Quick Reference Guide:

Traceability in Discrete Manufacturing

Traceability helps discrete manufacturers ensure compliance with government regulations; better
protect their brand and consumers; and perform rapid, focused and cost-effective recalls that minimize
financial impact.

This Quick Reference Guide is your key to understanding traceability in discrete manufacturing. It
provides third-party data, presents real-world case studies, lists key considerations and outlines
components needed for a traceability solution – all in an easy-to-understand, easy-to-read format.

Traceability: Defined
According to ISO 8402, traceability is “the ability to trace the history, application or location of an
entity by means of recorded identifications.”

For discrete manufacturers, this means you can track and trace each component that comprises
your product – from suppliers and manufacturers through assembly and final delivery to customers
by creating an as-built genealogy. There are multiple ways this can be accomplished including using
technologies such as direct part marking where parts and components receive a permanent mark
either as they enter assembly or by suppliers. The most common methods for applying permanent
marks include dot peen, laser etching, molding and stamping, or casting. Other technologies that
enable traceability include 1D and 2D bar codes and radio frequency identification (RFID). Once you
have chosen a traceability method, you can determine if Global Trade Item Number (GTIN), lot or serial
level identification is needed based on your operations.

Case Studies: Real-life Implementation and Results with Traceability

Ford Motor company

Company Overview: A global automotive manufacturer and distributor based in Dearborn, Michigan with
approximately 176,000 employees and 80 plants worldwide

Challenge: Improve the quality of finished products and mitigate large recalls

Solution: Direct part marking: Chose Motorola MC3090 mobile computers to read various direct part
marking symbologies

Partner: Freedom Technologies

Results: End-to-end traceability of parts for greater visibility, cost savings and brand protection

More Information: Read the complete case study for Ford at

http://www.motorola.com/staticfiles/Business/Solutions/Direct%20Part%20Marking/_Documents/staticFiles/
CaseStudy_Ford_DPM.pdf?pLibItem=1&keywords=Manufacturing+Case%20Studies&localeId=110

1
Primary Drivers of Adoption:
Costs, Compliance and Recalls Increase the Need for Traceability
With competitive pressures on the rise and consumer confidence becoming harder to earn and maintain,
companies are finding that now, more than ever, there is a need to protect their brands and reputations.
Completely negating or being able to minimize the impact of recalls is critical to maintaining customer
and distribution channel loyalty and minimizing costs.

In addition, compliance mandates are increasing as are the associated fines for non-compliance.
The Federal Transportation, Recall Enhancement, Accountability and Documentation (TREAD) Act
passed in 2000 requiring vehicle and equipment manufacturers to report to the National Highway
Traffic Safety Administration (NHTSA) a wide variety of information that could indicate the existence
of a potential safety defect1. There also are rising pressures from the U.S. Department of Defense,
which requires suppliers to complete Universal Identification (UID) marking of all legacy items. Not to
mention the aerospace Spec 2000 and SEMI standards and regulations that also must be met.

Manufacturers can no longer think of themselves as separate entities – but rather as part of a larger
supply chain that involves suppliers, distribution centers, warehouses and transportation operations.
Many manufacturers are turning to traceability solutions to help close some of the information gaps
that exist in disparate supply chains, track warranty data and meet customer requirements.

Recall Costs 2

Direct Costs Include:

The cost to remove product from market
Media costs associated with contacting customers
Costs associated with recovering or destroying product
Cost to recover product replacement or customer credit
Legal costs
Regulatory compliance costs (fees, additional testing and inspection costs)
Indirect Costs Include:
Damage to reputation and brand
Long-term losses to a product category
Added marketing and advertisement costs to recover market and market share
Increased regulatory and testing costs
Increased product liability insurance costs
Costs for adding employees (in technical and sales divisions)
Permanent increases in testing or sampling costs

2
 Components for Traceability Solutions
Being able to track and trace critical components within the discrete manufacturing process begins
with both process and technological changes. In order for traceability to be effective, companies
must shift from error-prone manual processes to automated ones – capturing, storing and managing
information automatically. Advances in industry standards and improved auto ID hardware and
software are making the transition easier than in the past. When looking at traceability solutions,
system capabilities may include serialized container and individual part tracking; built-in bar code
printing and scanning, RFID, and direct part marking; and detailed traceability from any point in the
manufacturing process. The chart below outlines the necessary components of a traceability solution:

Component Description

Manufacturing Execution • Provides detailed historical information related to production, inspection,

System (MES) genealogy and usage
• Captures component lot/serial numbers per finished assembly
• Documents variables at the time of manufacture such as temperature, pressure, etc.
• Identifies a specific person on a specific production shift
• Creates a template for the manufacturing system to guide all steps in production
• Tracks work in process (WIP) and provides insight into production of all current
orders and the status at each stage of production
Enterprise Resource • MES layer integrates with the ERP system
Planning (ERP) System • The ERP has the master information on materials, suppliers and vendors, while
the MES tracks the production shop orders including component consumption,
WIP and finished goods
Data Capture and Mobility • Mobile computers, bar code scanners, RFID tags and readers, and industrial
Hardware wireless local area network (WLAN) work in sync to capture build information.
This allows the MES and ERP system data to be available to mobile workers in
real time.
• Devices to capture all traceability methods, including:
o 1D and 2D bar codes
o RFID
o Direct part marking: laser etch, dot peen, chemical edge, stamped
Additional Software • Applications that create mobile and fixed reader front-end interfaces to MES
Systems and ERP systems, quality and lab systems. This allows users to access key
enterprise applications on mobile devices such as handheld mobile computers or
allow for automated data capture via fixed readers.
• Management software to:
o Manage, maintain and monitor mobile devices (Motorola Mobility Services
Platform)
o Manage, monitor, and ensure security and compliance within wireless
networks (Motorola AirDefense Suite)
Professional Services • Designs and implements traceability solutions within manufacturing
environments through consulting, project management and vendor selection

3
Benefits: Greater Customer Satisfaction, Cost Savings and Brand
Protection Delivered
through Traceability
Being able to identify the origin of a particular unit located within the supply chain is changing the way
businesses operate. Traceability technologies and processes ensure product quality standards are met
and give real-time information about production and equipment. It enables you to track production
information back to the exact date, time, supplier components, operator and machines used.

