The Value of Traceable Manufacturing in the Context of Global Sourcing

If you’re reading this, you’ve probably noticed escalating issues with uncooperative distribution partners, poor downstream inventory management, fake products, and product piracy during the past two years. These problems have been exacerbated by supply chain shocks brought on by the pandemic, natural catastrophes, skyrocketing oil costs, political unrest, and conflict, posing additional difficulties for your brand and business.

We have gathered key insights based on how we’ve implemented product traceability technology across complicated global supply chains for businesses like ExxonMobil, Dupont, and Rémy Cointreau in response to this gap between demand for high-quality information on traceability solutions and a lack of quality information.

Who is this intended for?

At a large industrial or packaged products firm or an international assistance organization, you hold a leadership position in marketing, distributor management, supply chain management, printing and packaging, digital transformation, and innovation.

How does product traceability work?

The capacity to follow and trace items through your supply chain from the point of production or manufacture to the final consumer is referred to as product traceability. Product traceability, which is used to improve supply chain visibility, necessitates the creation and management of supply chain data.

Businesses today can gain from modern traceability technologies in the following ways:

• Finding and identifying the origins of parallel imports and product diversion
• Creating visibility for distributor and channel channels and determining the product’s path to market
• Developing tools for inventory planning and demand forecasting
• Supporting environmental initiatives including carbon footprint tracking, recycling, and the circular economy
• Monitoring recalled goods, returned goods, damaged goods, and faulty goods.

A review of the technology required for product tracing

Although not all are necessary, the technological procedures and technologies are required for traceability:

Integrations with your ERP, Manufacturing Execution System, printing, and warehousing systems, as well as your traceability platform, are necessary to record all pertinent supply chain events at the point of origin.

The difference between upstream and downstream traceability

Traceability along the supply chain may be divided into “upstream” and “downstream” traceability. While downstream refers to following your product after manufacturing through the supply chain to the client, upstream refers to the origin and travel of your product’s inputs, ingredients, or raw materials.

Advantages of product and supply chain visibility and traceability

• By identifying parallel imports, enhancing distributor inventory management, streamlining product recalls, assisting with regulatory compliance, assisting with the achievement of sustainability goals, and informing end users of the product’s origin, traceability offers significant value to businesses with complex supply chains and distribution networks.
• Demand forecasting, distributor inventory management, sales, and operations planning, and supply and demand management (S&OP)

There are two sorts of advantages that product traceability may provide for distributor inventory management and demand forecasting:

• Forecasting demand, enhancing downstream inventory management, and sales and operational planning may all benefit from visibility into the activities of distribution centers (both internal and external distributors) (S&OP). This is particularly significant for goods that are subject to promotions or seasonality. Fewer shortages or overstock and better cash flow management are the benefits of improved demand management.
• Knowing the kind and quantity of inventory at distribution hubs may help brands identify outdated items that should be rushed to market and replaced with more modern ones.

Track product recalls, returns, broken goods, flaws, and warranty claims

• Items that have been recalled can be located using traceability systems, which can also follow the products through their distribution chain and farther upstream to their manufacture and processing.
• The distribution and shipping information for each product is provided by unit-level tags on current traceability systems. This information includes manufacturing data (batch, lot) and logistics or shipping data (box, crate, pallet) from various points in the supply chain. Utilizing this information, businesses may spot distributional problems that are affecting the quality of their products and, in turn, their profit margins.

Compliance with laws and trade restrictions

Many sectors are governed by laws requiring goods to be traceable to the unit level, including their components, raw materials, and other inputs. Only serialization the printing, labeling, or even laser stamping of special codes on goods and packaging can do this at a fair cost.

Data on downstream product traceability: “Where has your product gone?”

Downstream traceability data, as opposed to upstream data, originates at the place of production and continues along the supply chain. It is produced by the product’s maker or manufacturer, distributors, and customers by scanning the component’s packaging, product, or product itself.

The devices can cost up to USD 100, and monthly international data rates apply. As a result, they are more frequently used for high-value goods, higher-level logistical units like cargo containers, or a very limited piece of the supply chain that is being closely examined. Businesses can build a unit-collection mechanism after each trip to make implementation cost-effective.

The benefits of using specific, purpose-built traceability software include:

• Enables the integration of several MES and ERP systems from internal as well as third-party supply chain partners into a single source of truth.
• Adapts to the demands of various corporate users, including supply chain managers, demand and inventory management, channel managers, marketing, brand protection, and executives, allowing them to securely log in with the appropriate access and access analytics and tools for their traceability use case.
• Allows for the easy building of mobile web pages that may be used to show product information, such as information about the product’s origin or supply chain, to end users or professionals.
• Have fewer initial and continuing expenditures than internal ERP system development, customization, or expansion.

Which “Layer” does a product traceability system belong to in the ISA 95 Framework?

In the Layer Model for technology and business processes in manufacturing developed by the ISA 95 Framework, end-to-end product traceability systems are regarded as Layer 5 solutions. Through ERP, MES, and other IT systems, they integrate vertically with solutions in layers 0 through 4 while also consuming and connecting data throughout the supply chain network.

According to the ISA 95 framework (L’s), several components of the traceability technology stack fit into the following categories:

• Physical labor, such as assembly, is referred to as layer 0 through layer 3 solutions in the context of product production. Product data from these levels are often given into the level 4 solution, which is the following level.
• Systems like ERPs are considered layer 4 solutions since they track items from the production and packing stage to delivery, but not farther down the supply chain among stakeholders.
• The term “Layer 5 solutions” refers to hardware, software, and procedures that operate across distributors and end users as well as other supply chain participants at the network level of the supply chain and connect to the originating ERP to provide a single source of truth for the entire supply chain.