Manufacturers are now using digital manufacturing software to integrate Industry 4.0 technology in their operations. This enables them to go paperless on their shop floor and to improve their manufacturing processes.

However, a Manufacturing Execution System (MES) can be a significant capital expenditure. So, how do you justify this and how does an MES give Return on Investment (ROI)?

MES ROI

Here are the benefits based on the experiences of manufacturers who have implemented an MES in the past few years.

  • Labour productivity improvements.
  • Reaching improvement goals (KPIs) faster, due to real-time accurate data.
  • Labour & material cost savings through reduced scrap & wastage.
  • Increased sales turnover through better on-time delivery performance.
MES BENEFITSIMPACT ON ROI
Cost Savings £Increased Income £
LABOUR PRODUCTIVITY IMPROVEMENTSCost Savings Through Reduced Labour OverheadIncreased Turnover through Increased Output
REACH IMPROVEMENT GOALS FASTERCost Savings Through Reduced CostsIncreased Turnover through Increased Output
REDUCED SCRAP & WASTAGEReduced Time & Material Wastage
IMPROVED DELIVERY PERFORMANCEIncreased Turnover through Better Delivery Performance

ROI From Labour Productivity Improvements

Produce more from your existing labour by reducing time spent capturing shop floor data, product traceability, and quality inspections.

By using a Manufacturing Execution System to automatically capture this information, our clients typically see a 10 – 20 % productivity improvement and a positive Return on Investment (ROI).

Key ROI Indicator: Increased throughput per operator standard hour / reduced labour cost.

Reach Improvement Goals Faster to Get ROI

By capturing real-time, accurate production data, an MES can drive faster progress towards meeting and exceeding improvement goals, KPI’s and generating a good ROI.

An example of this is using an MES to capture and analyse process cycle times during a continuous improvement exercise.

If the MES is used to capture the baseline process cycle time, when the process improvement starts, the MES will be tracking real-time cycle times. This data will then be immediately available for comparison against baseline process time and therefore, can show if a positive improvement has been made.

ROI from Reduced Scrap & Wastage

A Manufacturing Execution System can be used to deliver ROI by increasing the Right First Time performance of a manufacturing process. This is the percentage of products that were made correctly without any need for rework. An MES does this by adding checks into the manufacturing process to ensure the correct process is adhered to at every stage.

Steve Hammond of Pfizer Global Manufacturing outlines the benefits of Right First Time in this presentation:

  • Improves Product Quality.
  • Enhances the reliability of supply chains.
  • Reduces material and labour cost on scrapped parts.
  • It can help to transform an organization: Reactive > Proactive > Predictive.
  • Reduces cycle time.

He goes on to say that a culture of Right First Time can transform an organisation from:

  • End of production line testing to controlling the manufacturing process.
  • Control through paper and procedures to understanding or processes.
  • From resistance to change to continuous improvement.

Key ROI Indicator: Reduced cycle time / standard time per product; Time & materials lost through rework

Improved Delivery Performance for Better ROI

When manufacturers rely on manual systems for managing customer demand and suppliers, they find it difficult to manage the supply and demand fluctuations and cyclic nature of business.

A Manufacturing Execution System can deliver ROI by automating the data collection and tracking of customer’s order status throughout the factory and displaying its shipment status. This makes it easier to manage your customer relationships. By identifying and resolving problems that cause delays with customer orders as early as possible, it makes it easier to meet on-time deliveries and production targets each month.

Key ROI Indicator: Improved customer relationship; turnover