From Shop Floor to Top Floor – Success is within reach

Imagine connecting real-time information about any machine on your shop floor to your management team so that you can improve your manufacturing capacity by 10% to 50%.  Truth is, you can do this now.  Many manufacturing companies today think that their businesses are doing just fine and that they have no worries.  However, in reality, they have little or no data about how the inner workings of their machines are truly functioning.  Once an objective, automated, evidence-based data collection system is used to assess the nuts and bolts of the manufacturing process, it is often found that efficiency in many areas can be greatly improved.

Memex Automation’s MERLIN OEE system is an automated MES solution with the mantra “Shop Floor to Top Floor”, and delivers exactly that.  Its combination of hardware and software integrates everything from any machine (including work centers) on the manufacturing floor all the way up to the head office, both vertically and horizontally.  Horizontal integration means that shop floor operations are linked and communicate with each other, optimizing production.  Vertical integration means that shop floor information is effortlessly transferred to head office and vice versa.  The transfer of production orders from the ERP system to the machine is streamlined and automated via an “electronic traveler” that sends results, including part counts, run times, down times with reason codes, and quality information, back to the ERP system.  Everyone from the machine operator to the company president has totally accurate data at their fingertips.

A key feature of MERLIN is that it allows companies to monitor their productivity in real-time.  Dashboard metrics provide instant visibility and machine alerts for the entire shop floor to see, so that problems such as machine breakdown or parts rejection can be dealt with immediately.  By accelerating response time, MERLIN increases a manufacturing plant’s productivity and thus profitability.  For example, implementation of MERLIN on 30 machines at Rose Integration, a precision machining company, increased OEE across the shop floor from 40% to 82% in 18 months.  Similarly, aerospace company Magellan increased their machining time by 100 hours per month per machine once MERLIN was implemented.

MERLIN contains an integrated Microsoft Dynamics AX Connector module and advanced functionality that allows production order information to flow seamlessly from Microsoft Dynamics AX through to the machine on the shop floor, and then sends results back to Dynamics AX in real-time.  The system automatically prioritizes transactions by date and time stamp, minimizing errors associated with manual input.  Accuracy of inventory, parts counts, and job costing data are all improved.

Success in a manufacturing plant is all about effective communications between the shop floor and the top floor, and this is where MERLIN outclasses any other manufacturing solution currently available.  By monitoring all of a plant’s machines, no matter what age or make, MERLIN boosts productivity and profitability.  Even better, MERLIN is affordable, so that a payback to the bottom line is achieved in just a few months.  In short, MERLIN is a time-saving, money-saving solution that starts with an understanding of what is happening at the machine level, and ends with efficient transfer of that information to Microsoft Dynamics AX.

John Rattray, V.P., Memex Automation Inc.,

Affordable MES for the mid-market

Gil Garcia, from Microsoft Dynamics AX, has hands-on experience with most manufacturing ecosystem products.  Most shops strive to be connected shop floor to top floor, but with the major obstacle in connecting these two being cost of equipment, Gil never thought that it was possible for a solution to become available to the mid-market.  Read about how Memex MERLIN, along with MTConnect and Dynamics AX, can in fact make this possible.

The full blog entry is listed below.

Click here to visit his site, Dynamics Cafe, where this blog and many more are posted.

Affordable MES for the mid-market

By Gil Garcia

I have been preaching the Shop Floor to Top Floor mantra for many years now but deep inside I knew it would never happen in the mid-market in my lifetime.  Companies that are successful in connecting the shop floor to their ERP system can achieve productivity increases in the range of 10%-50%. So why did I think this way? Costs!

The solutions available out there to the mid-market have always been super expensive. It’s not the software mind you.  I have seen license costs in the range of $50,000 – $100,000 which is pretty reasonable if the ERP system is costing around $350,000 (average mid-market deal). The real costs lie in the services costs connecting the machines to the historian. A typical shop floor can have a dozen different types of machines, with different PLCs, and an MES service project has to ‘translate” a dozen machine languages into language that the multitude of business applications can understand. So this many to many problem (known as the “(N-1)squared- N”) has been around forever, until an organization called MT Connect came along.

