Due Diligence Demands Better Product Tracking and Tracing

Globalization of manufacturing and retail industries is bringing rapid change and greater complexity to all aspects of business and manufacturing operations,as well as increasing competitive pressures.

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Manufacturers find themselves caught between slow (if any) growth, rising costs, waning pricing power, accelerated regulatory and customer requirements, and a growing percentage of sales from a limited number of powerful and demanding retailers as they seek growth in the remaining, less-developed global markets.

The FDA Globalization Act is yet another regulatory requirement making its way through Congress. It proposes to amend the current Food, Drug and Cosmetic Act to provide more global tracking and tracing of food, drug, medical device and cosmetic products and ingredients.
 
With this comes the need for continued improvement in product tracking-and-tracing capabilities to meet customer and regulatory requirements and to mitigate the ever-increasing business risk associated with a potential product recall or loss in consumer confidence. Most companies have or are deploying more robust business systems to obtain a “single system of record,” and to augment other tracking-and-tracing systems and subsystems they may have. However, very few companies have the product tracking-and-tracing granularity, accuracy and robustness to perform the corporate risk-mitigating due diligence expected of businesses today. Most systems still rely on error-prone, manual data entry and other manual operations.  Some of these manual operations are found in product, case, and pallet coding and labeling; warehousing; shipping; and logistics.

Vital role

One of the top causes of product recall is product mislabeling. This can either be failure to match the product with the correct product label or failure to use the correct version of the product label. The financial impact of a product recall includes not only the identified “lot” of defective product, but all the additional production that may also be defective or contaminated. Pallet serialization and the “nesting” of product, case, pallet and shipping data can provide the needed granularity and response time to minimize the financial impact and scope of a product recall.
 
ARC believes the following minimum functionality is required in a factory-floor system that will enable reduction or elimination of such common errors, minimize the financial risk and scope of a potential product recall, and simplify current and future regulatory compliance. The system should have the ability to monitor the functioning and health of all online devices such as case coders, print-and-apply labelers and readers. It should include proven interfaces to other control, production management, enterprise resource planning (ERP) and warehouse management systems. The system should be capable of downloading product and label information (without manual intervention) from a business system to the factory floor system and the print-and-apply labelers. The factory-floor system should be capable of automatically generating product and shipping reports, including those needed by the logistics provider, loaded and waiting at the shipping dock. In addition, it must include a local database to support real-time operations and data collection. It should have the capability to simplify installation and start-up of a secondary labeler should the primary labeler fail.

The system software should require a minimum of customization with facilities to support client-specific data customization and global regulations at the product, case and pallet level. Finally, the system should have multi-plant functionality and fully automated enterprise-wide label and product code change management. This functionality is increasingly important to international companies that must support a wide variety of static and dynamic product, processing, regulatory and logistics data labeling requirements.

Many companies are beginning to recognize that the benefits of a fully integrated and automated product-case-pallet
identification-and-traceability system can far exceed their expectations. These benefits include minimizing business risk, simplifying current and future regulatory compliance, improving efficiency and improving customer satisfaction.

John Blanchard, jblanchard@arcweb.com, is a Principal Analyst at ARC Advisory Group Inc., in Dedham, Mass.

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