Adopt traceability systems in electronics manufacturing

The need for traceability is usually driven by customers, specific industry standards, or by a country’s legislation, hence becoming a prerequisite to running a successful business. Besides, as complexity increases, so does the need for traceability. The more complex the product, the more likely it is that a recall will occur. And without traceability, there is no easy way to locate and recall the affected products

By Srabani Sen

Wednesday, August 28, 2013: With the recent government initiatives to make India an electronics manufacturing hub in the coming years, and MNCs and domestic manufacturers keen on investing in this sector, a very competitive market has opened up. Besides this increased competition, manufacturing has also come under intense pressure due to the globalisation of the supply chain and its related safety concerns, stricter government regulations, demand for higher value at lower cost, and a more discerning and socially conscious consumer base.

To survive and be successful in this competitive scenario, manufacturers in India are aware that they need to assemble high-quality products at the lowest possible cost. And one of the most important factors to cut the cost is to reduce the instances of product recall to zero per cent. With customers more conscious about quality, original equipment manufacturers (OEMs) and electronics manufacturing service (EMS) providers are under pressure to face the challenges of product recalls which not only dent a company’s credibility, but also affect its revenue. For instance, General Motors once paid US$ 1 million to settle a civil suit for failing to conduct a timely recall of failed windshield wiper components of more than half a million vehicles.

Hence, the total cost of production must take into account the cost of complete product lifecycle, including warranty, recalls and repairs. Taking care of these challenges is known as traceability or a track, trace and control (TTC) system in manufacturing, which has today become an essential element of success.

“During the last decade, technological advances in the electronic manufacturing sector have resulted in continued improvement in the production processes, but with this, traceability has become a major concern for the OEMs and a legitimate requirement of the customers. And as EMS graduates towards more customised production, greater pressure will be imposed on traceability. Customers are getting more and more concerned about what raw materials are being used in their products, how it is produced, etc,” says Subhash Goyal, managing director, Digital Circuits Pvt Ltd.

From OEMs and EMS providers to PCB assemblers, every link in the chain must comply with the strict process and material traceability requirements that satisfy both customer traceability expectations and regulatory audits.

What is traceability

Explains Shailendra Mathur, general manager (India), ASYS Group (a manufacturer of laser marking machines), traceability for electronics manufacturing is the demand of the day. It is a process that enables regulatory authorities or manufacturers to trace the history, application or location of equity by means of recorded identifications. For manufacturers, this means you can track and trace each component that goes into your products—from suppliers and manufacturers through assembly—and final delivery to customers by creating an in-built genealogy. It is the process that enables companies to trace goods backwards along the supply chain and forward along the distribution chain, based on identifying characteristics, and tell you who, what, where and when things happened. This means that there is a record of who did the work, what machine was used to do the work, where and when the work was done, and what was the outcome etc. With that information at your fingertips, it is easy to track defects back to the machines, parts, process etc… giving visibility to the origin of the problem. Once the cause is identified, it can be addresses effectively and promptly, be it operator training, machine rectification, process improvement etc.

According to Col (retd) Sharath Bhat, senior vice president, business development, Kaynes Technology India Pvt Ltd, traceability is a component of manufacturing execution systems (MES). “MES means traceability plus production plus enterprise control integration. Here traceability means real-time data collection during the production process and preparing powerful reports through which a product and its process information can be traced. Production control needs to be done by automating manufacturing rules and verifying processes to prevent errors, and enabling improvement of key performance indicators (KPI). Enterprise control integration means leveraging the return on the investment from today’s business applications,” explains Sharath Bhat.

The best approach for manufacturers is to ensure that traceability coverage begins with component production and goes all the way to the PCB board assembly, covering the entire production lifecycle to fully track materials, machines and processes, feels Dr Suresh Nair, chief technology officer, SFO Technologies.

Is the traceability concept popular in India

While India still lags far behind in terms of manufacturing excellence when compared to other countries, it is gearing up fast to be on par with its competitors. While the small and medium manufacturers and EMS providers are yet to adopt the traceability concept in manufacturing in the true sense, the big firms have been using TTC systems across India.

According to Subhash Goyal, the traceability concept is not very popular in India because it requires elaborate systems throughout the process flow chain. “It requires more effort and resources to keep track of every process and hence, manufacturers give it a low priority in India,” he says.