MT Connect has developed a connected manufacturing model which really translates into Universal Machine Connectivity. Now, MES application can use this “protocol pipeline” to seamlessly and inexpensively connect the multitude of machines to the shop floor to Dynamics AX. Obviously it’s not as simple as that. You still need a good MES application to translate the data into information, and provide the software and hardware to connect the PLCs to the system server. But the major cost obstacle in connecting the shop floor seems to have been overcome in my lifetime. Make sure to go out to the MTConnect website and download their Connectivity Guide as it provides invaluable information if you are considering an MES project.

As we all know there are several MES options available to the Dynamics AX user community. All are strong and very powerful when connected to the Dynamics AX ERP backbone. One of the ones I really like is an offering from MEMEX Automation called MERLIN. What really impresses me is their sales model. They will quote you an all in price per machine (hardware, software, services). The prices I have heard quoted are extremely reasonable and affordable for the mid-market, something I’d never thought I would see for mid-market companies.

So why do an MES project? Well for one, the return on investment from MES systems is similar to what you get from good advanced scheduling tools, around 3 months! Compare that to a typical 23 month ROI on an ERP project and its pretty simple to justify. What are the typical benefits? The MEMEX guys quote numbers like: 10% operational improvement, 20%-60% profit improvements, real time machine visibility and OEE statistics, reduction in unplanned downtime, scrap rates reductions, better labor productivity, and so on. On the shop floor operators will be able to see productivity numbers on large flat panels (much like the “lean” concepts of visual clues), and all this is real time data. So if processes start to edge out of productive ranges the operator or supervisors can react immediately, and not wait until the end of the shift or a week to address. The operators can also seamlessly report on downtime issues (bottlenecks, material shortage’s, scrap, operator error (yeah right!).

Now once you actually integrate the MES system to the ERP backbone (assuming its AX), the Role Centers in Ax will carry all the KPIs and OEE statistics to middle and upper management. These Role Centers will carry the company standards when it comes to productivity, efficiency, waste allowances, costs, quality non Conformances, and all the KPIs necessary to improve the business process. I say improve because in our world what cannot be measured cannot be improved. The information is real time so no need to wait until month end close to see how the plant is doing with respect to production on the shop floor. I never thought I would see it happen but the reality is finally here: Affordable MES for the Mid-Market. Fairy tales can come true, they can happen to you!

Check out our upcoming MES live meetings and podcasts on the Dynamics Cafe soon!

The 3 Levels of OEE Wisdom

Overall Equipment Effectiveness (OEE) is often misunderstood and miss-used to a fault.  “For the past five years, manufacturing plant managers and supervisors have adopted lean manufacturing principles, eliminated waste, and have still seen total production efficiency elude them. Monitoring and OEE solutions in the shop have extracted very little value because most ‘OEE monitoring’ technology uses tools that generate data, but unfortunately, none of them help us make sense of it.”[1]

The Top Shop performers have connected all the dots in a fundamental way by providing key information in terms of profit dollars, which changes existing paradigms of “current” state manufacturing, into real value “future” state manufacturing. They have advanced OEE understanding and have applied improvement projects strategically, optimizing the use of discretionary resources (people, time, and money). Everyone is “on the same page” of promoting organization success.

Yet, some manufacturers and part makers make the jump from “Good to Great” and become the Top 10% in their respective areas and demonstrate accomplishments significantly higher and more profitable than the “rest of the crowd”.[2]  (Note that the “Top Shops” reported the same number of machines, people and pay, as the “Other” Group.  Therefore, one can conclude that Top Shop capability already exists inside your current assets.)

Advanced OEE understanding can be envisioned as 3 levels:

  • Level 1: Mastering Individual Work Station OEE understanding – identifying Gap to World Class.
  • Level 2: Mastering Flow-line OEE performance by product – integrating the results relative to your product mix and applying the Theory of Constraints to prioritize the use of resources.
  • Level 3: Linking the Line of Business (LOB) financial information by product into the Flow-line diagrams and validating current state results – the resulting Financial OEE model becomes a ‘Crystal Ball’ to guide the profitable transition of “Other” performance into “Top Shop” performance.  Level 3 synergizes the physical side and business side of OEE.

