Your operation may be leveraging industrial data to increase production uptime and profitability or guard against counterfeiting. Or, you may be using serial numbers or other codes to identify your products. Wherever your company stands now, you're probably aware that more manufacturers are becoming more digitally connected. 

While we're talking data, did you know that companies that are reluctant to invest in smarter technologies, ones that can help their business grow, eventually end up falling behind in their market? In a study from Deloitte, manufacturers were asked to rate the business value of new technology solutions and their enterprise’s readiness to adopt and use smart and autonomous technologies. Results showed that about half (51 percent) ended up in the “Followers” segment, those who understand the value of these technologies but are not quite ready to fully adopt them.
 

The rest of the companies were either “Frontrunners” (26 percent) or, at the opposite end of the spectrum, “Stragglers” (23 percent). The Frontrunners were not only more prepared but also more confident that they could deliver stronger financial results.
 
What do these results tell us? Industry leaders, those with a more holistic digital strategy, may soon surpass slower-to-adopt organizations in terms of efficiency and profitability. Part traceability is the key to unlocking all the valuable insights we’re able to amass through digital technology.

You may be thinking, “We already do some part marking. Do I really need this advanced technology right now?” The truth is, with the challenges manufacturers face in Industry 4.0, permanent and intelligent part traceability with direct part marking is no longer simply a “nice-to-have” process.

The key takeaway here is to start somewhere.

If you start building your track and trace system now, you can:

1. Protect your company from certain risks inherent in a digitally connected world.
2. Compete in today’s increasingly digital supply chain.
3. Improve your overall manufacturing process by tracking parts throughout.

But First, What does Traceability Mean in Manufacturing?

Before I break down the reasons I pose to my customers in favor of traceability, let’s take a quick look at what that means.

MECCO’s official definition of traceability is:

“The process for locating components and their appropriate history throughout their life.”

At the basic level, part traceability begins with directly marking parts with a permanent serial number or other unique identifier (UID). This allows you to read that UID and track that part.

Now, when we talk about complete traceability, we mean: Creating discrete part marks, or individual component-level marks at the soonest possible moment in the manufacturing process. 

Why? This process allows manufacturers to digitally connect individual components to the subassembly, the major assembly, and the final assembly.
  Direct part marking is important here. It's the only way you’re going to get permanent marks -- hence 'lifetime traceability". Harsh conditions, repeated use, and even painting or galvanizing can wear down marks made by ink jet, labels, or other non-permanent methods, rendering them unreadable.

There is a variety of equipment used to create permanent marks. Laser marking and pin (dot peen) marking, however, are the most popular. You get durable, readable marks on a range of materials, and they’re great for almost any application, from light etching to deep marking. You should work with your marking equipment supplier to find the equipment that will work best for your material, application, budget, and manufacturing environment.
 

Why is Traceability Important?

When I consult with my customers, I want them to be equipped with the right traceability technology for them, so they’re not left in their competition’s dust.

Here are the top six reasons why manufacturing operations need complete part traceability.

Reason 1: Opportunities to Get Ahead

As much as I despise those “act-now-before-you-miss-out” late-night infomercials, this is really a situation where I urge my customers to build the infrastructure for complete traceability. Now, you can implement this process at your own pace, but it is important to start sooner rather than later.

Why? Because right now, it’s still a competitive advantage.

This emerging technology can deliver visibility of the entire lifecycle of each part and maximize data value to quickly spot production issues or trends and make proactive improvements.

In a study of manufacturing companies, LNS Research found that only 23 percent had the processes and software in place to enable complete traceability. However, around 60 percent stated that they plan to have these processes and software in the next year. 

So, if your competitors aren’t using this technology yet, there’s a good chance they will be soon. Get ahead now, and you could be a leader in your market.

Reason 2: Global Supply Chains

Today’s supply chain is a worldwide network that requires synchronized, strategic efforts to manage cross-border transactions and keep businesses running efficiently and profitably. Regardless of whether you are a part of a small business or multi-national organization, you face mounting pressures to provide more information about your products and materials, from their origins to how they were transported.

To ensure transparency and accountability throughout the supply chain, traceability with direct part marking provides a documented trail of each product, its history, components, quality, and safety. It proves that products meet certain standards or comply with industry regulations.

