(MSI Magazine, MESA, Manufacturing Engineering Laboratory)

Many organizations have implemented ERP and SCM systems, but most have overlooked manufacturing execution systems (MES). However, the shop floor limits of ERP and SCM systems highlight the need for more effective MES systems. Build a business case for an MES system using this guide.

What is an MES?
An MES is an application that monitors and controls activities on the shop floor and related areas (e.g. subcontracting, purchasing). This lets manufacturing managers and shop floor employees see what''s going on at a specific work center or how a specific manufacturing machine is being used.

How this Saves Money
MES reduces paperwork, increases automation, and gives everyone more information about the shop floor.

Action Plan
Here''s how to build a business case for implementing an MES:

Identify current problem areas in your manufacturing environment (e.g. lack of real-time information, long lead times to customers). Calculate how much these problems are costing today (e.g. $1 million per year in lost sales from long lead times).

Some specific ways MES systems can address problem areas include:

· Reducing lead times

· Boosting quality and reducing scrap and rework

· Lowering inventory (raw materials, work in progress, finished goods)

· Making orders more accuracy

· Shortening cycle time

· Eliminating much paperwork

· Improving maintenance scheduling

· Lowering warranty and post-sales service costs

· Increasing the accuracy of BOMs (Bills of Materials), Routers, recipes, and other master data

· Adding tracability of individual products back to production orders or production runs

Quantify the potential benefits to both the overall organization and manufacturing specifically. For example, work with your production planners to estimate how much inventory could be reduced from better order planning (e.g. $10,000 safety stock inventory reduction). You can also work with your marketing department to estimate how much customers would be willing to pay for shorter lead times (e.g. 10% premium on half of the $1 million in sales currently lost per year).

Start small and expand later. For example, pick a low-volume production line that isn''t critical to the overall company''s success, or a production line that everyone desperately wants to improve by adding MES functionality.

Determine how manufacturing can better leverage existing investments in ERP, SCM, and related systems. Many organizations have expensive ERP or SCM systems that haven''t produced the returns originally expected. Some of the benefits listed above can be helpful in justifying these existing investments, but other benefits beyond the shop floor include decreasing working capital and increasing cross-functional process integration.

Bottom Line
Although flashy CRM and e-business systems get senior management''s attention, they can''t succeed without the functionality of an MES system.