Do not let an unchecked fault drive off with your credibility

The impact of recalls within the automotive parts sector are far-reaching and not only do they affect the manufacturer themselves, but there is an impact on the automotive brands that use them too. From drops in sales, to reputational damage and not to mention customer safety, it has become vital to track and trace an automotive part throughout its entire lifecycle. And the automotive sector is particularly at risk of being affected by product recalls since cars are no longer manufactured here. Paulo de Matos, SYSPRO Chief Product Officer explains.

It goes without saying that with rapidly expanding product lines and stringent lot inventory and traceability requirements, automotive parts and accessories manufacturers require a sophisticated Enterprise Resource Planning (ERP) system with an advanced traceability system.

Some major automotive industry parts suppliers have lost billions in recent years and probably the biggest ongoing global recall to date is the airbags manufactured by Japanese firm Takata. The defective airbags were supplied to about 20 manufacturers globally including Honda, Nissan, Volkswagen, Jaguar Land Rover, BMW, Toyota, Subaru, Mercedes, Mazda, and Mitsubishi, who then fitted them to as many as 60 million cars.

Most of the cars affected by the Takata airbag defect were manufactured between 2000 and 2015. Honda was the first manufacturer to issue the recall notice in 2008. To date, 23 people have died as a result of the exploding airbags, with 300 more injured. It has proved to be one of the most complex and costly recalls in history and was a disaster from which the company could not recover. Takata filed for bankruptcy in 2017, and its leadership is faced with criminal charges.

Traceability has played a huge part in the Takata disaster. While the company may have been able to identify and notify the automotive manufacturers it supplied to a large degree, there is still a massive second-hand vehicle market globally; and tracing second, and potentially third or fourth owners of the affected vehicles has proved difficult. Even today, notices are still being issued for further recalls, as more faulty units are being identified.

More recently in Australia, Toyota and Lexus have recalled over 50,000 cars due to a fuel pump issue, which causes engines to suddenly stall. The Renault Clio has been recalled for defective front windscreen wipers and faulty fastening of its rear spoiler. Volkswagen has recalled 16,098 cars including the Golf, Jetta, Passat, Polo and Caddy models affected by an problem with their seven-speed dual clutch automatic ‘DSG’ transmission.

Considerations when selecting the right ERP system

Most ERP solutions offer a level of visibility with end-to-end tracking throughout the supply chain. This includes a lot traceability functionality where manufacturers can automatically or manually assign lot numbers as goods are received as well as assign alpha or numeric properties to traceable parts.

The question is what happens after visibility? What sets a great ERP solution apart is the action you take based on the visible data. Action will be born out of a full proactive strategy, which involves defining the scope, documenting the system, reviewing the system, and then testing it.

  • Defining your scope before you become the backseat driver within your own business

In the automotive sector there are many known variables in the system that create problems – never mind the unknown variables. Problems typically occur where there is no seamless interface between supplier, process, and customer. For that reason, it is important to implement supplier traceability (all incoming components need to have a known history), process traceability (the need to incorporate traceability of products through the organisation), and customer traceability (who is driving that second hand car now?).

  • Where all roads lead to review

It is important to remember that things often change in the automotive sector. On a regular basis, what is required is a multi-disciplinary team from all functional areas of the organisation and senior management to audit and review the traceability solution. The team will be responsible for areas of improvement or non-conformance so they can address them. They will also ensure that the business has the right business systems in place to make the reporting data available, which should dramatically reduce the “time to completion”.

  • Putting pedal to the metal in the ultimate test

Also known as a mock recall, this requires a horizontal check (including an audit of several batches at the same point in the process to ensure that all identification marks and documentation are correct) and a vertical check (following several batches from customer to supplier to ensure all identification marks and documentation are correct).

Preparation is key, and should an automotive parts business find itself in an unforeseen situation which requires a product recall, a powerful centralised ERP system is indispensable. It should give instant access to all of the critical information required to track a product and allow that manufacturer to take the immediate steps to quarantine products, work with automotive brands to identify and begin contacting the affected customers directly and through the media and social media, facilitate the return of the affected vehicles to their suppliers to replace any faulty parts or accessories.

Product recalls should not be sudden events thrust onto a company, but instead a well-practiced activity used to reduce any potential risk to the brand in the marketplace. It is preferable to recall suspect parts and test, sort and recover as required behind closed doors (in the factory) than in the marketplace.

Want to learn more? Download the ebook on Mitigating the effects of product recalls in the Manufacturing & Distribution sectors.