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"Plex Online manufacturing ERP software provides unparalleled coverage and access to operational intelligence, enabling managers to make decisions based on real-time data, and enabling continuous improvement and lean management."Source: Plex Systems
ERP Traceability Functions: Going beyond the Hype
is also known as : Enterprise Resource Planning Traceability
, ERP Traceability Functions
, Effective Traceability Program
, Maintaining Traceability
, Traceability Concept
, Step in a Process Chain
, Benefit of Traceability
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In a fiercely competitive global economy, manufacturers and their suppliers are challenged to continuously improve quality and maintain compliance with government and industry mandates – with limited labor and resources.
All the while, OEMS are increasing their dependence on suppliers for complex products, assembly operations and services.
Meanwhile, the push for quality intensifies.
Even after decades of emphasizing quality management programs and standards, manufacturers and their supply chain partners are still burdened with excessive warranty costs.
How Manufacturing Software Enables Companies to Improve Quality Operations and Control Warranty Costs
Today's manufacturers are looking for ERP solutions that improve operations, cut costs, and help improve product quality. These enterprises want to move "beyond the hype" and away from the empty promises of many ERP vendors in the marketplace.
This paper demonstrates how key capabilities, including the ability to trace the flow of lots and components used in manufacturing operations, are becoming increasingly vital to industries that must comply with strict quality mandates and governmental regulations.
Integrated technology solutions such as Plex Online are going beyond the hype, and are specifically geared to high-precision manufacturers.
A Hard Truth
It is alarming to note that U.S. manufacturers spend over $25 billion every year on product warranty claims. (Source: IDC). These same industry analysts also report that warranty costs in the automotive industry exceed $9 billion per year. Direct warranty costs are not the only consideration; indirect costs must take into account the significant loss of sales due to negative publicity.
The hard truth is that in the most challenging of years, the cost of bad quality exceeds the combined profits for the U.S. "big three" automakers, and has a similar cost in industries such as aerospace and defense, and medical device manufacturing.
The Role of Regulation
Increasingly complex government and industry regulations play a large part in the rising costs of warranty. Government regulations include:
The TREAD Act: The Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act requires that vehicle manufacturers report to the National Highway & Transportation Safety Administration (NHTSA) when it conducts a safety recall or other safety campaign in a foreign country.
The TREAD regulation mandates that vehicle manufacturers report information related to defects, reports of injury or death related to its products, as well as other relevant data in order to comply with "Early Warning" requirements. The "Early Warning" requirement is the heart of the TREAD Act, enabling the NHTSA to collect data, notice trends, and warn consumers of potential defects in vehicles.
The TREAD Act assigns criminal liability when a vehicle manufacturer intentionally violates the new reporting requirements when a safety-related defect has subsequently caused death or serious bodily injury. There are a number of other smaller provisions which mostly address manufacturers of vehicle tires and guidance to the NHTSA on reporting data.
Aerospace Regulation: Other important regulations include the AS9100: International Aerospace Quality Group, including the SAE (US), European Association of Aerospace Industries, and Asian industry groups. Initially released in October 1999, and revised in 2001, the mandates provide the essentials of an effective traceability program.
Medical Equipment Regulation: In the medical equipment manufacturing arena, FDA Medical Device Reporting (MDR) regulations have required firms who have received complaints of device malfunctions, serious injuries or deaths associated with medical devices to notify FDA of the incident.
The Safe Medical Devices Act (SMDA) of 1990 provided FDA with two additional post marketing activities, Postmarket Surveillance for the monitoring of products after their clearance to market and Device Tracking for maintaining traceability of certain devices to the user level.
The bottom line is that consumers, customers, government agencies and courts expect increasingly higher quality standards and levels of corporate responsibility. It's up to the manufacturer and supply chain to track their processes and business information so critical safety-related decisions and operations related to warranty issues can be properly analyzed.
For automotive, aerospace, and medical equipment manufacturers and suppliers, adhering to warranty related reporting requirements can make all the difference.
tracing goods and processes backward along the supply chain and forward along the distribution chain based on identifying characteristics.
The Role of Technology
What's the role of manufacturing technology related to improving product quality and minimizing the burden of warranty costs?
Today's integrated information technology solutions create electronic databases of decisions (e.g., safety vs. cost tradeoffs in design) that can be tapped by lawyers looking for evidence, or by the manufacturing companies themselves when faced with warranty issues.
This means that Information technology systems have become powerful tools for manufacturers to isolate quality, warranty or safety issues and minimize disruption to production.
This is the concept of "traceability" which is defined as the capability for tracing goods backward along the supply chain and forward along the distribution chain based on identifying characteristics
Short and Long Term Benefit of Traceability
The short-term goals of the traceability function are to identify products impacted by the defect after customer delivery to minimize recall costs.
This works to minimize the number of products that must be recalled when a manufacturing flaw is found by identifying only the specific serial numbers that were built with the faulty component/material or by the faulty process.
More importantly, the proactive, long-term result of traceability is to identify defects prior to customer delivery to reduce in-process costs (the reactive, short-term benefit) and eliminate the need and costs of a recall (proactive, long-term benefit).
