Tag Archives: ROI

What Tesla Teaches You about MES

The software sales process has never been customer-centric, but that may be changing.

By Kristin McLane, President of CIMx Software

Researching and buying software is a horrible job.

When you buy a commodity, many rely on the “seeing-is-believing” methodology.  Until you can hold a product in your hand, feel and use it, see it in action, the buyer will be reluctant to let go of their money.

Have you ever tried to hold software in your hand? Can you imagine “trying-out” an MES without training or an implementation?  Software is already one of the most challenging things to sell, and MES even more challenging.

You can demonstrate software, but rarely will an MES do exactly what the customer wants or needs.  Remember our last blog on manufacturers crafting requirement lists with 250 items or more?  No product will exactly match all 250 the way a customer wants (unless they pay for high-priced customization and additional complexity.)

We recognize an MES is not easy to buy, but there are actions suppliers can take to benefit the customer.

A Lesson from Tesla

Not all commodities rely on “seeing-is-believing.”  Tesla has turned the car industry on its head by not following conventional wisdom.

There’s a Tesla dealer near my house where I can look at a single turquoise blue S model sitting in a showroom.  I can sit in the car.  I can see it and touch it, but I can’t turn it on.  I imagine the road underneath my feet as the ever-so-smooth sales guy talks me through its performance, offering an impression, but still not the experience itself…

Despite Tesla’s reluctance to just give the customer what they think they want – the showroom’s always full.  People are buying these cars without driving them, paying $30, $40, even $70,000 dollars without demanding the “just-because-I’m-here,” discount.

Tesla broke the mold.  Where other electric car makers went after the young, hip, eco-conscious millennials and cost-conscious seniors, Musk went directly for the luxury car market.  He identified a better way of selling his product.

The Flaw in the MES Sales Process

So what’s that have to do with MES and software sales?

man under money on white background. Isolated 3D image

IS the software sales process for MES working for you? Illustration by http://www.colourbox.com

It’s simple.  People expect software to be incredibly complex.  Companies think they’ll have to change their processes and labor through a long “learning” period.  They expect the project to be a major investment in time, money, resources and effort.

Software suppliers are counting on this. They offer products with significant “service” charges attached to them, and a whole team (you are paying for) to help you through the process so they can capitalize the expectations.

The software sales guy is not helping, either.  They only make a commission when you buy it.  There’s incentive for him or her to tell you what you want to hear.  The supplier eagerly agrees to every one of the requirements, seeing the project and price grow like a hungry, bloated monster.

Going back to the “seeing-is-believing” conundrum in software sales, you need to trust the sales person to answer every question and help you navigate the purchase process.  The sales person is only making money if you spend it, so they keep telling you what you want to hear.

Sound miserable?  It is.

A Better Way to Sell Paperless Manufacturing

Most companies are happy to sell manufacturing software this way, but there are better options.

For example, our business model is focused on software products, and not software services. Our goal is to make money when you use our product, and not when you ask us to fix the product because it’s not working the way you want it to.

We take a consultative approach to sales. We make sure there is a technical resource or application engineer to answer questions honestly, and not just a sales rep. We know our solution may not be right for everyone, and we’ll tell a prospect to look elsewhere if we can’t adequately help them.

We also offer a guarantee.  We’ve talked about our guarantees before, but I’m not just selling us here.  I’m selling anyone in this industry that’s willing to provide you a written guarantee as part of the project – they will meet your written requirements for the amount of money in the proposal.  If they’re able to do that, I’d trust them.

Finally, with CIMx you have personalized demos. Our goal is to show (as close as possible) what the experience will be like on the shop floor. We put your material into the system and mirror your shop floor processes, offering you as close to a “see” as possible.

It’s a different way of selling software, it doesn’t follow conventional wisdom and it doesn’t appeal to everyone, but if you’d like to learn more then contact us today.

As for that Tesla, I haven’t gotten to the point where I’m willing to buy one yet, but I still admire the approach Tesla is taking to re-invent the car-buying process, even if I can’t feel the hum of the engine and purr of the road beneath my wheels.

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6 Tips for Forecasting an ROI for MES

Assessing the potential ROI for an MES is difficult, but you can improve results by recognizing risk factors that will negatively impact the overall return.