For example, some automotive manufacturers must meet traceability standards set by the Automotive Industry Action Group (AIAG).  That group’s initiatives, such as part mark readability scales that grade part marks based on contrast and quality, work to provide even greater visibility throughout the global supply chain.  

Reason 3: Counterfeiting Costs

Another effect of the global supply chain is an increase in counterfeit goods. While counterfeiters profit from reproducing, returning, or reselling products such as airbags, electronics, and medical devices, manufacturers are losing money – and their jobs are being put at risk.

Consider these statistics:

• In 2018, the number of seizures of counterfeit goods increased by 8 percent over FY2016.
• $1.2 billion: The total MSRP of seized products in 2018.
• Counterfeiting reports among aerospace and defense electronic parts distributors rose 142 percent between 2005 and 2008, according to an SAE International study.

Counterfeiting also affects consumers. Many “fake” products, from electric gadgets to safety equipment, do not live up to the safety and quality standards of their genuine counterparts, putting end-users at a high risk.
 
There are various levels of anti-counterfeiting companies can take.

• Level 1: Basic identifying marks, such as a barcode or 2D data matrix, can link the product back to the rest of your production data, enabling basic part traceability. 
  
  These can be paired with covert marks, added in even the most minuscule areas – as small as 200 microns wide – to avoid detection from counterfeiters looking to copy the product markings, protecting your product from replicated marks.
   
• Level 2: A more advanced layer of counterfeit protection involves identifying marks known as 2DMI. This advanced technology uses the precision of laser marking to make proprietary unique identifiers that are encrypted, making it much harder for counterfeiters to replicate.
  
  Adding a 2DMI code creates a safety net because all part information is housed in a database. Therefore, any missing data or discrepancies found on a barcode can quickly identify non-authentic products.

Reason 4: Product Recalls

Product recalls affect almost every industry, from medical and electrical to aerospace and automotive. They can be controlled and contained or large-scale and calamitous. The Takata airbag recall affected tens of millions of vehicles and was dubbed “the largest and most complex safety recall in history,” by Consumer Reports.

Complete part traceability is essential to protect your company against liability in the event of a recall. Traceability marks, when connected to the enterprise, leave a permanent paper trail. This provides manufacturers with the evidence to prove their parts complied with any safety or quality standards and can reduce the scope of a recall from millions of units to sometimes only a handful.

In light of the Takata airbag incident and other major recalls, many more automotive manufacturers have increased their focus on traceability. The results have been positive.

Reason 5: Increasing Industry Regulations

In a global marketplace where counterfeiting and recalls are on the rise, there is a greater need for modernized manufacturing regulations to improve value chain traceability. These standards help advance safety, quality, and sustainability while protecting from the threat of counterfeiting around the world.

Each year, manufacturers spend around $190 billion to comply with economic, environmental, and workplace safety regulations as well as regulatory compliance taxes, according to The Manufacturing Institute.
 
The best way to minimize your costs is to be prepared. Every industry has its own set of regulations. Manufacturing companies must be prepared to comply with these standards both operationally and financially.

And remember, compliance should be one part of your complete traceability strategy. If you are only placing an identifying mark on a part before it’s shipped rather than from the beginning of the manufacturing process, you are not gaining the rich track and trace data that can deliver insights for operational improvements.
 

Reason 6: Ongoing Production Dysfunctions

In addition to the changes that come with Industry 4.0, manufacturers are still grappling with typical production challenges:
 

• Quality control issues
• Process mistakes and rework
• Defective products reaching customers
• Late deliveries
• Inventory shortages
• Legal liabilities
• Inadequate data

Building Your Traceability Infrastructure

How can you combat counterfeiting, minimize recalls, comply with regulations, and remain competitive while continuing efforts to increase operational metrics?

Complete traceability – which can include laser marking, pin marking systems, and integration software such as EtherMark – can give manufacturers the ability to overcome these challenges.

(Pro Tip: Don't make the mistake of assuming a track and trace system will be a huge investment of your time and money. There is an easier, more approachable way to build your traceability infrastructure. We've found that taking smaller steps and taking the time to build an infrastructure that can scale with your needs can often be a more manageable -- and ultimately more successful -- strategy.)