In a world marked by pandemic-induced supply chain disruption, manufacturing organizations worldwide are increasingly digitizing to meet the challenge. It’s even the subject of a White House task force; IDC predicts that by the end of 2021, 60% of global manufacturing supply chains will have invested in technology and business processes to enhance their operations. As these supply chains become increasingly connected, traceability emerges as a powerful driver for agility, resilience and value.
Traceability is the capacity to monitor and track the journey of products, from component origin and manufacturing to delivery at the consumer. Many regulated industries are legally required to maintain traceability in their networks. But all manufacturers stand to benefit from traceability in connected supply chains.
As complex and varied as today's modern global supply chains may be, the yardstick for success is the ability to connect and integrate information to ensure agility and resilience. Think of agility as the overall ability to respond to both internal and external factors impacting the supply chain while maintaining consistent cost, service and quality in the organization. Resilience, meanwhile, is the ability to mitigate or respond to points of failure within the supply chain.
Both agility and resilience are rooted in the traceability of where and how products are flowing globally through the supply chain network, and the ability to make fast and accurate decisions on that information. The disruptions caused by COVID-19 — not to mention less devastating, but still significant recent impacts like global tariffs — are speeding up the pace needed to make those decisions and execute on them.
Traceability can help keep up with this pace, but it doesn’t happen automatically with the establishment of a connected supply chain. Several key functions and capabilities need to be established as a foundation.
One is serialization of assets coursing through the supply chain. Like digital breadcrumbs across a skein of systems and interconnections, serialization allows products and components to be itemized and trackable as they move through the supply chain — from the moment that serial number gets created through the generation of a work order, to the point where a completed product is shipped to the customer and ultimately used in the field.
Data standardization is also key to traceability across architectures, because it enables the smooth exchange of information between systems and even enterprises. Internally, there may be a need to exchange data between two systems that are impacting different parts of the supply chain. Externally, the data may need to be shared with a third-party logistics provider, distributor, market intelligence database or even customer support network in the field once a product is delivered. The enabler of traceability across these cases is the standardized ability to connect, correlate and process data.
Highly traceable digital supply chains not only help companies to understand and optimize the health of their supply chains; they also lead to more proactive planning and efficiencies over the long term, to anticipate growth factors or potential business continuity risks. This is typically augmented by advanced analytics for decision support, and strong investment in visualization tools that allow a broader group of business analysts and stakeholders to convene around the data and insights generated from a newly optimized connected supply chain system.
Take the example of component availability (something that’s far from hypothetical, as the current global semiconductor shortage makes clear). Traceability in this context can help predict when and where a sourcing shortage may occur, and what the contingencies are, including substitutions or simplification of a product portfolio to a more standard catalog of components based on what the organization can successfully source or design.
To minimize risk while reaping the benefits of traceability, companies need adequate security to protect data and assets in this connected environment, as warranty and other ongoing services are attached to a product in the field. Digital architectures need to be built with the power and security to extend to multi-enterprise environments and third-party systems.
Through better connection, exchange and integration of information across the connected supply chain, this data foundation ensures traceability that fuels agility and resilience. As with all digital transformation, there’s also a significant cultural shift. As companies create more data and digital tools for decision-making, the skills and competencies of the workforce must evolve to become more data-literate and data-driven. Taken together and when done correctly, all of these steps will help organizations to deploy traceability as a powerful lever for more agility, resilience and quality in the supply chain.
Jen Upthegrove is director of global supply chain process and systems at Rockwell Automation.
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