By David Oeters, Corporate Communications with CIMx Software

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Identify ROI risk to more accurately your return for an MES. Illustration by http://www.colourbox.com

Forecasting the ROI for an MES is a critical step for any company investigating manufacturing software. While identifying a nice, round number that will make the accountants feel good is the ultimate goal, its exceedingly difficult before the MES has been implemented. An MES potentially impacts all areas of the manufacturing value chain, and with so many factors any estimate becomes more conjecture than science.

A much easier, and many times more fruitful, exercise is to identify potential ROI detractors of an MES. Once you identify potential detractors (if there are any) you can better see how difficult it will be to reach your ROI goals. A project with many detractors will take much longer to reach an ROI than one without detractors.

MES Risk Factors

Here are 6 common risk factors we see in an MES project:

  1. Cost. The cost of the system is the biggest risk factor. How much are you going to pay? Consider more than the license fees – look at the service charges, the cost of integrations, consulting fees, hardware costs, and more. Many times, these added costs are significantly more than the initial fees.
  2. Customization. When it comes to any software system, the more changes or custom code you place on top of the initial software, the more expensive and risky the installation will be – decreasing the eventual return.
  3. Schedule. Once you decide to purchase a software system, the longer it takes to set-up, install, and start using the MES, the more difficult it is to achieve an ROI. Every week you wait is costing money.
  4. Flexibility. Software shouldn’t reflect the manufacturing needs at a single moment in time, because those needs will change. How quickly and easily will the system adapt? Do you need to go back to the supplier for each change, or can your team make the changes?
  5. Upgrades. New technology and market changes are impacting manufacturing at an increasing rate. Is there an upgrade path and plan? What is the cost for an upgrade? Software without a clear, and efficient, upgrade path will become inefficient as it ages.

Anyone that promises you an inclusive and comprehensive ROI for an MES is either lying or delusional. The cost of misunderstandings between the supplier and customer leads to upscoping and slipped schedules, increasing implementation service fees and frustration – ROI project-killers.  Estimates, forecasts and guarantees should be the goal before an implementation, which is why risk factors such as these are so important. Each risk factor will significantly increase the time necessary to reach an ROI. Eliminating risk factors without loss of functionality will ensure a rapid ROI on the system.

Want to learn more, or receive a free shop floor analysis to see how an MES can benefit your company? Then contact CIMx today to learn more about paperless manufacturing. We’re always happy to help.

Making Sense of the ROI for an MES

Many shop floors struggle to justify the cost of an MES, even as errors and inefficiencies that would be eliminated with a shop floor system drain profit and production from the company.

By David Oeters, Corporate Communications with CIMx Software

Here’s the problem for shop floor and operations managers looking to implement an MES or paperless manufacturing solution – many of the greatest benefits of a shop floor system offer soft savings, but management approves investment with an analysis of the hard savings from a capitol project.

The ROI Conundrum for MES

Many companies struggle to justify the expense of shop floor software, even as problems drain profit and production from the bottom line. Illustration by www.colourbox.com

Many companies struggle to justify the expense of shop floor software, even as problems drain profit and production from the bottom line. Illustration by http://www.colourbox.com

Consider this – you put in a modern MES, and you’ll have real-time production data that provides the foundation for continuous improvement. Shop floor production and control improve, errors and quality escapes are eliminated, and planners benefit from revision control and a library of approved work plans. Many Shop Floor Managers and Quality Engineers drool at the prospect of any ONE item in that list.

But, a business case isn’t built on “better,” but on hard numbers. Procurement and the CFO don’t care about, and may not even understand, revision control. How can the shop floor measure the benefit of real-time data and continuous improvement? How do you articulate the savings from fewer errors, when you struggle to consistently capture any data at all from your shop floor processes? For the CFO, “more data” is nice, but it doesn’t translate to a line item in the finances.

Truth is, there is a disconnect between the accepted way we measure ROI, and the needs of production operations and modern manufacturing. Typically, ROI requires a measurement of hard savings and direct benefit from a capital investment. Modern manufacturing seeks continuous improvement, agility and flexibility from an MES – all characteristics that are difficult to measure with hard data, and aren’t easily quantified with numbers.

