Wednesday, October 1, 2014

How to Build ROI Analysis for Manufacturing Systems

By Conrad Leiva, International Board Member of MESA International and member of MESA’s Technical Committee

The economy is recovering, but we are still facing a very conservative spending environment in our manufacturing organizations. Increased scrutiny on process improvement projects requiring investment, means that Return on Investment (ROI) analysis is not optional for information technology (IT) related projects.

The good news is that the MESA organization has a guidebook available to help you put the business case together to justify that investment in information technology to improve your shop floor operations. Manufacturing Execution Systems (MES) and Manufacturing Operations Management (MOM) systems are helping many manufacturer cut costs, improve on-time delivery and quality performance.  The MESA Guidebook on ROI and Justification for MES will provide a robust framework for your analysis of benefits and costs, and help you create that compelling business case.

Here are 11 areas discussed in the guidebook:
  1. Project Definition
  2. Critical Manufacturing Issues
  3. Identifying Potential Business Impact (Increased Revenues, reduced Costs, reduced risk)
  4. Qualitative (non-quantified) Benefits
  5. Quantifiable and Qualitative Benefits
  6. Total Life Cycle Costs (Total Cost of Ownership)
  7. Project Development
  8. Hardware and Infrastructure
  9. Services and Consulting
  10. Risk Management
  11. Cost-Benefit Analysis (Different Return on Investment Measures)

If you are a member of MESA, you can download the referenced document listed below. If you are not member, you should really consider joining the organization for access to the complete library of resources and to participate in future studies and initiatives that further advance and document information technology in manufacturing operations.

Referenced Material: 


Conrad’s career has included consulting with many Aerospace & Defense companies on how to streamline the paperwork and information flow among Planning, Inventory, Quality, Production and Supply Chain disciplines. Recently, his work has focused on manufacturing intelligence and the integration between engineering, business, and manufacturing systems working with PLM and ERP partners. Conrad is VP Product Marketing and Alliances at iBASEt. Conrad holds an M.S. in Industrial Engineering from Georgia Tech, certification in MES/MOM manufacturing operations management methodologies, and is a certified quality auditor.

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