MES Investment and ROI

How to build a solid business case part 2/2
savings and growth (PresseBox) (Dresden, ) This article was first published in a series of blog posts at Critical Manufacturing's website.

Manufacturing Execution System (MES) applications were first introduced in the semiconductor industry during the 80s. The semiconductor industry is very capital intensive and its manufacturing processes are very complex.

Even though the hardware costs have decreased by several orders of magnitude since the first MES systems were implemented, the investment required for an MES system implementation can still be significant. Therefore, it’s necessary to build a strong business case to justify the project.

A detailed ROI analysis requires identifying all benefits gained and costs incurred due to the MES implementation.

The first half on Benefits was published last week, while this article concludes the second part on the COST side.

MES related hardware depreciation
Recurring cost (not incurred if hardware is not renewed at the end of depreciation period).

MES related software licenses
Cost incurred one time, during the project implementation.
Other licensing models are typically also available based on a monthly/yearly fee or pay per usage model.

MES related software maintenance

Recurring cost, after project implementation.
Typically includes access to new software versions and product support.

MES related implementation services
Cost incurred one time, during the project implementation.
However, most of the MES implementations truly never end with new requirements and capabilities being required as the company evolves. Still, the bulk of the work is associated with the MES introduction.

MES project implementation internal employees time
Cost incurred one time, during the project implementation.
This is considering that the operational MES utilization is part of the daily job of the internal employees.
For a MES implementation, it’s essential to secure the availability of key users to support the project.

MES related operational costs

Recurring cost. It consists of the costs related with operation and administration of the MES system.

Given the environment today with growing global competition in terms of innovation, cost and time to market (given by short product cycles) as well as with increasing regulatory demands, the answer to the question “can you afford not to invest in an MES?” is turning into a clear “No”.


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