LOGISTICS TRACEABILITY

FOR SUPPLY CHAIN IMPROVEMENT

Case Study of SMMART Project

Paulina Blaszkowska, Jana Pieriegud and Michal Wolanski

Department of Transport, Warsaw School of Economics, Al. Niepodleglosci 164/1013, Warsaw 02-554, Poland

Keywords: Traceability, Tracking & Tracing, Supply Chain Event Management, RFID Technology, Spare Parts

Logistics, Automotive Industry, Aerospace Industry.

Abstract: Tracking and tracing of shipment is nowadays a key element of customer service. RFID technology, which

provides real-time tracking, helps to indicate and to monitor the transition of the events along the supply

chain. Traceability permits not only to reduce the total logistics cost and to shorten the order cycle time, but

also to increase efficiency, to improve quality performance and to offer new added value services for

clients. The Authors present the theoretical background of the problem as well as the experiences and the

ideas of new solutions which are currently developed within the SMMART 6 Framework Program Project.

1 INTRODUCTION

Traceability has developed from the traditional

tracking and tracing technology which enables to

determine the location of single items, product lots

or transport units into a broad approach for

monitoring of performance across the supply chain.

The increase in the information’s volume led to the

necessity of using advanced technologies for supply

chain improvement, such as Supply Chain Event

Management which permits to enhance the visibility

of the data collection. RFID technology opens up

completely new opportunities in the logistics

traceability context. The most significant progress in

this area can be observed in the automotive and

aerospace industries.

The aim of this paper is to present the

contemporary knowledge and solutions as well as

particular examples of business benefits which can

be achieved thanks to logistics traceability.

Firstly, various definitions and relations between

tracking, tracing and traceability are reviewed. The

second part describes the main challenges which

encompass tracking and tracing (T&T) system

design development, including technological

solutions which could be used to identify the object

and to collect data from the supply chain.

The SMMART project case study presented in

the last section of this paper concerns the spare parts

supply chains of aircraft and automotive

manufactures to which many new traceability ideas

have to be adopted. The end-user requirements

concerning this system were conducted from

research activities undertaken in the SMMART

project as well as from the literature review.

2 LOGISTICS TRACEABILITY

2.1 Definitions

There are various definitions of tracking, tracing

and traceability (van Dorp, 2002; Kärkkäinen et al.,

2004). Tracking and tracing is usually associated

with logistics as the process of determining the

location of goods which are delivered from an origin

to a destination. If tracking is the ability to

determine the current state of a product in the real

time, tracing means the ability to remember the past

states and the origins (raw materials, subparts,

components) of the product as well. According to

van Twillert (1999) “tracking and tracing may be

subdivided into a tracking part and a forward and

backward traceability. The tracking part consists of

the determination of the ongoing location of items

during their way through the supply chain. The

forward traceability part refers to the determination

of the location of items in the supply chain, which

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Blaszkowska P., Pieriegud J. and Wolanski M. (2007).

LOGISTICS TRACEABILITY FOR SUPPLY CHAIN IMPROVEMENT - Case Study of SMMART Project.

In Proceedings of the Ninth International Conference on Enterprise Information Systems, pages 599-604

 SciTePress

were produced together. Backward tracing is used to

determine the source of the problem of a defective

item”.

Thus, the term of logistics traceability is related

to the order-delivery processes and can be

understood as an ability to retrace steps and events,

referring to logistical activities such as

transportation, distribution or warehousing.

Another important area, especially for closed-

loop supply chains, is the industrial traceability

which concerns the processes related to products

(Saaksvuori and Immonen, 2005). In this context,

traceability refers to the completeness of the

information about all the states of entity and their

changes during their product lifecycle, including

manufacturing, removing, maintaining, repairing,

storing and delivering processes. The Air Transport

Association (ATA) defines traceability as “the

ability to show where a part has been since it was

manufactured or last certified” (Kelepouris et al.,

2006).

In the European food industry, where traceability

is required by law, traceability is defined as “the

ability to trace and follow a food, feed, food-

producing animal or substance intended to be, or

expected to be incorporated into a food or feed,

through all stages of production, processing and

distribution” (Regulation 178/2002/EC).

Another compilation of branch standards is ISO

21849:2006 and it specifies the requirements for the

product identification and traceability for the

lifecycle management of aircraft and space

products/parts as well. It states the minimum

essential identification of the information needed for

traceability of a product for its lifecycle.

It is worth mentioning that in the software

development, the term traceability refers to the

ability to link requirements back to stakeholders'

rationales and forward to corresponding design code

as well as to test cases. Traceability supports

numerous software engineering activities such as

change impact analysis, compliance verification of

the code, regression test selection and requirements

validation.

