Effective Traceability – An Insurance Policy for the Electronics Industry

Product recalls are one of the biggest risks that manufacturers have to face. According to the insurance industry, the average cost of product recall claims is over US $1 million. Product recalls in the electronics industry were 15% of all recalls in the EU in Q1 2019, and 29% in the US.

As regulatory requirements expand in the electronic industry, manufacturers are finding it necessary to set up a system to track and trace all items used in the production process, and a recall management system that enables them to quickly access the critical information needed to track a suspect product.

The Need for Traceability

Traceability is the ability to trace the movement of components through the supply and manufacturing chain to customer delivery and identify the components and the locations associated with their movement. It’s becoming increasingly important for manufacturers to have business systems in place that can provide full control over product traceability to ensure compliance. The ability to speedily locate specific lots of finished goods for a defective part is a key requirement. Once identified, a product recall needs to be issued on that lot.

Implementing Traceability

Effective traceability is implemented by tying together a number of different components:

A warehouse management system with functionality to track serial numbers, lots and bin locations to provide better visibility and management of serialized stock items in specific warehouses
Inventory management that records traceability and quality data of materials and products through the supply chain
A manufacturing operations management system that allows you to measure and improve product quality
A customer complaints capability for capturing, managing and resolving customer issues, including the review and escalation of product defects to enable recalls and prevent future problems.
Product recall and mock recall capability that enables compliance for industries that need to manage the recall process as well as testing the system through mock recalls

Getting these as separate disparate systems invites a whole range of problems, including integration and management of upgrades. That is why using an ERP solution which has the components as standard is often preferred as those problems are resolved.

In industries with strict regulatory requirements, many if not all of these solutions are needed to achieve a formal quality accreditation.

Manufacturers also need to hold a long history of inventory and shop floor data due to legislation that compels manufacturers to keep that data for a period after products have been sold.

The traceability system needs to be able to answer common questions, such as:

Was the product assembled with a defective component?
Was the product assembled with a compliant process?
Is the whole manufactured order affected, or is it limited to a specific component, batch or lot?
What is the overall production history of the item?

The Benefits of Traceability

The data that traceability provides can help operations and engineering teams to find and fix production problems, and it also helps to maintain good customer relationships. The data gained from traceability also drives process and product improvement over time.

There are specific traceability systems available, but an integrated traceability functionality as part of an ERP solution allows a company to easily make reporting data available as well as having a single source of all critical business information.

Due to growing regulations, including warranties and returns, electronics producers have a lot to gain by implementing a traceability and product recall solution. Among the benefits of traceability are the improvement of the production process, control over the supply chain, reduction in the risk of defects, and improved customer service. It’s an insurance policy that every electronics manufacturer should have.