ASCM Insights
Why Traceability in Manufacturing Matters More Now than Ever Before
By Lucy Pamment
When operating an efficient product supply chain, every component matters. The ability to track each piece from its origin at the supplier’s facility to its final delivery to customers should no longer just be a benefit or add-on service. It is a necessity. With an even greater focus on quality control and compliance across the manufacturing sector, as well as increased customer scrutiny of how raw materials are sourced and processed, traceability is more important than ever.
Because of its criticality, traceability needs to be a part of everyday operations. Companies should not only track individual components and products but also critical information such as details about suppliers and the products or inputs they provide, details about customers and the products supplied to them, the date of every transaction or delivery, the batch or serial number for each stock keeping unit, quality records for every component or batch, and the volume or quantity of every batch.
For companies that do not have dedicated traceability tools and processes in place, dealing with traceability queries can be time-consuming. In some cases, the inability to show evidence of origin or use can quickly escalate into a more pressing business issue. As such, having the ability to track components both forward and backward across the supply chain can eliminate unforeseen issues and save time and money.
Traceability also can help with inventory management and operations planning. Having the ability to trace fluctuations in raw materials, to understand when a machine part is coming to the end of its life, and to monitor the quality of parts and materials from specific suppliers will enhance every level of the supply chain. It’s safer and more efficient in the long run to make decisions based on solid facts and data as opposed to estimates.
Catering to customers
Once a product leaves a factory, traceability plays a key role in customer satisfaction. First, consumers care about product origins. They want to know where products come from, who makes them and how they are made. This is especially true in the food manufacturing sector, which has come under greater scrutiny in recent years. Being able to provide this detailed information can satisfy consumers’ curiosity and, in some cases, alleviate concerns about practices that can harm the environment or that are unethical.
In many sectors, consumers are turning toward more sustainable options as their concerns for the environment grow. Since 2016, 65% more consumers have avoided buying a product or using a service because of its environmental impact, according to the 2018 market report by Ethical Consumer.
More importantly, consumers want to know that the products they purchase and consume are safe. In the food and beverage industry, products frequently are recalled for a variety of reasons, including contamination by other foreign objects, such as metal or plastic debris from the machinery used to make, process or package the products or remnants of equipment-cleaning fluid, or foodborne bacteria. A recall event will certainly sour sales, even if just in the near-term, and likely will alter consumers’ perceptions of the brand.
However, having the proper traceability tools and protocols in place can save a company’s brand image when a recall event occurs. In fact, the benefit is at least twofold: the recall will be more targeted, which means discarding only the affected products, and consumers will be impressed, or at least calmed, but the company’s quick response to the issue.
Don’t be the kink in the supply chain
Traceability also helps with pleasing supply chain partners. Enhanced visibility enables quick turnarounds, increased attention to customer needs and competitive pricing.
Attention to product performance further down the supply chain also can help protect the reputation of all members of the supply chain. If one company institutes a cost-cutting measure or starts slacking off on quality assurance, traceability will help identify issues caused by these practices and empower supply chain players to quickly resolve the problems. Ideally, every company should ensure that it has the relevant technology and platforms in place to provide the ability to quickly recall products, track production and match replacement parts. Pair this ability with a solid crisis management contingency, and you will be prepared for all scenarios.
Lucy Pamment is head of product at The Access Group Supply Chain Division. She may be contacted here.