The Problem for Manufacturing

In a way, accepted accounting techniques don’t adequately represent the true value of an MES – at least, not without a leap in logic or an adjustment in the techniques used. This doesn’t mean there is a problem with MES or standard accounting practices; it just means you are using the wrong tool to take the measurement. A good example might be using a ruler to measure temperature. The ruler offers hard data, just not the right data to measure a summer day.

This disconnect, while unfortunate, is often compounded by the reluctance of some companies to quantify and value the perceived benefit of the shop floor system. Rather than finding a way to communicate the need for better production control, and connect a shop floor tool like paperless manufacturing to company goals, they decide it is easier to make what they have work and ignore a potential long-term solution.

In the end, this problem costs manufacturers revenue and production every year. Scrap and waste accumulate for no reason other than the operations team hasn’t found a way to collaborate and communicate with the financial team.

Breaking Out of the Cycle

I’m not suggesting operations get a free pass when they seek money for a shop floor system. I suggest we need to adjust how we determine ROI when discussing MES. The shop floor needs to assign value to their investments early in the process, and collaborate early-on with internal partners as they select a software solution.

Building a business case and determining ROI shouldn’t cause a shop floor improvement project to crash and burn. Done right, it should help a company determine if the selected system is the right one, helping create an even better solution for the company.

Want to learn more, or see how you can better collaborate on an MES solution? Contact CIMx today for a free shop floor solution analysis. We’re always happy to help.

Why Not Now?

Paperless manufacturing and the digital shop floor are changing manufacturing for the better, but there are still companies reluctant to embrace the future.

By Tony Cuilwik, CEO of CIMx Software

You will implement a paperless solution on your shop floor.  It will happen.  Manufacturing, the market and technology are changing too quickly to continue supporting old, inefficient paper-based processes.  The move to paperless will save money and improve your competitive position.  So why not make the move now?  What are you waiting for?

With paperless manufacturing, if you can improve production, remove errors, and see and ROI within 9 months, why not make a decision now? Illustration by www.colourbox.com

With paperless manufacturing, if you can improve production, remove errors, and see and ROI within 9 months, why not make a decision now? Illustration by http://www.colourbox.com

Every company that has moved from a paper-driven environment to a carefully planned paperless one has saved money, improved worker morale, improved productivity and increased quality.  Paperless manufacturing delivers shop floor visibility and manufacturing control like no other product.  Companies eliminate errors, increase productivity and increase profitability with a paperless system.  Even purchasing a simple system with limited functionality is better than relying on error-prone paper.  One aerospace manufacturing company executive remarked that the purchase of a paperless solution was the best return on his money in many years of shop floor purchases.

As obvious as the choice may be for us, there are legitimate reasons for waiting and “making it work” with paper for a little longer.  I understand that, but let’s take a look at some of the reasons:

Money

Money (or the loss of money) is a good reason for any company to wait on implementing a project.  But, a good paperless system will deliver an ROI in less than 9 months.  Some companies report an ROI in less than 3 months after implementation.  The positive return on a paperless solution ranges from 3 to 10 times the initial cost annually.  As you research paperless solutions, keep these numbers in mind.  As long as you find a solution that makes sense financially, the project will pay for itself.

Risk

Any capital project carries a risk, and for many paperless manufacturing is an even greater risk because it impacts the profit driver of a manufacturing business – the shop floor.   There is a risk with any project.  For example, the promised or expected benefits won’t materialize, the project is never finished, and the money is wasted.  This is a valid concern, because in overly complex projects, projects with a massive requirement list, or a custom system, project cost and schedule overruns are common, and many companies end the project early to cut their losses.

On the other hand, many times the company will discover more benefit than initially envisioned.  They will expand the use of the technology into all corners of the plant.  The key to mitigating risk and ensuring benefit is to manage the choice of solution carefully.  Roll the project out in smaller phases, and initially focus on fewer requirements – ensuring you tackle the key project drivers before rolling out nice-to-have items.  Large, complex, and expensive solutions are a much greater risk, regardless from who they are purchased, because there are many more factors to manage in the project and heavy costs for any small change.