Says Praveen Rawle, founder and director, Technical, Quad Electronics, “While the traceability concept is popular for high-value products, it is of less significance for low-value products. This is mainly due to the cost considerations and a company’s capability constraints.”

Mohan BS, general manager, quality department, Bosch Automotive Electronics India Pvt Ltd, on the other hand, believes that India is definitely open to traceability and the concept is already well established in manufacturing. Bosch Automotive India has been using this system since a long time. Earlier, all its products had a bar code label. But now the company has smarter solutions, with a wide range of information linked to a single code pasted on a component that has been manufactured.

“The one reason that could justify some companies not following traceability in their products is the associated costs, but even in those companies, there must be some system in place in the form of written records and piles of files. Traceability is the need of the hour for today’s generation of sensitive customers,” says Mohan BS.

Voicing a similar opinion, BN Shukla, business unit manager, Jabil Circuits, feels that TTC systems are picking up in India due to the entry of MNCs into the market and also because the consumers have become more demanding, driving the manufacturers to become more accountable and have a quality management system in place that can support full traceability of products.

How a company can benefit from traceability systems

As complexity increases, so does the need for traceability. The more complex is the component, the more likely it is that a recall will occur from the component manufacturer. Without traceability, there is no easy way to locate and recall the affected product, says Shailendra Mathur.

By adopting traceability systems, a company can considerably reduce the time taken to review the material flow in the supply chain. Within the organisation, traceability takes place in two ways—product tracking and product tracing. The former is the capability to follow the product wherever it goes within the supply chain. “It’s like a mother tracking a child at all times and knowing when it falls into trouble. Products are routinely tracked for obsolescence, inventory management and logistical purposes. Product tracing means identifying the origin of a product unit or batch of a product located within a supply chain. This helps in continuous improvement and getting to the root cause in case of problems,” informs Mohan BS.

Adopting traceability systems in manufacturing is important to build reliability into products. “Since every step in the process chain is documented, it will record the history, location, or use of an item in a particular batch by means of automated identification. We use this information to gain visibility to achieve just-in-time delivery, lean manufacturing, enhanced quality, and regulatory compliance,” says Subhash Goyal.

According to Praveen Rawle, since product quality, reliability, and serviceability require traceability, adopting this system is very important. It is also essential for environment friendliness and recyclability, he says.

Says Dr Suresh Nair, “With India trying to be a world class manufacturing location, traceability is an important criterion for market acceptance. Customers would like to feel confident that even in the unlikely event of a quality issue with a component or sub-system, their products would be attended to throughout their life period. Traceability is important when you want to know which products in the field need correction in case of a latent quality problem detected after they got into the field. This is also equally important for products under manufacture.”

Praveen Rawle feels that adoption of a traceability system helps a company to get more business, have good control over the supply chain and quality, and serve its customers with excellent aftermarket services. Inventory control is one of the direct financial benefits, he says.

Increase in production cost is minimal

Adopting the traceability system does increase production costs to some extent. According to Praveen Rawle, production costs increase by Rs 2 to Rs 20 per product that is made traceable. The cost is for stationery, printing (either inkject/thermal/ribbon transfer), labour and equipment cost amortisation (like barcode printer/inkjet printer) further depending on number of stages/data capture points and depth of data/details. The cost can further go up if RFIDs are used, depending on the level of traceability done.

As Mohan BS points out, usage of coding equipment, bar code scanners, etc, definitely adds to the production costs. On top of that, a huge amount of data also needs to be stored on servers. However, these costs are compensated by faster reaction to any deviation in everyday activities due to reasons like the immediate access to data, high standardisation of trading information, lesser involvement of man hours, and a more stringent continuous improvement process due to the access to data over long periods of time.

BN Shukla feels that when compared to the benefits derived by adopting traceability systems, the extra cost is not much. “Also, it depends on what level of traceability one wants—traceability with manual systems or an automated system. We can choose one, based on what we can afford. But in both the cases, it is a one-time investment,” he says.

Traceability can also lead to bigger business

Just by meeting certain requirements to provide total traceability information about every product manufactured can help manufacturers grow their business. Today, compliance to internal and external standards is essential for electronics goods like military, medical, automotive, aerospace, telecommunications and industrial controls. Even lower-priced consumer goods like handsets, toys, games, etc, require safety and environmental compliance.

