What is manufacturing traceability and why is it important?
Explore how traceability gives you a detailed record of how the products are manufactured and the supply chain, from raw materials to finished products. Having that information will improve quality, reduce risks, and make your products/business more compliant with industry requirements and regulations. It also improves your visibility and control over the supply chain which is always welcome.
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Traceability takes a conscious effort to put in place.
Traceability isn’t a single task. It’s more of a mindset shift from a business that will start adding the oversight required to build traceability into processes, labelling, and even sub-suppliers. (03:53)
Introducing manufacturing traceability and the difference between batch level and unit level.
Manufacturing traceability gives buyers a full view of their finished product: Which deliveries from the BOM of which batches were used in the product, how it was processed such as in which plastic injection molding machine, inspection reports, delivery notes, so you will know the date of manufacture and which inspections were done, proof that samples were reliability tested, etc.
On the other hand, for manufacturers traceability can help track components and find issues where they have occurred. For example, problem batteries. If the supplier can trace back the defective battery to a specific batch, because they have kept records and been tracing when and where they made it, that’s going to help investigate why the battery (or the whole batch) turned out to be defective.
Batch level traceability is usually good enough for most consumer products, unit level is more specifically used in the food, medical, or automotive fields, for example, and sometimes an RFID chip might be included so the unit can be tracked throughout. However, for most products, being able to isolate a single batch where a problem has been found is easily preferable to having to recall ALL products. (06:07)
Benefits.
When implementing a manufacturing traceability initiative in your business, expect these benefits:
- You can trace ‘bad batches’ and deal with them in isolation instead of needing to do a full product recall. This helps reduce the risks you’ face from putting non-compliant or unsafe products on the market, which also has legal, reputational, and financial ramifications.
- You fulfill regulatory requirements that force you to keep a thorough ‘paper trail’ for products, such as the EU’s deforestation and battery regulations.
- Marketing can benefit from being able to confirm claims that may appeal to customers, for example, if a fast food restaurant makes claims that its cups are only made from FSC-certified paper sources this may please customers who want to be more sustainable, but they will also ned to have traceability data that confirms the chain of custody for the sustainable wood source and that none can have come from other sources.
- You may get more business as customers will see that you have made the effort to put in place systems to inspect products for example and record the results, this would give some level of batch traceability. Without any of this customers may walk away as they see you are too risky, this is true if you are the customer who is sourcing a supplier, too, you may choose to audit their traceability system to get an idea of how capable they are of meeting your needs.
- It helps you to do root cause analysis on issues internally because you will have batch and supplier information for products, for example, and can go back to them and explore why they have caused an issue that you have found, say, in testing, before the product even hits the market. This could be especially useful if you’re purchasing components from more than one supplier (many businesses double-source key components so they have a redundancy that protects supply). So problems can be found, analyzed, and fixed faster with the right information that has been collected. This helps a company improve its processes and systems, too. (12:06)
Is it expensive to run a traceability initiative?
After setup, running manufacturing traceability is not expensive. Documenting when, how, and with what processes are done is important and if you are a large enough customer you should be able to persuade your suppliers to document things in the same way as you require. You may also use RFID chips to track products through the supply chain as these are not expensive. (24:01)
How does traceability in manufacturing relate to product passports in the EU?
In the EU toys and certain battery-powered products will soon need to include a product passport that provides market surveillance authorities and consumers with thorough supply chain information, and most products to be sold there by around 2027/28.
The passport can be scanned via QR code and it will display information including where the product or its components have come from which can only really be provided by having some level of traceability in supply chains, so EU importers in particular need to be thinking about this sooner rather than later (and other areas may follow suit soon, too, such as parts of the USA, Canada, Australasia, etc). (25:35)
How to implement it?
First, think about your business processes. There are common warehouse and logistics management systems that you can use when putting in place a traceability initiative that can help enable you, but a company should define what they are trying to achieve first. Define the mapping of the flow of materials and information, what information are you already collecting, can you keep using your current software? Do you need measures to control and document what gets purchased, allow warehouse clerks to see what is coming in and input it? Do you run mock recalls to test your current system and see if it’s possible to trace back products and obtain the linked upstream information you require to solve the mock issue? If so, you will find gaps in the system where information is not available and you can focus on improving there.
Software is only a part of the puzzle, using some lower-tech and inexpensive methods can also improve traceability. For example, incoming products could be given a barcode for warehouse staff to scan, saving time and keeping records, or plastic injection molded parts could have a batch number included on them (by adding it to the mold itself) in a place that the customer won’t see it much/at all.
Having a mindset of collecting and retaining information about, say, different suppliers producing the same product in different batches, so you can tell them apart and then look back later if there is an issue and be able to differentiate them, is a great start. (27:44)
How to audit a supplier’s traceability system?
If you’re sourcing suppliers you may want a third party to audit their manufacturing traceability system to verify that it reaches your requirements and you will obtain required information down the line, although this is probably more suitable for expensive and complex parts such as displays, batteries, or motors, or those that come with very high safety risks. Simple products like screws may not be such a good candidate for a traceability initiative unless you are buying in extremely large quantities.
Typically the auditor will go in and check:
- Their quality system – if it is robust and properly implemented.
- Risks of quality problems – if the risk is low in terms of quality issues, this suggests that they already have at least a basic traceability system in place.
If they have the above, they’re probably more trustworthy when it comes to traceability than those that do not.
However, keeping track of information in your own business is critical, because you can’t always guarantee that a supplier will give you truthful information, such as if they changed a component or design slightly without telling you which can happen. What you can control is that you have kept thorough internal records about the incoming products. (35:41)