The result is increased revenues, improved customer satisfaction, and reduced manufacturing
liabilities. The adoption of traceability requires time, effort and resources, but the returns companies
realize outweigh the investment.

Increase customer satisfaction and safety

One of the key elements to building customer loyalty and satisfaction is trust. Ensuring your product
meets quality level standards and proactively identifying any flaw before a recall is necessary
increases customer confidence – and in turn allows you to protect profitability by protecting the brand
and limiting rework. Traceability solutions can eliminate recalls by providing real-time reports on the
machines, components, stations, shifts and operators involved in the defective product and processes
before the product is shipped.

In the event a recall does take place, manufacturers are able to minimize the impact by only recalling
those items with the specific serial numbers that were built with the faulty component, material or
process – thus significantly reducing expenses and customer impact.

Meet government and compliance mandates

Traceability can ease the burden and lessen the chances for fines and penalties associated with non-
compliance. Manufacturers can manage detailed product histories to meet automotive (TREAD Act)
and aerospace SPEC 2000 and SEMI standards and regulations.

Improve data accuracy

The element of human error is significantly reduced as components are handled within the
manufacturing plant with the use of mobile computers, bar code scanners, RFID and wireless data
technology. Product, part, employee number, quantity and supplier information can be automatically
captured accurately and timely rather than written on a tablet and transcribed into a computer system.

Increase operational productivity

In addition to the efficiencies gained through the removal of manual processes, businesses can save
millions in lost revenue, recall costs, damage control campaigns, litigation and fines through the use of
traceability solutions to prevent quality issues. And, from an operations perspective, automated KanBan for
just-in-time (JIT) line side replenishment of component parts can also significantly increase productivity

4
 Reduce warranty claim costs
Warranty claims can significantly impact a business’s bottom line. Traceability enables manufacturers
to accurately analyze the root cause of a product or part failure to recover warranty costs from liable
suppliers. This not only reduces warranty costs, but also can contribute to improved product quality in
the future.

Focus on generating revenue

While cutting costs is one way to improve your bottom line, increasing revenue is another. With
automation and traceability solutions, you can track warranty and part information to up-sell and cross-
sell complementary products and services. In addition, labor hours can be reallocated to focus on
revenue-generating activities versus the double reporting that occurs when data is collected manually
and then later transferred into a computer system.

“General Motors paid a $1 million civil penalty for failing to conduct a timely recall of
failed windshield wiper components on more than a half-million vehicles.” 3

“Reducing recalls is a compelling reason to start thinking about traceability in

automotive,” says Alison Smith, senior research analyst at AMR Research Inc.
“If 12 cars have a problem, you don’t want to recall 30,000 cars. You want to recall 50.” 4

“Warranty costs in the automotive industry exceed $9 billion per year.”5

5
Professional Associations
The associations listed below are dedicated to educating manufacturing and supply chain
professionals. When you become a member, you have access to education and research material to
help improve your business operations and stay up to date with the latest trends.

Association or Resource Website

American Production and Inventory Control Society (APICS) http://www.apics.org

Council of Supply Chain Management Professionals (CSCMP) http://cscmp.org

GS1 http://www.gs1.org

ISO http://www.iso.org

Electronics Components Association http://ec-central.org/index.cfm

Automotive Industry Action Group (AIAG) http://www.aiag.org/scriptcontent/index.cfm

Air Transport Association (ATA) http://www.airlines.org/pages/home.aspx

Department of Defense (DOD) http://www.defense.gov/

International Aerospace Quality Group (IAQG) http://www.iaqg.sae.org/iaqg/

Contact Us
To find out how Motorola’s bar code scanners, mobile computers, wireless infrastructure, RFID and
two-way radios can help you improve traceability within your manufacturing operations, contact us at
+1.866.416.8593 or visit http://www.motorola.com/business/manufacturing.

References
1. National Highway Transportation Safety Administration http://www.nhtsa.gov
2. *From Peanuts to Pet Food: Coverage Available for Rising Recall Exposures, Patricia Roth, Aug. 2009. Originally published in the August 2009 issue of National
Underwriter’s e-newsletter
3. “Parts tracing drives automotive supply chain: government regulations and rising recall costs force suppliers to get a better handle on parts data,” Frontline Solu-
tions, Brian Albright, April 2005
4. “Creating a Genealogy,” Automation World, Rob Spiegel, Contributing Editor, September 2006
5. “The Traceability Advantage,” Quality Magazine, Mark Symonds, September 2007

motorola.com

Printed in USA 05/10. MOTOROLA are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective
owners. ©2010 Motorola, Inc. All rights reserved. For system, product or services availability and specific information within your country, please contact your
local Motorola office or Business Partner. Specifications are subject to change without notice.

64