You may think that the primary value of product traceability is to limit exposure to quality risk. I remember when a plant manager once told me that traceability is just like an insurance policy. In the event a defective part is discovered, it can be traced back the 5W1H so exposure can be limited.
To my surprise, during a value discovery session with an Apriso customer, we discovered that traceability can go way beyond an insurance policy when implemented correctly.
Let’s start by assuming component part, lot or serial number(s) are captured to link with those of the finished good assembly for genealogy recording. Here are some of benefits you can expect beyond having an insurance policy:
- Real-time visibility of material flow – When part, lot or serial numbers are captured as-built, in real-time, you have virtually instant visibility to the material flows across production. There is no need to walk around the plant to locate parts, or see what the progress of an order is or identify a possible bottleneck.
- Better plan vs. actual management – With real-time visibility, managers, supervisors and operators are empowered to make instant comparisons to plan. This type of visibility virtually eliminates “fire-fighting” exercises, helping you to improve productivity (while reducing stress). This data can also be used to improve long term planning accuracy. For example, now you can realistically use actual historical averages for lead-times to improve standard lead-time forecasts in MRP or scheduling applications.
- More accurate inventory – The capturing of part, lot or serial numbers that are coming out of each production process should always be integrated with pay-out or production declaration functions to avoid duplicate data entry to ERP. This approach results in improved pay-out and backflush accuracy, leading to an overall improvement in inventory accuracy.
- Improved predictive maintenance – It may not be obvious at first glance how the capturing of part, lot or serial numbers in your production process can actually help with predictive maintenance. It turns out that Apriso’s customer had been struggling to deal with an uptick of demand in the past several months. Tooling and die changes are managed in a time-based manner, so the unplanned increase in production resulted in machines being “consumed” or wearing out faster than originally projected. A by-product of real-time traceability is visibility to the actual number of usage cycles at each operation, letting you better manage tooling and die changes based on actual usage instead of an estimated timeframe from the past.
- Improved supply chain coordination – Perhaps the most unexpected benefit has been improvement in supply chain coordination, as a result of implementing traceability across interdependent plants in the supply chain. As soon as real-time material flows are available in the plants, this information should be shared with your supply chain partners. This information also allows a plant to adjust its own schedule based on the real-time progress of critical components from supplying plants as well as important feedback to improve supply chain planning. In more advanced cases, the downstream plant can be empowered to actually adjust the schedule of its supplying plants, or the upstream production flow can be pulled by real-time progress of downstream supply chain processes. Such inter-plant synchronization can improve overall agility and competitiveness of the entire product supply network.
“Basic” traceability can deliver the above benefits. Implementing a more robust solution, which I refer to as “interlocking” traceability, includes a more comprehensive history of not only the parts, but also of the processes and resources involved with every production step. Suffice it to say that each of these benefits is greater when you have more data to draw upon to make forecasts and anticipate future production requirements.
In closing, it is possible to reap many rewards with traceability, but only when your system has been correctly implemented – as a platform-based solution tightly integrated with each of your manufacturing operations across every location. A point-solution simply can’t deliver the same level of benefit. In my next post, I will go into further detail on why this “platform” approach is really necessary. It is not an understatement to say that millions of dollars are hidden in the traceability data waiting for those who have the foresight of a strategic approach to unlock it.