It’s the cost of global trace and genealogy (T&G), which means the ability to trace the complete history of every part, assembly and process throughout the supply chain and out the door to the customer. I’m hearing this subject brought up more and more frequently from our customers, across every industry.
In automotive, Tier 1 and Tier 2 suppliers want global product traceability so they can better see into their supply chains. When the tsunami struck Japan in 2011, and the Taiwan floods struck a couple of months later, the industry was caught unprepared to make the sudden adjustments needed to the flow of parts and supplies. Now, many leading auto companies are investing in product genealogy solutions, both organizational and technological. In addition OEM’s are starting to make this a mandatory requirement of their suppliers to protect from future such disruptions.
The pet food industry has had several contamination recalls in recent years. In some cases, manufacturers had to take a much bigger hit than would have been necessary if they been able to produce accurate global T&G data.
Of course industries like pharma and medical devices have long been focused on trace and genealogy for regulatory compliance reasons, as well as for safety. But the challenges keep growing as the interconnected web of suppliers and sub-suppliers keeps growing. Companies that thought they had mastered product genealogy, suddenly found themselves racing just to keep pace with the growing complexities of global manufacturing.
We shouldn’t be surprised by all of this. When we talk about global trace and genealogy, what we’re really talking about is tracking everything – every last production detail that could possibly matter. And not just in one plant, but in and across every plant, and every suppliers’ plants, and even to their suppliers.
What’s more, this complexity is growing exponentially, with each new plant that opens. This is increasingly a concern as companies increase their investment in BRIC countries and off shoring.
Meanwhile, the impact that a product failure can have – on the enterprise and on the world – is also growing exponentially. One mistake can reverberate around the globe, while failure to contain that mistake could do irreparable damage to a brand. That should put global trace and genealogy near the top of any corporate to-do list.
Interestingly, the recent turn of events is actually good news for manufacturers. Implementing a robust global T&G solution can help you to unlock greater value from your operations while enabling greater results from continuous process improvement. If you can track all production and supply chain operations, you’re well on your way to having the best infrastructure for higher quality, lower costs and a superior brand. So, perhaps we should be talking about global trace and genealogy as an investment, not a cost.
In any case, we can safely say this: Offshore manufacturing has many inherent business advantages, but reliable product genealogy is probably not one of them. Companies opening plants around the world to reduce operating costs need to make sure they have trace and genealogy under control, or they may end up paying a very high price later on.
In my next post, I’ll take a look at a few misconceptions about what manufacturers actually need from their global trace and genealogy solution.