Just this year, General Motors has made 54 separate recalls, affecting nearly 29 million vehicles worldwide. GM estimates that those recalls, most of which are related to ignition switches, will cost the company $2.5 billion.
To minimize the cost and disruption of potential recalls, manufacturers are undertaking extensive efforts in product traceability. Doing a better job with production-line forensics, so to speak, might have helped GM flag the problems with its ignition switches and backtrack them to their suppliers earlier on. It might also have closed some of the information gaps that exist in the supply chain when trouble struck. Traceability efforts are helping manufacturers narrow the scale of recalls by isolating problems to the particular production line where it occurred, the specific batch or pallet, or even the line worker responsible. The ability to perform rapid, focused recalls helps manufacturers better protect their brand and consumers, as well as ensure compliance with regulations.
According to a report by Chicago-based Motorola Solutions, product recalls rack up direct costs in a number of ways, including the costs of removing product from the market and correcting or destroying it, compensation for injuries or damages, costs associated with notifying customers and issuing credits, and legal and regulatory compliance costs. Recalls also result in a slew of indirect costs: reputation and brand damage, loss of sales and competitiveness, additional marketing and advertising costs to recover sales and market share, increases in product liability insurance, additional staffing to such areas as technical and sales departments, and increases in testing and quality procedures.
Motorola Solutions defines product traceability as "the ability to trace the history, application, or location of an entity by means of recorded identifications." For manufacturers, this means "you can track and trace each component that comprises your product -- from suppliers and manufacturers through assembly and final delivery to customers by creating an as-built genealogy."
Mark Davidson, principal analyst at Cambridge, Mass.-based LNS Research and a former executive in the controls manufacturing industry, told ThomasNet News in an interview that the need for technology-enabled traceability has become acute as supply chains have grown more complex. "There's really a push now to put labeling and tracking further back into the supply chain," he said, in order to give companies visibility into the multitude of materials, parts, and sub-assemblies that can make up a single product today.
Automakers have hundreds of original equipment manufacturers that supply parts and components from all over the globe.
"GM or [any auto manufacturer is acting as a system integrator for all of those OEM components," Davidson said. "Companies today are putting much more responsibility back on those suppliers to track and trace what they do and to improve their quality."
Better and cheaper data storage have made product traceability more feasible and affordable, Davidson notes. The greater capacity to manage information can naturally be leveraged to diagnose and prevent quality problems. "Why not track everything, in case there is a downstream issue?" he said. "It allows us to reconstruct what caused the issue, or to mitigate our risk in the first place."
Davidson is currently consulting a major defense aerospace company "that has to trace everything" and store the information -- in some cases, for decades -- in case there is ever an incident with an aircraft and it needs to find out what went into its manufacture. This requires keeping track of a multitude of parts and processes at the company itself and at its suppliers, and includes engineering changes along the way, which tools were used, and when they were calibrated. "Who did what, what personnel worked on what part of what assembly -- even what training they received. They are tracking everything," Davidson noted.
Traditional manual processes for tracking products are too slow and error-prone, says the report from Motorola, and must give way to automated processes for capturing, storing, and managing information. This is becoming increasingly feasible through the emergence of auto-ID hardware and software capable of tracking products and their components, whether directly or by packaging and containers.
At the most granular level, a traceability solution starts with marking parts, ingredients, or components. Parts can receive permanent marks during production by such means as dot peening, laser etching, molding, stamping, or casting. Marks can also be printed or attached using data matrix, barcoding, or radio frequency identification (RFID) tags. Based on a company's operations, says Motorola, products might be tracked by Global Trade Item Number (GTIN), if that system is most appropriate.
These marking methods provide fundamental visibility into the various stages of product manufacturing. Tracking data is collected through data-capture and mobility systems, such as bar-code scanners, RFID readers, and mobile devices, with industrial wireless local area networks (WLANs) working to capture and transmit data in real time.
In the solution model described by Motorola Solutions, production data is delivered to the company's manufacturing execution system (MES), where each product, part, component, or other entity obtains a documented history or "genealogy." The MES can track and associate a product with a specific production line or shift -- or even with a specific person. It can associate inspection activities and variables that occurred during production in such areas as temperature, pressure, and machine settings. The MES layer integrates with the ERP system, which holds master information on suppliers and materials.
A recent report from LNS Research spotlights end-to-end product traceability as a key component of what the firm refers to as "operational excellence," i.e., a strategy focused on continuous improvement in business and operational practices in such areas as agility, productivity, quality, risk mitigation, and generation of economic value.
In a survey of some 300 manufacturing business decision-makers, LNS Research studied respondents' practices in manufacturing operations management (MOM). Researchers found that the success of a new product rests on "the ability to effectively track quality metrics across the life-cycle of new product introductions."
The survey revealed that 60 percent of companies already have or are planning to implement software for end-to-end product tracking over the next year. For those companies that have already deployed this capability, nearly half are doing so as an enterprise-wide effort; 31 percent are doing so at the level of business units, and 20 percent are doing it at the plant level.
The top MOM software solution being used for traceability efforts is MES software, at 69 percent of companies, followed by quality management (QM) software at 63 percent. Also frequently mentioned by respondents were planning and scheduling, document management, and asset management software.