Colour coding on files in drawers is not as effective as colour coding on open shelves.
There is no visibility until we open a drawer.
(Imagine the McDonald’s sign inside the Restaurant!)
The colour blocks must be meaningful. They should be large enough so they can be easily identified from a distance, and small enough to separate the file into groups of records that can be handled efficiently during a file search.
Colour coding has a cost. Each label adds to the cost, both as a cost of supplies and a labour cost for the application.
The degree of coding that is justified depends upon the activity in the files.