No company wants to face a recall — it hurts your reputation and it hurts your bottom line. However, as a major toy maker found out this summer, sometimes it happens.
In the past, recalling millions of products, especially from a foreign country like China, would have been daunting. The company would have to evaluate every step of the supply chain to find the tainted products, pull them and provide reassurance for customers — all within a very short timeframe.
Although the steps and the timeframe haven’t changed, we now have the added benefit of technology like Radio Frequency Identification (RFID) and Enterprise Resource Planning (ERP). Thank goodness for small favors…
According to Sven Denecken, Vice President ERP Market Strategy, SAP, all recalls have three steps. Those steps are:
“Determining the scope of the affected product is not a trivial task,” said Dr. Krish Mantripragada, Head, Solutions Management, RFID & Supply Chain Management at SAP.
“ERP can automate some of the identification process, but since there are several materials and material components involved that require several systems to monitor, RFID provides a more granular and enhanced view,” adds Denecken.
- Execution — Off with their heads! Ok, not really. In this stage, it’s time for companies to implement a well-planned strategy to remove the affected product(s) from the market and be sure all traces are gone from their supply chain.
In the past, this was a manual, labor-intensive process. Today, technology allows companies to automate several aspects of the process, from identifying products to tracking feedback.
RFID aids in traceability. It can help you narrow down affected suppliers and distributors, and it can help you get all tainted products off the market as quickly and easily as possible.
With new product development and introduction, you now have Restriction on Hazardous Substances (RoHS) regulations and compliance, and added liability in your supply chain. It is a more complex, fast-changing environment.
Using RFID can help provide information on what you are buying and what the components are — giving you more bullet-proof documentation of compliance.
RFID integration provides a degree of transparency along the supply chain that wasn’t available in the past. Prior to technological advances, companies would recall more than necessary just to be on the safe side — increasing costs and expenses for the whole process. RFID provides a more targeted and focused recall.
“This technology allows companies to zero in and see affected assets and batches,” Dr. Mantripragada said.
The ability to make the recall process easier is definitely a plus, but technology can go a step further to keep problems from arising in the first place.
Manufacturers today deal with a continuously changing environment. They are no longer restricted by geographical boundaries. A company can be based in Detroit, but have their products made in Beijing. While it can lower costs and open new markets, this globalization carries risks. That Detroit-based company cannot be on-site to scrutinize the Chinese operations to be sure certain procedures are followed.
With new compliance regulations and products rapidly entering the market, RFID can help companies keep track of their products and parts to prevent recalls from ever happening.
Despite the potential benefits, RFID is currently used by only a fraction of companies. For some industries, it may not be applicable. For others, the cost is too high.
“Some use the technology, but it’s nowhere near where it needs to be,” said Dr. Mantripragada. “In the future, as adoption becomes more widespread, costs will go down and companies will be able to track their products at an even more granular level.”
A global supply chain will always include some loss of control. Using available technology is one way to help mitigate the risks. It can provide a safety net to keep both manufacturers and consumers out of harm's way. And in the event a recall becomes necessary, it can help you get back to business as usual sooner. It’s an effective tool that companies can use everyday to automate their product lifecycle.
“RFID is a carrier of information and it shouldn’t be viewed in isolation,” said Dr. Mantripragada. “Its true value is when it is integrated into the supply chain and ERP. It needs to become part of the mainstream process.”
Systems Applications and Products, SAP, provides collaborative business solutions for all types of industries and for every major market. For more information, click here.