Complex Recalls Prompt Traceability System Updates in Automotive
(VDC Research guest blog post for Loftware)
Globally distributed automotive supply chains now make it imperative for automakers to have the ability to trace any part all the way from the component/part supplier through to the end consumer.
Specialized component vendors may distribute their products throughout the entire industry to several different automakers, meaning an issue with one small part has the potential to affect several market participants. According to VDC’s latest report, US-based automakers and components manufacturers are looking to invest in smarter traceability and communications systems in order to shift from a traditionally reactive supply chain model to one that is more proactive in order to support functions like order fulfillment, inventory management, reverse logistics, and recall management.
Automotive recalls have been at the center of focus for the industry, and the news over the past year with mass recalls by prominent automakers including GM and Toyota for vehicles with faulty parts/components. The law that regulates automotive-related recalls in the US, the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act (2000), was sparked by the most controversial recall of its time, when Ford Explorers fitted with Firestone tires caused several fatalities. The TREAD Act stipulates that manufacturers must keep and report to the National Highway Traffic Safety Administration all relevant data related to the safety or recall of their products.
Takata Corporation, a Japanese automotive parts manufacturer, is currently the subject of the largest recall in US history due to defective airbag inflators that may cause injury upon inflation. What began as a small scale recall has continued to expand because of inadequately kept records to trace products to affected vehicles. Being a specialized supplier of automotive parts, the recalled airbags are installed across the industry in vehicles provided by several automakers including Chrysler, Honda, Toyota, Mazda, Nissan, Subaru, Mitsubishi, and Ferrari causing more than 50 million vehicles to be recalled worldwide.
In contrast to the Takata recall, in 2013 General Motors recalled just four 2012 Chevrolet Volts that were manufactured with defective brake pressure modulator valves that had the potential to cause the brakes to lock. Within a month of identifying the issue, GM was able to use barcodes and RFID tags to identify and limit its recall to only four vehicles. The ability to specifically pinpoint only four affected vehicles saved the company from having to perform an unnecessary large blanket recall of the entire 2012 Chevrolet Volt model that would have had the potential to damage their brand as well as cost them large sums of money. Such examples show the importance and benefits of having track-and-trace systems in the auto industry.
In the automotive industry, the market for traceability solutions is well established with adoption driven by the much older TREAD Act. However, recalls such as the Takata airbag recall, which is the largest single recall in US history affecting hundreds of models from various automakers, are likely to push lawmakers to introduce new laws to encourage manufacturers to upgrade their systems to those that can handle such uncertain recalls and events. Upgrading current traceability systems and adopting new barcode symbologies/RFID tags can help manufacturers avoid lengthy and costly situations in the increasingly complex industry. Auto manufacturers are investing in 2D barcode scanning imagers and technologies to improve data collection and communication performances, with 47% of automotive respondents currently evaluating the use of 2D barcodes. Solutions that support direct part marking (DPM) are seeing greater deployments in the industry for the encoding of auto components with 2D barcodes.
VDC believes that as auto supply chains become increasingly complex, companies will look to standardization of track and trace technologies, closer communication, and collaboration with all members in the supply chain. Standardization will enable manufacturers to gain accurate and timely visibility into the distribution of products and improve supply chain processes such as recall management, returns management and inventory management as items can be more easily identified and located.
For more information and insights about traceability initiatives in the food, pharmaceuticals, and automotive industries be sure to review our latest report – Connecting the Dots: What is Driving Traceability Solutions Investment? Addtitionally, here's more information on automotive labeling. Please feel free to download the Executive Brief or contact us to learn how to gain access to the full report at firstname.lastname@example.org.
(With Rachel Walker, Research Assistant)