In essence, parts traceability information technology solutions eliminate recalls in the first place 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.
Manufacturers are wise to implement an integrated solution that provides real-time traceability features to accurately track individual containers and/or pieces as they flow through the entire manufacturing value chain. These solutions must be able to not just provide historical information – they must isolate problems with exact data related to production, inspection, genealogy, and usage.
The Warning Signs
As a way to showcase a best practice approach in traceability, the experience of a regional tier two bearing supplier serves as a fitting example.
A large US-based tier one manufacturer began searching for a new component supplier for a unitized center bearing (UCB) component used in its customers' cars and trucks.
The previous UCB supplier had serious quality problems, which exposed shortcomings in its inventory control and increased the potential of future warranty costs.
The issues root cause was a rubber bushing which sometimes became too hard, and worked to reduce the UCB's dampening ability and allowed normal driveshaft vibrations to be transmitted into the passenger compartment.
The previous bearing supplier only had the ability to label each part with just a Julian date, thus it was assumed that all parts marked with that date were suspect.
The limitation in this situation was that there was no traceability to ensure the Tier One's parts produced the days before and after shouldn't be contained as well. In fact, the tier one manufacturer rejected a total of three days of parts every time a defect was found.
Thus, when looking for a new UCB supplier, the Tier One wanted proof of a strong traceability system before awarding the work to new supplier.
Traceability as a Competitive Advantage
During the customer proposal and quotation phase, the regional tier two bearing supplier utilized Plex Online, an advanced software-as-a-service manufacturing solution during negotiations with the Tier One. It was important to show the manufacturer that the bearing supplier could easily manage part serialization, bar coding, component tracking, quality management, SPC/measurement data, and full part traceability.
Plexus Online provided the bearing supplier not only the production date/time, but also the machines and operators that made it, the in-process measurement data, the supplier and serial numbers of the components that went into it, the steel chemistry of the raw material, and much more.
It was important to showcase this advanced traceability capability, and in fact this advantage was an important part in why the bearing supplier was eventually awarded the business - and why the OEM agreed to very strict limits on any potential recalls
For this bearing supplier, the combined capabilities of process control and traceability have allowed the company not only to produce the UCB without major problems, but also to make multiple design changes that have radically improved the part's performance.
For this bearing supplier, parts traceability results in defect-free components.
It's important to note that the company gained these benefits from a technology that offered much more than just a quality documentation system. Plex Online was designed specifically for manufacturers to increase process repeatability, reduce variation, increase production throughput and reduce defects.
The web-hosted system provided the bearing tier two supplier with an automatic, paperless and real-time linkage between part dimensions, FMEA, control plan, process instructions, check sheets, inspection data collection and SPC, along with part layouts, PPAPs, gage studies, and capability studies.
The technology solution also included effective problem control systems used to manage corrective action reports, customer concerns, online supplier management, 8D problem solving and other types of issues.
Plex Online as a Competitive Advantage
As revealed in the best practices case study included here, Plex Systems, Inc., providers of Plex Online on-demand software for the manufacturing enterprise, helps the manufacturing enterprise dramatically reduce the cost of quality using its software.
The on demand solution's integrated traceability features accurately track individual containers and/ or pieces as they flow through the manufacturing process and the entire supply chain, and can quickly isolate problems with pinpoint precision. Plex Online provides detailed historical information related to production, inspection, genealogy, and usage.
Designed for companies that require true traceability, such as automotive, aerospace/defense, medical device manufacturers and food producers, the Plex Online system provides the most effective traceability system on the market today. Because full and detailed traceability is built into the Plex Online inventory system, and all other aspects of Plex Online, it's simple to use and highly effective.
Capabilities include serialized container and individual part tracking; built-in barcode printing and scanning, RFID, and Direct Part Marking; and detailed container-to-container traceability both upstream and downstream from any point in the process and/or shipped parts.
About Plex Online
Plex Systems, Inc. is the developer of Plex Online, a software as a service (SaaS) solution for manufacturers. Plex Online includes over 350 functional modules to manage operations from the shop floor to the top floor, including manufacturing execution system (MES) modules such as quality management and machine integration, enterprise resource planning (ERP) modules such as accounting and finance, customer relationship management (CRM) modules such as order entry and tracking, and supply chain management (SCM) modules such as supplier quality and traceability. Plex Online's SaaS model delivers reduced cost of operations, faster implementations and a continuously improving feature set.
About Plex Systems
Since 1995, Plex Systems, Inc. (Auburn Hills, Mich.) has maintained a singular vision -- to drive significant cost, quality and productivity improvements for manufacturers, from the shop floor to the top floor. Today, Plex Online also enables manufacturers to manage accounting, financials, regulatory compliance, human resources and other critical priorities, based on real-time, highly accurate data from their manufacturing operations. Plex Systems serves a global cross section of manufacturing industries (OEM and suppliers), particularly automotive, medical device and aerospace and defense companies. In 2006, Apax Partners made a strategic investment in Plex Systems, joining the founding investment group as stakeholders in Plex. For more information, visit http://www.plex.com/.