Tag Archives: Two comma MES

Is Your MES Sunk Cost Software?

Want to improve production, increase profit and implement more efficient operations? We borrow tips from one of the top poker players in the world (and a cognitive psychologist) to show how you can deliver better business results quickly and easily.

 By David Oeters, Corporate Communications with CIMx Software

Is your old and dusty MES a disaster waiting to happen? Illustration by www.colourbox.com

Is your old and dusty MES a disaster waiting to happen? Illustration by http://www.colourbox.com

The other day we celebrated my brother’s birthday with a trip to his favorite restaurant.  The plan was a quick lunch, a trip to the movies, and then ice cream. Problem was, a horde of hungry people decided to get lunch at the same time. The lobby and waiting area was packed. “It can’t be that bad,” we told ourselves. “Let’s just wait it out. We have time before the movie.”

So we waited. And waited. And then waited some more. My brother and Dad spent time designing miniature houses with napkins and chopsticks. My Mom did a crossword, while my wife and I tried to keep two kids under the age of 6 amused. We waited almost three hours before we got a table, and ended up missing the movie. We were even too tired to get ice cream.

Why did we wait? It was completely irrational to sit in the lobby on an uncomfortable bench for 3 hours when we could have found another restaurant with good food in less than 15 minutes! We could have saved three hours of our day, gone to the movies and enjoyed ice cream, but we didn’t. We waited….

How Sunk Costs Can Sink You

Annie Duke, a former professional poker player and current Decision Coach, calls this irrational behavior a Sunk Cost. “We have a strong bias to take into account resources already invested in our decisions about whether to move forward,” she explains. By making the decision to go to the restaurant, and investing time (even a little time) in waiting, we are less likely to change our minds and go somewhere else. Even at the cost of missing the movie (we all wanted to see) and not getting ice cream (which was absolutely crushing for the kids).

Resources (like time, money, effort, etc.) already spent are a sunk cost, because you can never get them back. It’s a decision-making error when you consider sunk costs in making present and future decisions. Past investment is resources gone, and they won’t magically come back if you keep investing more. Rationally, you must consider ONLY the future return in the decision-making process.

Consider this… if someone had told me we were going to wait THREE hours for a table before I got to the restaurant, I would have gone somewhere else. I would have gone somewhere else if you had told me I was going to wait 15 minutes! But, because I invested time (which is a Sunk Cost , because I can never get that time back), I kept waiting.

Manufacturing Software and Sunk Costs

Clinging to past decisions can hurt your business and siphon profit. Illustration by www.colourbox.com

Clinging to past decisions can hurt your business and siphon profit. Illustration by http://www.colourbox.com

It was a completely irrational decision to wait that long, because the cost of lunch went from $20, to $20 plus a missed movie, no ice cream, boredom and pain sitting on the bench, frustration keeping hyper kids amused, and three hours of my precious time I will NEVER get back. In my effort NOT to waste 15 minutes, I wasted three hours.

Unfortunately, we are all guilty of faulty, sunk cost decision-making. How many times do we stay in a long line, reluctant to move even though there is a shorter line nearby? As Duke explains, how many poker players keep pushing a poor hand (bluffing) because they already have money in the pot?

What about your MES? How many companies keep struggling with old, inefficient and costly manufacturing software because of a past investment in the system? If the MES isn’t (or can’t) adequately support current manufacturing processes, and the only viable solution is expensive customization and upgrades, then keeping your current system because it offers limited useful functionality is irrational.

Today, there are low-cost, modern manufacturing software systems that can be installed in less than a week. You can easily import your current work plans and have digital work instructions on your shop floor a few weeks later. These agile and flexible systems are intuitive, with on-site training completed in less than a day. With inexpensive infrastructure costs and minimal maintenance, they are clearly superior to the aging two comma systems some manufacturers struggle with. Sure, some may be more comfortable with the older system, but “comfort” shouldn’t be a critical factor in a business decision.

Minimizing MES Risk

I can understand the fear and risk that has long been associated with implementing a new manufacturing system. Many cling to old software because they know the limitations. Installing a new MES exposes them to unknown risks and potentially crippling costs.

In the past, those were legitimate fears. Today you can mitigate risk with a low-cost, no-risk pilot program in a single area. You can quickly see if the software will work and determine any potential weaknesses while forecasting the Total Cost of Ownership. With a scalable and flexible solution, you can quickly roll it out everywhere when you’re ready.

Put simply – moving on from an inadequate MES to one that meets your needs and actually supports your operation is significantly less risky than waiting and continuing to throw money away.

Add Discipline and Logic to Decisions

When you are faced with a computer system or manufacturing system that isn’t meeting your needs, don’t let sunk costs influence your decisions. Decide on the path forward based solely on present and future returns, and consider the cost of adapting the faulty current system you have against the cost of installing a new, modern and flexible system.

Want to know more, or see how much you can save with a new system? Contact CIMx today, we’re happy to help.

Do You Need a Two Comma MES?

Some companies throw money away for software that will never do what they need, not knowing a better solution is available without gutting your profits.

By Kristin McLane, President of CIMx Software

Are you looking for an MES that will deliver and ROI and improve manufacturing outcomes? Image by www.colourbox.com

Are you looking for an MES that will deliver and ROI and improve manufacturing outcomes? Image by http://www.colourbox.com

I love the show Silicon Valley on HBO. It’s raw, open and makes fun of the software industry. Even with the absurd situations and characters, I recognize a grain of truth. There are times I cringe – some humor is misplaced, the language can be foul, and there are inappropriate things happening all the time. Yet, even when the show seems to make no sense at all, (like, why you would be obsessed with sesame seeds on burgers from “The Bur-gur King”?) I recognize… something true. It’s this recognition of reality in absurdity that makes Silicon Valley so entertaining.