The term traceability in manufacturing systems

may refer to status, performance or goal (Cheng and

Simmons, 1994). In the first case, the subject of

tracing is the current situation of the system,

including for example delivery time. The

performance traceability analyses long-, medium-

and short-term indicators, such as a variance

between planned and actual shipping time. The goal

tracing indicates if target levels of those factors were

achieved at particular fields.

From the software design point of view, the

traceability system will contain T&T application

which will offer standard tracking and tracing

functions. However, in the context of the present

study, it is essential to outline the main challenges

for tracking and tracing system design development.

These issues will be examined in section 3.

2.2 Benefits

Currently, traceability is one of the bases of supply

chain management approach. Such functions as

current status, expected delivery time and

information about delays allow coordination

between companies involved in a supply chain

(Kärkkäinen et al., 2004). Numerous benefits from

improved T&T system could be identified in the

fields of operational performance, risk and safety as

well as in the legislation (Kelepouris et al., 2006).

Traceability helps companies to use their assets in

a more efficient way and to achieve a competitive

advantage through a better customization and faster

deliveries of ordered goods. A number of incorrect

deliveries and costs caused by them can also be

significantly decreased thanks to the better quality

control.

Tracking is also useful for aftermarket logistics,

especially within relative long-lifecycle goods, such

as vehicles or aircrafts. Traceability through the

maintenance, repair and overhaul (MRO) processes

enables new efficiencies in these operations as well

as increases visibility at the logistics level. Thanks to

dedicated offers, it helps to build individualized

relations with customers. It is also applicable when

selected batches of the product have to be recalled,

for example because of manufacturing failures.

As it was already mentioned, traceability is

required in food industry. According to the

European regulation 178/2002, the entire supply

chain including animals and its feed should be

traceable, and the information should be available

for competent authorities. Other regulations refer to

medicines, drugs and tobacco products, in order to

provide full emergency control over the supply

chain, for example in case of incorrectly labeled

medicines. Thanks to tracing, wrong lots of the

products can be recalled from the market precisely,

without the necessity to remove all the entities,

which – in case of unique medicines for example –

can be dangerous. In this case, traceability also

permits a precise, purposeful and possibly cheap

reaction to customers’ claims, which is a significant

improvement both for clients and manufacturers.

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Other benefits for many sectors (e.g.

pharmaceutical, automotive) concern the fact that

traceability gives possibilities to prevent

counterfeiting and theft in a more efficient way.

3 TRACKING & TRACING

SYSTEM ASPECTS

3.1 Supply Chain Integration

General strategic tendency to decentralize

production and management leads to a broad

organizational dispersion of particular functions

which are transferred to smaller units. It impacts,

among others, the traceability. According to

Zimmermann (2000) two generic tracking & tracing

mechanisms have to be distinguished. As far as the

first one – decentralized – is concerned, each party

in the supply chain disposes of their own data

available to others upon request. Requests are

addressed to the predecessors in the supply chain

until the data are found. The company which has the

information passes it over to the addressee from

whom the request was received.

The second tracking and tracing mechanism –

the centralized one – operates on the basis of the

data managed by only one company. Each party

interested in particular information has to send a

request directly to this main player in the supply

chain. As it is stressed by experts (Kärkkäinen et al.,

2004), centralized solutions are suitable for internal

tracking and tracing. From the entire supply chain

perspective, current tracking and tracing systems are

mainly decentralized. However, from the point of

view of a single company, these systems are

designed to ensure total visibility within one

organization which collects and manages the data.

The integrated tracking and tracing system which

covers the whole multi-company supply chain is the

most important challenge. Especially, when it is

required by regulations, like the Resources

Conservation and Recovery Act (RCRA) in an

American law concerning hazardous wastes where

the cradle-to-grave tracking is a necessary

condition. Also, the federal aviation regulations

require an individual tracking of each parts’ history.

In case of automotive industry, car manufactures

should comply with new European Commission

laws mandating 80 percent of each car be recycled.

At present, within a project called PROMISE, Fiat

and its suppliers are testing an RFID system in

which tags are applied to certain car components.

If a car must be scrapped, the owner and/or the

dealer will be able to use the data to determine

which components still could be resold or recycled

(Wasserman, 2007).

However, the total level of integration depends

on whether all interested parties will agree on the

scope, identification technology, coding, content of

exchanged information, architecture of information

and the access to information (Kärkkäinen et al.,

2004).

3.2 Extended Information in Supply

Chain

Single tracking information is narrowed to “the

identity of the entity at the checkpoint, the location

of the checkpoint, and the time of arrival of the

entity” (Kärkkäinen et al., 2004). Even if it is

combined with the history of the entity, it appears

not to be sufficient. Companies aim to integrate

logistical and manufacturing information to follow

the processes from raw material to final product

supplied to the customer. Extended information may

refer to the following fields: environment of an item

(e.g. temperature, humidity, process flow, product

information (e.g. ingredients, composition) and

changes of the product state (e.g. detailed history of

maintenance). However, this extended information

could improve management decisions only if the

T&T system is integrated with other enterprise’s

systems like ERP, SCM, WMS or TMS. Tracking

and tracing system itself provides information, but

does not analyze it.