Fear

Following a few simple tips, you can position a project for success. Image by www.colourbox.com

Following a few simple tips, you can position a project for success. Image by http://www.colourbox.com

Fear is closely related to risk, and with good reason.  Moving to paperless manufacturing is a big decision, and it will impact your business.  If you are the one tasked with making a decision, the wrong decision could be embarrassing or worse.  Software solutions are being sold with inflated promises, and when you don’t achieve the desired results, even a successful project can look like a failure.

Once again, you can minimize fear with a simple phased project utilizing small, inexpensive phases to meet bigger goals.  Rather than create a massive requirement list, make a focused list with clearly measurable ROI benefits after each step.  With a phased project, you have more control.  After each phase, evaluate the results and make changes as needed.  Look for a vendor willing to offer guarantees on price, schedule and results to further eliminate the source of fear, risk or hesitation.

Getting started on your paperless manufacturing project

Paper-based manufacturing processes are error-prone, inefficient, needlessly expensive and aren’t suited to meet the demands of modern manufacturing.  As more and more shop floors move to a paperless system, paperless manufacturing will be the new standard.  But, there are risks to moving to paperless, and as of now there are many still unwilling to implement a project.  We understand that.

But, if you’re ready, there are a few simple steps you can take to overcome fear, lower the cost and reduce the risk.  If a positive financial outcome can be shown and the expected project results can be documented and guaranteed, then “why not now?” Why wait?  Every day you delay making a decision is another day your shop floor loses money, struggles with errors, and works to overcome an inefficient system.  Make the move to paperless manufacturing or at least research your options.

Want to know more or talk about how paperless manufacturing can help you?  Give us a call or leave us a message, and let’s see what we can do for you.

You Can Build a Business Case for an MES

Many manufacturers understand the benefit of an MES for their shop floor operations, but struggle to build a case for implementation.  We offer three tips for building a convincing case for MES.

By David Oeters, Corporate Communications with CIMx Software

Ever try to convince a 3 year-old to eat vegetables?

kids

What can a savvy 3 year-old teach you as you build a case for paperless manufacturing?

Most times, you explore tactics looking for one that works.  You start with logic (“It’s good for you!”).  Then you try threats (“Eat those peas, now!”) before moving on to bartering (“We’ll eat dessert if you try the peas.)  Finally, other strategies are considered, like reverse psychology (“I figured you wouldn’t eat the good peas,”) identification, (“Dora likes to eat peas,”) to pure insanity (“Tater tots are SO lonely in your belly, can they play with peas?”).  The negotiation continues until you find the strategy that works… and many times it never does.

Unfortunately, for many shop floors, building a case study for MES resembles convincing a 3-year old to eat peas.  The MES team knows there is a problem (more than likely, many problems).  They need to present a convincing case study, but aren’t sure how to start.  The team will try everything to build a case, creating a mess that does more to confuse than convince.

Building a Case for Paperless Manufacturing

Here are three expert tips for building a case study that works:

  1. Focus

Most MES or paperless manufacturing projects begin with a single problem – such as quality escapes, paper-based errors, poor data collection, or no shop floor control.

Unfortunately, once a potential solution is identified, companies begin to add functionality.  The solution grows (and adds cost and complexity) as people add their requirements to the project.  The scope balloons as everyone wants to make it “their” project.  The project quickly explodes with requirements and additional functionality.  The original problem is lost in the chaos.

When building a case for MES, more is not better.  Adding functionality and requirements will not make it easier to prove an ROI, it will just increase cost (dramatically) and delay implementation – which isn’t a good thing when building a case for MES.

Focus on solving the initial problem.  The benefits and ROI delivered with the initial solution will help justify later requirements, and keep the project focused, manageable, and cost effective.  One costly problem solved with a positive ROI is better than 10 problems partially addressed.

  1. Plan in phases

It is much easier to build support for a project that makes incremental changes through smaller phases than tackling a massive project that with a very high cost and significant risk for production disruption.  We call this incremental process a “phased implementation.”  A phased implementation allows greater project control with more immediate benefits, helping you build your case for MES.

