It’s about time the defensive driving courses across the globe start including lessons on how to tackle the ‘Drive-by-Wire’ challenges. The Toyota recall was soon followed by Honda’s expansion of a previously announced recall due to lingering concerns on airbag hazards. Blame it on the supplier who provided the faulty part or the software program, or be it the manufacturer’s unilateral dependence on a single supplier to supply those parts, it is a problem that needs to be owned by the manufacturer. As in this case, lenience in their quality assurance measures paved the way for glitches both on the engineering side as well as the software side.
Part I of this blog entry addressed the root causes of a product recall. To avoid just being an arm-chair critic and advisor, in this entry, I would like to address the tougher part of the recall problem, i.e., to help design a sustainable recall-solution that has actionable manufacturing intelligence.
For ease of laying this out on paper, let’s split the recall problem into two parts – the upstream and the downstream challenges in the recall supply chain with OEM at the fulcrum.
The Upstream world
The up-stream value chain begins with the flow of raw materials and semi-finished components from various tier-n suppliers across the geo-borders all the way to the OEM Production Hub. Due to stringent quality mandates from federal regulatory committees, Pharmaceuticals and A&D industry verticals have subscribed to the ‘Recall traceability and Reverse logistics’ procedures to a certain extent. However, the adoption of such quality control programs within the manufacturing execution cycles is quite low in other industry verticals because of:
- the perception of these processes as an overkill investment
- lenience or lack of industry-specific regulatory guidelines
- economics (significant upfront costs)
- potential data-Integration difficulties
- lack of industry-specific standardization of business documents around product recalls
The Downstream world
The downstream value chain is all about the distribution of finished goods all the way from the production hub to the channels and end consumers. While the technological capability to solve the ‘Packaging and Dispatching Traceability’ challenges (i.e., tracking the flow of goods / containers / bulk loads etc. all the way to retailer shelves or dealer points) exists today; what is lacking is the capability for manufacturers to alert the retailers and/or end-consumers efficiently and directly to resolve the product-recall issues. This is because every participant in the downstream supply chain, be they retailers or end consumers, have their own method of communication (phone, fax, emails etc.) and, in many instances, the final ownership of a product is almost always unknown.
The Fix
A comprehensive Recall Solution framework has to be a tripod of People-Process-Technology.
Process – Manufacturers must invest in establishing quality gates at various strategic nodes of the supply chain to capture the product metamorphosis data in real time. Business rules and alert mechanisms must be put in place to scan the captured data for weeds and other quality control issues. This will help OEMs capture the rotten apple right at its point of occurrence, thereby preventing any further amplification of problems in the downstream value chain.
Technology – The figure below is a technical footprint to enable the process discussed earlier.
The components that make up this framework are:
- DATA PROBES: Any medium capable of collecting supply chain data and passing it to a Master Data Server. This could be RFID Chips, Barcodes, Kiosks, Web Portals or the evolving Mobile Application interfaces that helps feed the product location and/or status data from across various preset nodes on the supply chain, either automatically (as in the case of RFID) or manually. The table below details such possibilities.
- DATA Management: Considering the lack of data standardization for the Recall Industry, a Master Data Management tool would be needed here to establish a single version of truth, to cleanse all the data from the supply chain nodes, enrich downstream and upstream data as needed before making it available to other systems for meaningful correlation and analysis. This would be clear spot for B2B integration given data needs to be consolidated from across numerous global business partners, from different mediums, and in different form and formats.
- VALUE ADDED APPLICATION: An exception-driven, reporting-based Management Dashboard that provides a product traceability view to the manufacturers. This will require leveraging the SOA/BPM building blocks to weave the various resident applications, rules engines, and other UI elements to build a rich composite user-friendly decision support system. Bear in mind, both the Data and the Application layer can remain on the cloud thereby letting the manufacturers focus just on their core process improvements.
People – You will notice that it is relatively easier to capture the data from anywhere on the supply chain but from the end-consumers, and here lies the biggest challenge and the opportunity to win this game outright. This requires taking collaboration to newer heights where in manufacturers collaborate with end-consumers directly and in real-time. Consumer-driven manufacturing will let OEMs heavily partner with the downstream partners of their supply chain to constantly gather data on the last-inch product location and status, by leveraging the POS data, the data captured from loyalty cards and potentially the interactive slick mobile applications in the future. The upside for manufacturers is huge if the end-consumers are enticed and incited to participate and become a value-added participant in the supply chain, be it a product-design, beta-use or real-time consumer feedback. The Direct-to-Consumer attitude will not only help tackle recall issues, but also has the potential to bring in strong brand loyalty and help OEMs establish a strong foothold in the marketplace.
Bottom-line, supply chains can be reinforced with a recall-proof jacket if the leaders remain grounded, acknowledge the issue and get their acts straight. Simple yet creative supply chain innovation is the need of the hour. Adoption of cloud technologies, and collaboration with consumers directly holds a key to bringing a sustainable solution that works towards pushing the top line for the manufacturers while keeping their COGS at a minimum.