Proactive operations are not the basic function of

the T&T system, however the data collected during

various processes are essential for forecasting and

planning purposes. Supply Chain Event

Management (SCEM) is the mechanism which

supports sorting and information management

process. It permits to inform the proper user about

an event (e.g. a delay of the delivery) and to propose

solutions for the problem.

3.3 Supply Chain Event Management

Supply Chain Event Management (SCEM) is a

management approach which deals with events

which happen differently than they were scheduled.

It provides a possibly early detection of the

deviation and an implementation of corrective

actions, according to the rules given (Otto, 2003). It

is also connected not only with logistics

management, but with management by exceptions as

well.

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According to Otto (2003) and Elsenbach (2005),

SCEM – similar to other concepts such as CRM

(Customer Relationship Management) – can be

understood as a management concept, a software

solution and a software component.

As a management concept, SCEM changes the

functionality of tracking from simple determining

the position to determining, comparing with

scheduled status and generating needed output data

(only in case of significant negative difference).

While choosing right corrective actions, a SCEM

system compares potential costs and benefits of

different possibilities, taking into account their

influence on other proceeded orders, and re-planning

them in the most efficient way.

The SCEM system can also have a learning

functionality, which can prevent repeating negative

events it the future, thanks to appropriate planning –

ex. avoiding routes where delays happen more often.

To perform advanced functions, SCEM system

has to be supplied in a lot information concerning all

the processes, their costs and conditions, for

example to valuate potential loses resulting from a

number of alternative delays.

To sum up the SCEM concept, a sequence of its

second level functions should be presented (Otto,

2003):

 collect data about current and planned status;

 document current and planned status;

 analyze the situation in order to model

potential results of the failure;

 decide which corrective actions must be taken;

 implement the new plan;

 learn how to avoid similar faults in the future

(if they occur more often).

3.4 Automatic Identification and

Data Capture

Data collection is of crucial importance for tracking

and tracing systems. If the high quality of

information is not ensured, the whole system will

not achieve high level of performance. According to

the survey prepared by the Auto-ID Lab (Fleish et

al., 2005) even 30 per cent of tracking data are

incorrect. There are several dimensions which

constitute the basis for evaluating the collected data.

Not only the timelines and precision, but also

integrity, completeness and source should be

examined (van Dorp, 2002). In this context, it seems

to be obvious that data collection process without

automation is not the suitable solution for most

companies. The increased automation means

significant cost and time savings as well as

improved quality of the data. Thus, it should be

considered as one of the challenges for T&T system

design.

At present, both aerospace and automotive

industry deal with thousands or even millions of

spare parts of different types circulating in the

network. Identifying each of these items on the basis

of human-readable text means high labor cost,

delays and errors which impact economic

performance and customers’ satisfaction. For

example, more than 64 million vehicles were

manufactured in 2005, requiring up to 10,000 parts

each, in assembly plants around the world

(Wasserman, 2007). It is desirable that Auto ID

technology could be applied not only to spare parts

but also reusable assets such as tools, pallets and

containers as well as the documentation

accompanying the item (Kelepouris et al., 2006).

There is a wide spectrum of technological

solutions which could be used to identify the object

and collect data from the supply chain but barcodes

(both linear and 2D markings) are still the most

ordinary tracking solution (Kärkkäinen et al., 2004).

RFID (passive and active tags) was also

implemented successfully in many organizations.

Other technologies which enable automatic

identification are more often used as a complement

to RFID or operate as hybrids. These are GPS,

RTLS (Real-Time Location System), VoIP, sensors,

biometrics and others. These technologies are not

the subject of the present paper and therefore they

will not be examined in detail.

The introduction of AIDC solution does not

solve definitely the problem of status changes. The

status of a spare part changes not only when it is

reallocated between points of the network, but also

after maintenance and planned or unscheduled

repairs. In each of these cases, tracking and tracing

data as well as the maintenance history of the item

need to be modified (e.g. Boeing aircraft engines are

renumbered). The same part could get in and out of

the supply chain several times in a relatively short

time. To ensure high quality of information both

downstream and upstream the supply chain, the data

entries must be created in various locations in the

network – anywhere the status change may occur. It

means that proper IT infrastructure has to be located

not only in warehouses and production plants but

also e.g. in repair shops.