Think of it like this – the bigger the project, the more variables you’ll need to address.  A 2-year project will have 2 years of costs, potential disruptions and project unknowns to punch holes in your business case.  A single 2 month phase of a (potentially) larger project is much easier to predict.  The costs can be managed, and shop floor disruption (if any)  controlled.  The ROI is often easier to calculate, and with lower costs you can more easily build a case.  In some cases the most important benefit of short measurable phases is a tangible demonstration to management of increased efficiency or quality.

There is a reason why the savvy 3 year-old will first ask for an elephant before requesting a new puppy.  A single puppy is easier to justify than the massive, elephant-like MES project.

  1. Follow a few simple tips to build an air-tight case for shop floor innovation and production improvement.  Illustration by www.colourbox.com

    Follow a few simple tips to build an air-tight case for shop floor innovation and production improvement. Illustration by http://www.colourbox.com

    Assign a cost

Once you’ve identified a problem or challenge, determine the cost.  If troublesome as-built records are the challenge, then calculate employee time currently spent searching and assembling as-built records.  Identify how much other work is delayed assembling the records.   Calculate production delays or business lost because you don’t have readily accessible as-built records.

Spend a little time putting the numbers together.  Most of the time, companies are shocked to learn how much they spend struggling to overcome (avoidable) shop floor problems.  Compare that number to the cost to purchase and implement a solution, and you’ll have the core of your ROI.  A true business case is more than just a retelling of the requirement list.  It should look at the costs to determine whether the solution offers an ROI.  It may not, but working with a focused solution over a single phase will help minimize costs and simplify the ROI calculation.  Most company executives welcome the shorter phases, smaller costs, and frequent examples of positive impact on the business.

 Building For the Future

Building a business case for an MES or paperless manufacturing is not only possible, but likely much easier than you might think.  It’s definitely easier than convincing a 3 year-old of the importance of peas and spinach when they know candy is SO tasty.

Want to know more?  Check out our blog on Insider Tips on Calculating ROI for your Shop Floor System, or a recent article we wrote on Uncovering the Real Benefits of MES and Paperless Manufacturing.  No other purchase has the potential to significantly improve shop floor production like paperless manufacturing.  Still worried?  Give us a call and let us answer your questions.

When Is the Right Time to Install Paperless Manufacturing?

Too often, the benefits and ROI of shop floor improvement projects are lost as projects are delayed or postponed.  Learn how to maximize your benefit and discover the best time to install your system.

By David Oeters, Corporate Communications with CIMx Software

Don't wait to install.  Maximize the benefit from your shop floor system.   Photo by www.colourbox.com

Don’t wait to install. Maximize the benefit from your shop floor system. Photo by http://www.colourbox.com

Many manufacturers see the advantages of MES and paperless manufacturing, but struggle with the final decision to implement the system.  The process becomes a waiting game, where the implementation team knows something needs to be done, but they delay waiting for the “right” time or some confirmation or signal (a planetary or astrology alignment, perhaps?).  Sometimes it’s a budget or resource concern (when will IT have time to help, or when will Procurement be ready to release the purchase order), but other times, it’s indecision or doubt that the operation is really ready… or maybe it is some mysterious omen everyone is waiting for?

This sounds silly, but the truth is while you wait, shop floor problems continue.  Profit is lost, quality is sacrificed and production struggles during this period.

Overcoming Indecision

The truth is, there is no “right” time (other than now) to begin a paperless manufacturing or MES project, but there are a few simple questions that will help determine if your shop is ready:

  • How much are the challenges facing your shop floor costing you?

It’s important to determine your potential ROI before installing a shop floor solution.  This helps focus your system on your greatest challenges.  Once you have an ROI, it is a simple matter to see how much money a delay in the project is costing you.  Consider this, the solution may be an investment, but the delay is an expense with absolutely no return.

  • What benefit will your customers get from your shop floor solution?

Rolling out a new shop floor system, with features such as real-time WIP (Work In Progress) dashboard and ECO management is added value and benefit to your customers.  No other shop floor solution delivers as much benefit to production as MES or Paperless manufacturing.  Take the opportunity to reconnect with your customers and introduce them to the shop floor and production improvements you’ve made.  Often the additional benefit will be the “sign” you’re looking for to initiate the project.

  • Can you maximize your benefit by understanding your business cycle?

