By John Dancoe, Product Manager, Plex Systems
In his LNS Research blog post, 3 Reasons Why Your Product Traceability Strategy Isn’t Working, president and principal analyst Matthew Littlefield raises a number of important reasons why excellent product traceability is both more necessary than many suppliers believe, and also that their existing systems are often far less effective than they’d prefer to think.
Discovery of this situation can often be very costly. Consider a situation in which a single unit of defective product has been identified at a customer’s facility.
One possible scenario is having to “cast the widest net”: Recall, sort and re-process a large amount of shipped product — almost all of which is NOT defective — in order to ensure containment of any other product with defects created by the same root cause. This is necessary when product traceability fails or lacks sufficient granularity. It can also be caused or exacerbated by a lack of timely visibility of the root cause; with insufficient knowledge relating the nature and extent of the root cause to shipped product that might be affected, a “wide net” is again necessary to ensure containment.
Another scenario is a narrowly-targeted recall of the smallest possible amount of product guaranteed to capture all potentially defective material. This is a practical response when the production, inventory and shipping systems have built-in traceability features which are robust, electronic (vs. paper), real-time (vs. batch), have fine granularity and deep depth of traceability, and are tightly integrated with quality system data.
Obviously, the costs involved with the second scenario will be far less in terms of both hard currency and – perhaps even more importantly – in terms of damage to reputation. (For additional thoughts on brand protection, read this blog post by my Plex Systems colleagues Jon Cowen and Tom Nessen.)
Littlefield concludes that “Investments in end-to-end product traceability are on the horizon”: that OEMs, brand owners and retailers will eventually apply “incentives” to encourage their supply chains to adopt systems which provide such levels of traceability.
I contend that suppliers who get ahead of this curve will realize important bottom-line benefits even before that happens, and will be in the right place to gain most-favored status with their customers when that day does come…if it hasn’t already.