Take, for instance, the latest investor in Pied Piper. Russ Hanneman (some say he’s a take-off on Mark Cuban) is wealthy beyond measure for bringing “Radio to the Internet,” but is self-obsessed and has no concept of real life. There is a painting that hangs in his house – modern, Jackson Pollock-style work dominated by three large commas. Russ considers himself a three comma – the three commas found in a billion ($1,000,000,000). The third comma is the differentiator, separating the elite such as Russ from everyone else. At one point, he loses money on an investment and ends up with only $960 or $970 million. He becomes a mere two comma and is distraught beyond belief, thinking the world has ended.

The Two Comma MES

Don't get buried by the cost of your two comma MES. Illustration by www.colourbox.com

Don’t get buried by the cost of your two comma MES. Illustration by http://www.colourbox.com

It seems absurd to focus so heavily on the difference between a two comma and a three comma, but  many perceive manufacturing software solutions the same way. Some believe the only “viable” MES solution MUST cost two commas, and anything less won’t work. They believe their company needs a complex, wildly over-priced and over-developed piece of manufacturing software. It must be crafted specifically for their shop floor in incredibly specific and costly configurations yielding the “best” solution. Any software meeting these criteria must cost (at least) two commas or it’s just not good enough.

I know why they think that way. For many years, the industry built this vision of MES with complex integrations and layers and layers of modules, functions and intricate software widgets with multifarious forms and menus. It’s a vision partially based in reality. Fact is, not all MES vendors actually provide a MESA-style, comprehensive and complete system. Vendors that do subscribe to this comprehensive and complex model provide systems that take years to install and configure (which they call an “off-the-shelf” solution), and cost more than two commas ($1,000,000+) when they’re done.

Two commas?!? Think about the percentage of your overall revenue represented by those two commas. Can you throw away two commas without a clear vision of the return? If your total spend on infrastructure and software is going to be more than US$25M+ this year, then you may have the resources for a two comma MES. Otherwise, you may be spending too much. Consider what you actually need.

The Paperless Manufacturing Solution

More money doesn't always mean a better solution. Illustration by www.colourbox.com

More money doesn’t always mean a better solution. Illustration by http://www.colourbox.com

As the manufacturing software industry began embracing the two comma vision of MES, we introduced “paperless manufacturing.” Paperless manufacturing provides all the functionality and production control of MES, without the unnecessary complexity and “service”-driven escalation of price. If you want a digital shop floor with paperless operations, and need the ability to know what’s going on real-time in your operations with total connectivity to your internal business systems and processes, then paperless operations will deliver without the pain some MES software demands.

Paperless manufacturing focuses on supporting manufacturing operations with software tools – eliminating errors as operators access the information they need at their workstation, using the instructions, photos, drawings, videos and attachments you provide. The software gives you tools to create better instructions and deliver them efficiently, without having to create them in a costly and inefficient desktop template. Paperless operations increase efficiency, as the correct work instructions are prioritized and delivered directly to the operator. When problems come up, you can quickly make corrections before production issues cause scrap. Paperless manufacturing gives you manufacturing control, without forcing you to adjust your processes or creating other problems.

Sure, a two comma MES MIGHT be able to do all this, but justifying the cost with unnecessary complexity, a massive project team and software developed decades ago doesn’t make any sense to me. The focus of the project should be improving production, solving problems, and ensuring an ROI. When you buy an operations efficiency engine like an MES, you are investing in your business and should know what the return is. A two comma MES doesn’t provide a suitable return because the cost for functionality is so high. Unnecessary complexity not focused on productivity is a sunk cost for manufacturing.

A Manufacturing Solution that Makes Sense

We encourage customers to develop a strong ROI with an efficient path to their organizational goals. If the project doesn’t provide an adequate ROI, we suggest the prospect look for a different solution. Also, keep in mind the more complex the software, the heavier the burden on the organization to implement the system. The subsequent cost savings must make up for all the overhead carried by the additional complexity.

Improve your shop floor with a true MES, not a mess of modular functionality. Illustration from www.colourbox.com

Improve your shop floor with a true MES, not a mess of modular functionality. Illustration from http://www.colourbox.com

What’s worthwhile about two comma MES? Why do people buy it? Many times, I think companies fall into a Russ Hanneman mindset, and believe ONLY a two comma solution could possibly meet their needs. They never bother to investigate anything else, or they assume two comma solutions are more robust or sustainable (this is blatantly untrue). Corporately, they’ve settled on the solution, even if it doesn’t work perfectly. They’ve made their decision and expect everyone else to make it work.

Russ might claim that if you have two commas to spend, you shouldn’t have to ask the true cost (I’d argue Mark Cuban wouldn’t say the same). But in our experience, total cost of ownership is one of the predetermined deciding factors in MES selection, and traditional two comma MES vendors just can’t size projects accurately. To quote a customer, these systems are “painfully configurable,” and focused on increasing service costs.

And finally, back to Mark Cuban…even he doesn’t believe in perfection, he said in a recent interview, “Some people work so hard to get it absolutely right that they don’t have the bandwidth to do all the other things that go into making a business successful.” Does this same concept apply to your selection of an MES vendor?  Have you gotten so focused on building the perfect requirement list that you lose sight of the usability of the final product, and the cost and time you need to make it work?