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Traceability Challenges for Mixed Serialized and Non-Serialized Inventory

Posted by John DiPalo on July 16, 2015

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Some solutions exist to effectively manage inventory in either fully serialized or entirely non-serialized environments. Where things become difficult is in circumstances where these environments overlap. Finding an effective management solution becomes more difficult in a mixed serialized and non-serialized environment, as a full system upgrade within an existing environment can become a very expensive proposition.

Think of serialized inventory like you would your car, with its unique Vehicle Identification Number (VIN). Using the VIN, one can identify the make, model, options date and location of manufacture–as well as the date and location of sale or delivery. This number can also be used to identify the current owner or registrar of the vehicle. If you have ever received a recall notice for a vehicle you purchased used, you know this is true.

Think of non-serialized inventory like you would cans of soup at your favorite grocery store. The manufacturer, distributor, and retailer do not track each can individually and there is no unique number on each can. They all have the same UPC number and–at best–a lot number. Your grocery store does not know where can #43 went. They only know that they purchased 100 cans, sold four and should have 96 left.

Challenges in the Complex Serialized Warehouse

Today, when implementing a serialization solution, companies across all industries tend to initially put the focus on their manufacturing and packaging solutions–spending money, time, and effort on their processes, lines, and the additional automation required to support serialization. But what happens next? Once a product moves from manufacturing, or packaging goes out into the warehouse and supply chain, there is an entirely different set of challenges to overcome.

The challenge of tracking serialized product once it moves into the larger supply chain occurs because serialized manufacturing and packaging processes take place in a homogeneous packaging environment. Once a product reaches the warehouse environment you need to have systems in place to effectively manage both serialized and non-serialized at once. Often the way a manufacturer creates a product is not the way people purchase it. The distributor will order in different quantities which requires systems in place that will allow workers to open pallets, break-up cases, and pull from separate lots in order to fulfill customer orders. This effect is even further amplified by packing and shipping partners located downstream and directly affects the customer experience across the supply chain. With each additional step, granularity increases.

Many systems that are being implemented today are not optimum; there is a focus on the task of serialization, but it does not take a cross-functional view of the requirement. The result of taking a “vertical” view of the process is that the approach of managing the serialization process often pushes the “track-and-trace” issue further downstream. This affects the customer in a number of ways. Availability, speed-to-ship, and shipment reliability can all be affected. Few companies take a horizontal view that enables one end-to-end system to manage both serialized and non-serialized product across internal and external systems.

Missed Opportunities and Direct Operational Costs

In the distribution process, the different levels of granularity that need to be captured also involve third-party suppliers and partners. Since the warehouse environment will remain both serialized and non-serialized for the foreseeable future, consideration must also be given to business regulations, logical requirements regarding the identification of serial numbers, shipment tracking, and the location of distributors, customers, and end-users.

  • Efficiency: Using serialization creates a convenient and efficient data-capture point for order identification, enhancing operational efficiency. Doing things properly from the beginning can lower costs and help eliminate missed opportunities.
  • Labor: Having a fully integrated solution in-place helps limit the additional labor requirement of items that must be scanned multiple times into multiple inventory-control systems–or even entered manually into some systems.
  • Compliance: In those industries that manufacture tightly controlled or regulated products, the penalties for non-compliance can be severe. Those systems that rely on the worker to make decisions create issues with no easy end-to-end solutions.

Effective Approaches to the Challenges at Hand

Within both packaging and post-packaging operations, the master data within your ERP is integral to the process. This means that–in any effective end solution–the system and the data associated with orders and materials must ultimately drive the process itself. This requires that data be not only in-place but easily accessible as well. An example of the importance of this can be illustrated when a company moves from tracking at the batch level to tracking at a serialized level for certain products. In order to ensure that you have a supportable, long term solution, the master data associated with that serialized batch of product should drive your execution system to prompt the users to collect the required serialization information automatically, and no additional decisions by the user should be required. Once this approach is in place, you can compile serialized data for customers and end-users while using all collected information to drive compliance and increase order accuracy.

The collection of data helps advance business goals. In addition to the information required for supply chain compliance, other data – including materials, quantities, batch numbers, and expiration dates – can be leveraged to improve processes and ensure efficiency. A system that automatically shares important information with customers, shippers, and regulatory bodies ensures that the right product goes to the right customer at the right time.

The Cloud Approach to Traceability

Cloud services – with the required safety and security – can be leveraged for the benefits of avoiding the cost and complexity of an on-premises IT implementation. Cloud traceability can provide compliance with the regulations that are in and are being put in place, and do so while saving time, money and resources.

For example, a cloud traceability solution could be set up using Amazon Web Services (AWS) or other cloud provider, in a private-cloud or hybrid-cloud version (AWS offers multiple levels of service and security). Each trading partner on the supply chain gets its own configuration of the software service along with the added reliability offered by a cloud solution offers. Access, visibility, and other aspects are configured per partner while the data remains consistent and is updated automatically. When changes need to be made to the system, it is transparent to the users and ensures real-time updates as products are moved through the supply chain.

What the Future Holds for You and Your Business

Before implementing a successful serialization program, companies will need an end-to-end approach for data capture capabilities from receiving through manufacturing, packaging, picking and shipping. One of the main objectives of this end-to-end approach is that all systems within the enterprise are updated as product moves through the process. This includes Enterprise Resource Planning (ERP) systems, MES and quality systems, packaging and warehouse management systems. Some systems require scanning products multiple times in order to update these separate systems. In contrast, a flexible execution system should allow you to capture serialized and non-serialized data using one system and it manages the updates to all of the other systems as required. This allows companies to build one set of Standard Operating Procedures (SOPs), validate one system and have a single face to the user for all product movements.

The ideal execution system is built with these tenets in mind. It is robust. It captures both serialized and non-serialized data within same transaction set. It also allows companies to configure the solution to capture additional pieces of context data that are needed to add business benefit and provide the basis for end-to-end supply chain visibility. These features allow for a number of additional benefits. Having the ability to add business relevant context data to a serial number allows companies to utilize that data to better manage additional processes such as returns and recall management. Other benefits include easier detection of parallel trades and other gray-market activities, enhanced warranty-claim information, and other supply chain factors. With the ability to manage items at a granular level and assign attributes to products that allow users to both manage and locate inventory, solutions for the supply chain world will better allow users to track containers, products, and assets.

Manufacturers can expect serialization to expand in consumer packaged goods (CPGs), chemical manufacturing, and pharmaceutical production–as well as food distribution.

Download our white paper for a more in-depth discussion of the serialized data challenge.