The function of traceability has long been a core component of most Manufacturing Execution System (MES) solutions. Countless MES RFP’s have contained a line that described a company’s requirement for lot or serial tracked traceability of products from components consumed to finished goods shipped. While not a full-fledged afterthought, a lot of RFP’s do leave you with a sense that traceability requirements are a “check-the-box” type requirement that is a low-level minimum qualifier rather than satisfying the core traceability and genealogy needs of their business. In fact, one prospect I spoke with recently stated that their responsibility for traceability only extended “from WIP to Ship” (see related post here). I’m sure that in today’s quality-sensitive, hyper-litigious marketplace, his customer would love to hear about a supplier with this level of detachment (not really)! Today’s reality is that traceability, genealogy and containment are critical manufacturing capabilities that must now be executed locally at each plant and coordinated on a global scale.
So what is driving the need for expanded capabilities around global traceability?
In the automotive industry, one of the big trends driving this transformation is an expanded focus on global platform-based vehicle design and manufacturing. While the concept isn’t brand new, it is being taken to a scale and volume never seen before in the auto industry. Most of the top-tier vehicle manufacturers are in some stage of developing or introducing new vehicles based on standardized architecture platforms that can support many different models. Recently reported in Automotive News and Autoweek, IHS Automotive predicted that by 2017 VW will build over 40 models on its MQB platform (Audi A3, VW Golf, etc.) totaling over 4 million vehicles worldwide (see article here). They also estimate that Toyota will build 3.4 million vehicles globally by 2017 on their MC-M platform (Corolla, Camry). And all of the major global car makers will be above 2 million vehicles per year with their major platforms. That is a lot of new product introductions!
There are many benefits to this approach. Car companies can compete in multiple vehicle segments using the same common platform that is assembled in multiple facilities around the world. This approach addresses the unique demands of different markets without the expense of ground-up vehicle design. The savings from faster vehicle development time, lower tooling costs and more advantageous supply contracts (by leveraging higher volumes) could easily add up to billions of dollars in savings. Suppliers also benefit as they service larger, more stable supply contracts that support broad-based utilization of their global manufacturing facilities.
So what is the down-side? The same global scale that can yield big savings benefits could drive huge costs and reputation damage if a product defect or manufacturing quality issue surfaces and is not quickly addressed within the common platform. Instead of the defect being confined to a single plant, single model or even a single vehicle segment, the potential exists for the defect to be multiplied across thousands of vehicles around the world in a very short amount of time. Instead of a defect being confined to vehicles produced in 1 or 2 assembly operations and source parts from 1 or 2 supplier plants, you now have the potential for new massive global issues with a scope spanning both of your vehicle and component supply operations.
The key in preventing this kind of disaster will rest in preparedness. And that means that both car makers and suppliers must have robust traceability systems and processes across their enterprise manufacturing landscape and their supply network. The “check-the-box” minimalist approach to traceability is no longer good enough (if it ever was). The risk to both car-makers and suppliers is far greater than it has ever been before. Thinking that doing some parent and child relationship searches against a plant’s MES system to find material lot #’s and serial #’s, only to jot them down on paper so you can look them up in an antiquated green screen terminal in the ERP system will be “good enough,” is in fact not even close to “good enough.” And, taking a week to do so is about the same time it will take to have a full-scale PR disaster on your hands in today’s global vehicle platform world.
So what is required? I’ll share that in my next post.