Level 1 – The introduction of basic OEE at the individual work station.  This includes product run data collection, loss analysis, and improvement using work station resources.  At this level, production effectiveness is focused on the physics of improving throughput at the work station.  Effectiveness gain opens up time for more learning, establishing ‘One Best Way’ and a reliability/quality focus in the work station.

Level 2 – The application of OEE value stream mapping of product Flow-lines using actual OEE product data generated from the Current state results and actual product mix.  A validated Flow-line analysis would reflect “how the shared work stations were used” to generate the product volumes and waste amounts for the time period investigated.  Correctly combining the work station usage for the spectrum of LOB product volumes produced automatically identifies the Overall Constraint as well as the next constraint(s), etc.  (Note that the Flow-line OEE is the OEE of the constraint minus all downstream quality losses).  At this level, application of the Theory Of Constraints is used to begin managing the Flow-line bottlenecks.  This is like tuning up the manufacturing engine where each work station represents an individual cylinder that needs to be harmonized with the rest in order to get the best effectiveness out of the production engine.

Level 3 – The Financial OEE which links actual product financial information into the Flow-line diagrams, and validating the overall results with the LOB actual results, for expenses and profits.  Upon completion, the actual “contribution by constraint hour” can be computed to assist the entire organization with better business decisions for product mix.[3]  More importantly, the LOB Financial OEE Model can be used to investigate the “bottom line” impact for any change to an input parameter.  This is a powerful Intelligence tool for the Leadership Team to use to prioritize improvement alternatives in terms of actual profit dollars.  By having the total organization “on the same page” and understanding exactly when, where, why and what to apply to key resources, it not only moves the organization toward Top Shop performance quickly, but it also gives the road map of profit dollars along the way.  Being able to leverage the “Hidden Factory” completely gives the Top Shops a competitive advantage as demonstrated in their survey results.  Their results showed a 16% more profit per machine and double the business growth rate while supplying customers with lower prices and faster delivery.[2]

Are you interested in learning more about all three levels of OEE Wisdom?  Narrated Financial OEE training modules and consulting services are available at

– Robert Hansen

Author OEE: A Powerful Production/Maintenance Tool for Increased Profits

R.C. Hansen Consulting, LLC.

[1] Cutler, Thomas. “Listen to the Machine.” Business Excellence Magazine (2013).  Web. <>

[2] “Top Shops – Benchmarking Your Machining Business.” Modern Machine Shop (2013).  Web. <>

[3] Hansen, Robert. “20% More Profit – For Free.” Web log post. Memex Automation. 25 Apr. 2013. Web. <>.

MEMEX - Machine Monitoring

To Measure Is To Know – MTConnect book

The world’s first book on MTConnect, an open and royalty-free interoperability standard and the application of open systems in manufacturing has been released and it is titled,  MTConnectTo Measure Is To Know”.  Written by Dave Edstrom, CEO/CTO of MTConnect, the book discusses the many lessons learned in the world of open systems and the value this means to the manufacturing industry.

Dave Edstrom has spent over 35 years in the computer industry.  He helps the reader understand that MTConnect is not just an evolution in manufacturing, but that it is a revolution, a true game changer.  “MTConnect will be more important in the 21st century for manufacturing than CNC was for manufacturing in the 20th century” said John Byrd, former president of Association Manufacturing Technology,   (MTConnect: To Measure Is To Know. Ashburn: Virtual Photons Electrons, 2013. pg xiii).  MTConnect is making the dreams and desires of generations of manufactures possible.  Machine tool builders and manufacturing equipment providers alike all want to see the same goal of different devices having a common connection on the plant floor.  With MTConnect, anything is possible.

A few excerpts from the book:

“Only one to two percent of all shops monitor their shop floor.  The ability to know what is happening on your shop or plant floor anywhere, at anytime, is vital to the manufacturing process.  As a comparison, the next time you go in for a surgery, tell the surgeon that you want to save money and not monitor any of your vital signs.  Drop me a note and tell me what the surgeon tells you.  Then why is it that 98% to 99% of all shops don’t bother monitoring their shop floor?