“By tracking production information back to the exact date, time, supplier components, operator and machines used, a company can significantly reduce the issues linked to defective products. The result is increased revenue, improved customer satisfaction, and reduced manufacturing liabilities. Adopting traceability requires time, effort and resources, but the returns far outweigh the investment,” says Sharath Bhat.

Minimising recall costs: If a recall takes place, manufacturers can minimise the impact by only recalling those items with the specific serial numbers that were developed with the faulty component, material or process, thus significantly reducing expenses and customer impact.

Fewer errors, higher productivity: The element of human error will be significantly reduced as components can be handled and checked within the manufacturing plant with the use of mobile computers, bar code scanners, RFID and wireless data technology. Products, components, employee numbers, quantities and supplier information can be automatically captured accurately and in time.

Higher productivity, increased revenue: By minimising manual traceability processes, companies can save millions in lost revenue, recall costs, damage control campaigns, litigation and fines. The automated systems can also significantly increase productivity.

Less warranty claim costs: Warranty claims can significantly impact a business’ bottom line. Traceability enables manufacturers to accurately analyse the root cause of a product or part failure to recover warranty costs from the liable suppliers. This not only reduces warranty costs, but also contributes to improved product quality in the future.

No penalties associated with non-compliance: Traceability can lessen the chances for fines and penalties associated with non-compliance. Compliance to traceability standards in the export markets helps manufacturers meet the challenges of stricter government regulations.

Manufacturers that have adopted the traceability concept, and the tools and equipment they use

Every manufacturer requires some level of work in process (WIP) tracking on the factory floor.

In Bosch Automotive Electronics India, traceability is done in two ways—forward and backward. Traceability starts from the receipt of raw materials and continues till the delivery to the customer, covering the complete supply chain.

Tools and equipment used:

• Laser etching machine
• Bar code pointer
• Server for data storage
• Scanners
• Personal computers
• Db explorers
• SAP (systems, applications and products)
• MES

The latest technology used for traceability

Electronic Kanban (E-Kanban) is a messaging system which uses a mix of technology to trigger the movement of components and materials within a manufacturing facility. E-Kanban differs from traditional Kanban in the way it uses technology to replace traditional elements, such as replacing Kanban cards with barcodes or radio-frequency identification (RFID) tags. With RFID technology, the identification process can be fully automated. This leads to faster tracking, with higher reliability and less operator intervention.

In an E-Kanban system, the inventory is marked with barcodes or RFID tags that are scanned at various steps in the manufacturing process to signal usage levels, and this is sent back to an ERP system for replenishment of records. This method ensures a constant flow of material while keeping inventories to a minimum. E-Kanban also makes it possible to integrate outside suppliers through an ERP system.

eMTraceability solutions can maintain a comprehensive relational knowledge base on every physical component, every board, every lot, and every significant operation and task executed in every manufacturing process.

Track-it Traceability Pad is a printed circuit board (PCB) miniature identifier that provides unambiguous product traceability within the production process of work-in-progress in any high-volume electronic PCB assembly operation. The track-it system is ideal for any SMT PCB assembly where space is limited and traceability is required, including high-temperature ceramic PCB assemblies

An integrated complete solution is now available, which integrates ERP, SCM (software configuration management), QMS (quality management system) and MES.

Source: Kaynes Technology India Pvt Ltd

Product recall examples

Traceability requirements in export markets

The US Restriction of Hazardous Substances legislation (RoHS) and the European Waste Electrical and Electronic Equipment Directive (WEEE) require comprehensive reporting, tracking and up-to-the-minute data capture.

Impact of not adapting traceability

Direct costs include

• The cost of removing the product from the market
• Costs associated with recovering or destroying the product
• Costs associated with product replacement or
• customer credit
• Legal costs
• Regulatory compliance costs (fees, additional testing and inspection costs)

Indirect costs include:

• Damage to reputation and brand
• Long-term losses to a product category
• Added marketing and advertisement costs to recover market and market share
• Increased regulatory and testing costs
• Increased product liability insurance costs
• Costs of adding employees in the technical and sales divisions
• Permanent increases in testing or sampling costs

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine