Moindi Brian Meshack

How to Measure ROI from Your MES ROI (Return On Investment) refers to calculations that help determine whether an investment is profitable. For example, companies can do Return On Investment calculations before purchasing new systems to determine what optimisations are involved and whether its a good investment. A positive ROI is good for companies because it means that they have a good production rate, make good quality products, and have net-positive returns. Measuring ROI from your Manufacturing Execution System can help your company understand its financial impact on operations and whether the manufacturing process is running optimally. While implementing an MES improves your production process, the real question is: how much is it really saving or generating for you? In this article, we shall discuss how to measure ROI from your MES, along with approaches such as AI, no-code, and real-time intelligence for improving your returns. What is MES (Manufacturing Execution System)? An MES is a comprehensive software system used to monitor, track, document, and control various steps of the manufacturing process, from obtaining raw materials to making finished products. MES provides a functional layer between process control systems and ERP or Enterprise Resource Planning. MES provides decision makers with enough data to make their manufacturing process information driven and more efficient by optimizing production. It offers several benefits, including increased uptime by balancing equipment, personnel, and material resources, plus generating realistic production schedules. It also increases quality control, reduces inventory, improves product tracking and genealogy, and creates a paperless shop floor by eliminating paperwork and reducing human error. MES provides real-time data to decision makers ensuring quick, efficient, and informed decision-making. You should also note that having an MES may not always be enough, one must know if the MES is delivering value for your company and whether your investment provides worthwhile returns. ROI gives you the correlation of benefit that the organization is getting from the system and incurred costs. Knowing the total cost and ROI of an MES becomes critical, since more manufacturing systems have integrated AI and automation into their processes. The ideal solution for MES, when integrated and nurtured with tools such as the AI Factory Toolkit, is to enhance the manufacturing process’ efficiency and eliminate expensive costs as well. What is ROI (Return On Investment)? ROI or Return On Investment is a performance measure that helps evaluate or compare an investment’s profitability or efficiency with other investments. ROI helps investors measure the amount of returns they can get from the manufacturing process with relation to its cost. Key factors that influence ROI include the initial investment, maintenance costs, and the investment’s cash flow generation. ROI is useful because of its simplicity and versatility. It is determined by dividing an investment’s net profit or loss by its initial outlay or cost and is often expressed as a ratio or percentage. Calculating ROI is important for companies because it helps them compare various investments in similar niches. Doing this will help the companies separate worthwhile investments from those they’ll need to tweak or push off for later. Worthwhile investments will have a higher ROI, which means that they’ll yield better results. This can help companies find better investment opportunities. Methods of measuring ROI from your MES Identify the Key Performance Indicators As mentioned earlier, measuring ROI from your MES will help you make more informed decisions since you’ll be able to know whether your manufacturing process is profitable. There are various aspects you should consider during this exercise and one of them includes identifying key performance indicators. Common KPIs you can use for measuring your MES’ ROI include machine utilization, product output,inventory levels, defect rates, and downtime. Production Output Production output can be a very good ROI indicator and it refers to the amount of complete units produced within a preset period. Companies that produce more high-quality products within a shorter period are more likely to have a higher ROI than those that don’t and it is a sign of optimal MES functionality and better resource utilization. You can measure your company’s production output by tracking the amount of complete, high-quality units your manufacturing process generates within a specific period. Next, you should compare these results with previous production rates to determine whether your manufacturing line is profitable. Often, producing more high-quality products translates to a net-positive ROI. Machine Utilization Measuring machine utilization is a good ROI indicator because it helps you determine whether your machines are working at full capacity. Measuring machine utilization provdes you with important data like underused or broken equipment, allowing you to either optimize them for efficiency, plan maintenance schedules, or quickly fix broken machines for increased manufacturing capacity. MES can help you find machine utilization rates by comparing their running time with the total available time. The software can track operational periods and compare them with the total available time. It can also track machine status, helping you plan for maintenance costs. Smaller ratios between operational times and total available times and excelent machine status could be a good indicator of higher ROIs. Downtime You should measure any downtime experienced in your manufacturing process because it has a negative effect on your ROI. Downtime refers to instances where your manufacturing equipment is not operational due various issues like maintenance or breakdowns. Downtime can negatively affect your ROI in different ways, which may include time wastage, reduced number of manufactured units, and operational expenses that may arise from extensive repairs. Measuring your manufacturing process’ downtime will help you determine whether your maintenance strategies are effective and if your equipment is reliable. Measure your manufacturing process’ downtime by recording its frequency and period. Understand that companies whose manufacturing lines experience a lot of downtime are more likely to experience reduced ROIs. Inventory levels Tracking the inventory levels helps you determining the amount of raw materials available, WIP (Work-In-Progress), and manufactured products you have in stock. Keeping up with inventory levels helps you ensure you have enough materials and finished products without overstocking, It also helps reduce holding costs and wastes that arise from excess inventory. You can measure this metric by monitoring your stock levels and turnover rates. You can use MES data to track the inventory levels in real time and adjust your procurement strategies accordingly. Efficiently managing the amount of raw materials you acquire and finished products you’ve held in stock will help improve your ROI and cash flow. Defect Rates This KPI helps you determine the number of products that dont meet quality standards. A high defect rate indicates issues with the manufacturing process or equipment, which can affect customer satisfaction. You should calculate the number of defective products and tract the causes using MES data. Defective products can affect customer satisfaction and increase waste and rework. Reducing the amount of defective products produced from the manufacturing process will reduce overal costs and improve your ROI. Best Practices to Maximize Your ROI Here are some guidelines that you need to adhere to if you want to make your MES more efficient and maximize your ROI. 1. Work Begins from Scratch with No Code Remember, you need to take it slow when it comes to implementing any type of new technology, including MES, to the manufacturing process. However, you can introduce additional tools like no-code and implement it through AI Factory Toolkit with a high degree of speed and minimal levels of risk. This tool is great for implementing functions that create automatic workflows without the need for a team of programmers and can help you quickly boost your ROI. 2. AI as a means to improve existing processes While automation is great for boosting ROI, it should go beyond the most fundamental levels. You can boost your company’s manufacturing process by incorporating AI into your MES to help the business grow even more. Incorporating AI helps you manage and synchronize production lines in real-time. It can help minimize delays and inefficiencies which, in turn, maximizes quality and production rates. This kind of real-time control helps guarantee that you are continuously achieving optimum utilization of the MES. 3. Continuous Monitoring and Optimization It is important to continuously monitor and optimize your company’s operations to ensure constant growth and an improved ROI. You’ll need to regularly assess your company and ensure all operations are working efficiently and that there is constant improvements. You should also be sure to use MES to help you make all the necessary changes that can help improve your company’s ROI. Conclusion It is crucial to understand the return on investment on your MES in order to ensure that you are benefiting from your investment. You need to use key performance indicators like machine utilization, product output,inventory levels, defect rates, and downtime to identify where the MES is most valuable in the manufacturing process and make the necessary optimizations. Remember, most companies have incorporated AI in their manufacturing processes and any further delays on your part could affect your company’s ROI. You should use any available tools at your disposal, including AI. AI can help supplement your company’s automated processes and improve its ROI. You need to consider AI additions such as Tupl or the AI Factory Toolkit to improve your MES’ performance. Remember, MES is more efficient when it is based on real-time intelligence, no-code applications, and automated industrial systems. Using these tools can help increase production and make your company more efficient and profitable.