According to the concept of cyclical investment in a business from International Trend Research Group (ITR), the right time to invest is during the down cycle in your business in order to maximize your capacity as business picks up.   This may seem counter-intuitive, but investment during the down cycle ensures your shop floor is positioned to maximize production during a business boom.

  • Can you use a phased implementation during installation?

A phased implementation allows you to select the features and capabilities the project focuses on, minimizing shop floor disruption and maximizing the ROI.  If you have a system that allows a phased implementation, there is little reason (other than budgetary and IT support) to delay the project.  Determine where you can achieve the biggest benefit and dive in.  Roll out new features when you are ready.

The Next Step

In a perfect world, once a manufacturer has made the decision to upgrade their production to a Paperless manufacturing system, the hard work is finished and the implementation will be a breeze.  Unfortunately, we don’t live in a perfect world, but you can maximize your shop floor benefit by taking control of the implementation and working strategically to ensure a smooth transition from a paper-based to a paperless operation.

Want to know more, or learn how paperless manufacturing can benefit your shop floor?  Leave us a message or give us a call, we’re happy to help.

How to Win With a Manufacturing Shop Floor Pilot Program

Conducting a Pilot Program for your MES or Paperless Manufacturing system won’t guarantee project success, but there are clear benefits for the savvy shop floor.

By David Oeters, Corporate Communications with CIMx Software

Ever talk to someone in the manufacturing industry about a software pilot program?  Unfortunately, I don’t know of a topic more likely to kill a conversation at a dinner party (… “So, how’s your pilot program going?  Pass the biscuits, please!)  If it does happen to come up, you will quickly discover something we’ve come to accept.

Understanding the reasons and potential benefits of your pilot program will help ensure a focused project.  Image by www.colourbox.com

Understanding the reasons and potential benefits of your pilot program will help ensure a focused project. Image by http://www.colourbox.com

We call it the Shop Floor Pilot Program Conundrum – a strange place where multiple realities merge.

Here’s what I mean.  The vendor might see the pilot program as an extended demo, or as an easy way to get their foot on the shop floor and another step in the software sale.  The manufacturing executive sees it as an inexpensive vendor service and low risk way to confirm product selection.  The shop floor sees it as a pain-in-the-butt project from corporate.  Savvy shop floors, however, see it as a way to kick the wheels of a new toy and proof the sky is falling, and shop floor errors can be fixed with the right tools.  IT might be wondering how much work this will mean for them.

Benefits of the Pilot Program

The conundrum in all this… they may all be right.  In the end, there’s no “wrong” way to view the pilot program, but conflicting ideas can lead to missed opportunities that negatively impact the final project.  So, in our quest to de-mystify the conundrum, here are a few things a shop floor pilot program could (potentially) definitely do for you:

  • Define an achievable requirement list.  Many MES projects suffer from “requirement bloat” as everyone in the company offers their opinion on what the system should do.  A good pilot program will splash some needed reality on the requirement list.  It will focus the project on achievable requirements that make a positive impact on the business.
  • Build shop floor acceptance for the program.  Giving the shop floor team, who will be working with the new system the most, the chance to work with the software is a great idea.  Once they see the software won’t lead to robots replace people, but will help them do their job better, faster, and with fewer errors, they’ll work hard to make the project a success.
  • Low risk first step before a much larger investment.  Spending a little money to install the software on one line is much cheaper than buying all the equipment to install it everywhere before you know how it works.  This way, you can identify challenges early and will have a better idea of final cost of the total project.
  • Build a stronger case for an ROI.  Before you install the software, an estimated ROI will be mostly conjecture.  With a pilot program, you will have real shop floor data you can attach to the estimate to prove the ROI.  Plus, nothing can build an advocate for the project than an executive seeing firsthand the benefits of the investment and how it will work.

There are benefits to a pilot program.  They can help define a project, prove the ROI, and minimize risk.  But, if you begin your pilot project with false expectations, you end up with confusion.  The vendor isn’t sure what they’re offering, the shop floor isn’t sure what they’re getting and the executives aren’t sure what they’re buying.  No one is happy.

Eliminate confusion, and make sure you understand what the pilot program can do for you.  Have you been part of a successful pilot program in the past?  If so, what made it a success?  What did you do to eliminate confusion?  Let us know, we’d love to hear from you!