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4 SMMART CASE STUDY

4.1 Project Challenges

The SMMART (System for Mobile Maintenance

Accessible in Real Time) is an integrated Research

and Development project co-funded by the European

Commission under the FP6 joint IST (Information

Society Technologies) priority. Coordinated by

Turbomeca – one of the world leading manufacturer

turbine for helicopters and engines for aircrafts – the

project involves a consortium of 24 partners, which

consists of large industry leaders, small and medium

enterprises as well as research centres and

universities from across the Europe.

The main challenges of logistics traceability

system developing in project for the aerospace and

automotive industries are to be able to:

 optimize maintenance and logistics planning

through a worldwide network,

 monitor in the real-time the usage and the

maintenance data throughout the lifecycle of

critical sub-assemblies of a vehicle,

 ensure end-to-end visibility of the integrated

supply chain,

 provide new end-users services.

The aerospace and automotive industry which

are beneficiaries of the project are regarded as

highly innovative and global-wide ranging despite

being restricted with numerous standards related to

each operated vehicle during its whole lifecycle. The

crucial importance of spare parts logistics comes out

of the necessity to keep these standards and to

maintain the cost at the same time. Spare parts

supply chain presents specific features, including

complexity of the supply network, aftermarket

support activities which bring many challenges and

opportunities (managing of obsolete, repaired, new

parts, forecasting demand of parts, reallocation of

parts etc). Therefore, spare parts supply chains need

the advanced T&T systems to stay agile and

transparent.

4.2 Developing T&T System Functions

Logistics T&T system in SMMART project is

designed to fulfill the requirements of leading

companies in automotive and aerospace industries.

The complexity of the logistics network, which will

be covered with the T&T system, steams from fields

of activities of end-users, in particular spare parts

supply and MRO aftermarket services.

In the context of problems which were briefly

outlined in the previous chapter, the main challenge

is to ensure the real-time visibility of each item

including assets such as tools. In order to reach this

goal, item-level automatic identification will be

applied to the most critical assets in the network

(e.g. turbines, engines). The dominant technology is

RFID, as it enables improvement of the data and

deals with ordinary status changes as well. Other

solutions, which are tested to support the

identification processes, will be bi-dimensional

barcode technology and visual techniques (necessary

in case of system failure).

The dedicated functions of the T&T system

developed in SMMART project include global

automatic inventory, reallocation algorithm, supply

chain event management and reports.

The global automatic inventory will be carried

out on the basis of item entrance and exit registration

in the checkpoint. This solution will provide basic

information for further use in the areas of

maintenance, customer service or management (e.g.

planning, troubleshooting).

The SCEM as an extended function of T&T

system will support strategic and operational actions

of the manufacturer. In order to provide users with

essential information about events which influence

the processes, proper alerts will be generated on the

basis of the data collected during the logistic

operations (both automatic inventory and item

replacement). It should be clear when one realizes

that avoiding stock-outs is critical to keep or

enhance repair cycle time.

The user of T&T system will also be provided

with reports generated on the basis of pre-defined

criteria. The data collected by using RFID

technology could be much more detailed than these

which are ensured by the barcodes and it is crucial

that users will have a fast access to required

information. When it comes to spare parts, the

logistics information will be enriched with the

maintenance history of an item. This is important in

the context of a particular item. The parts which are

ready-to-use or temporary failed (needing different

repairs) as well as these removed from one module

and mounted in another can be easily identified.

T&T system mechanism will be centralized and

suitable to internal supply chain of end-user. It is

possible to integrate it in a wider supply chain

context provided that all the parties, including

external logistics service provider will agree on the

common solution.

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5 CONCLUSIONS

Nowadays, traceability is a key factor for supply

chain and product lifecycle management which

allows public authorities to increase customers’

safety and private businesses to improve supply

chains and get better outcomes through a higher

level of customer service, the products’

customization and the quality control. The case of

SMMART project shows that different benefits can

be achieved in this area.

The complete historical data about planned and

actual shipping times should help companies to

avoid delays. T&T system, in combination with

SCEM functions, will also help to react in the

optimal way in case of a delay caused either by

transportation or repair disruptions. Increased

efficiency of in-stock parts management also means

a shorter searching, identification and stocktaking

time.

Thanks to the traceability functions, the users

will have a possibility to compare complex

properties of disposed parts, including forecasted

lifecycle costs which can vary according to the

history of a part (ex. total working time or type of

repairs already made). This will allow stockholders

to differentiate their pricing strategy.

Traceability functions will not only increase the

general quality, but also permit to inform customers

about potential delays or failures of delivery. This

will help the customers to reduce costs and to

increase their satisfaction.

One of the expected results of developing RFID-

based T&T systems is a simplified spare parts

process management, which saves time on trouble

shooting, parts inspection and on whole products

lifecycle. Traceability using RFID technology also

permits to create new services which will integrate

industrial and logistics traceability in order to

provide comprehensive value added services to

customers and to increase the global

competitiveness.

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