Think of MTConnect as the Bluetooth of manufacturing that makes it easy to get information off your manufacturing equipment.  MTConnect is not an application, but it makes it very easy for applications to read data in a common and universal format.

Different Devices, Common Connection.
(MTConnect: To Measure Is To Know. Ashburn: Virtual Photons Electrons, 2013. pg xii).

“The process of standardization is always a political struggle with winners and losers.  The primary winners will be those companies that understand it is co-opetition (competition and cooperation) that drives thriving markets.  The primary losers will be those companies holding on to proprietary solutions at all costs.  With a standard screw, you could now have standard tools, standard assembly lines, and the growth of mass production.”
(MTConnect: To Measure Is To Know. Ashburn: Virtual Photons Electrons, 2013. pg 3.)

“If we look at the manufacturing companies that are embracing open thinking and open collaboration, these companies report secondary benefits in morale as their employees typically tell their management that they have a much higher job satisfaction.”
(MTConnect: To Measure Is To Know. Ashburn: Virtual Photons Electrons, 2013. pg 22).

Memex is mentioned in the acknowledgements

“Huge thanks to Dave McPhail, president of Memex Automation.  Dave is a great guy, and so is his business partner, John Rattray, who is the vice president of sales and marketing, as well as the whole Memex Automation team.  Thanks as well to Bob Hansen of R.C. Hansen Consulting for his help at [MC]2 2013 and educating me on OEE”
(Dave Edstrom, MTConnect: To Measure Is To Know. Ashburn: Virtual Photons Electrons, 2013. pg 209).

There is a paperback version that is available at Amazon.

2013 – Adapt or Die

Information presented at the MTConnect 2012 conference in Cincinnati, OH. clearly emphasized that the Manufacturing world is going to change extremely fast in the next few years.

Many examples of “How and Why a Royalty-free and Open-Source Standard is Revolutionizing the Business and Technology of Manufacturing” are provided in the book written by Dave Edstrom, President of MTConnect, To Measure Is to Know.  The main point of the book is that the new manufacturing equipment will have a common “Bluetooth type data” speak-ability to interface with software monitoring, your enterprise resource planning (ERP), and any other software, including your financial software.

This common speak-ability will allow for the capturing and linking of detailed real-time performance monitoring of shop floor actions, with planned road maps executing customer work orders for real-time proactive intervention, and, more importantly, historical information to analyze for strategic competitive advantage and continuous improvement.

Stop and read the above paragraph again.  Think of what “accurate real-time shop floor critical information” would mean in your current work environment.  You could make better decisions throughout your daily manufacturing processes, regarding order tracking, quality, rework, overall scheduling optimization, customer delivery, and most importantly, the impact on profit.  Detailed historical data could dramatically improve job estimates, material usage, updated work order planning values by individual work station, and optimizing product mix decisions using “Contribution by Constraint hour” information.[1]  Guidelines would be implemented for the sequence of handling unplanned events and would be made visible from the shop floor to the top floor, enabling all levels of the organization to automatically take immediate corrective action.

Now you might say “that is great for those manufacturers getting new equipment, but we aren’t in that group.”  This is where the “Adapt or Die” situation becomes visible.  You can either choose the current criteria that is on the market and remain “blinded” because you don’t have the new manufacturing equipment listed above (and in turn, you can get eaten up by the competition with the new equipment).  Or you can launch your own new real-time information revolution on your already existing equipment.

So how can this be done?  How can you launch a revolution on your existing equipment?  Your organization must first be able to recognize that the compatible MTConnect hardware/software information capability is already available for ALL Legacy machines.  Providers such as the Memex MERLIN system and the advanced Financial OEE value stream analysis can be applied specific to your site using your current Line of Business product portfolio.[2]

But what evidence exists except for this Blog?  A brief review of Modern Machine Shops “2012 Top Shop” survey indicates that of the 350 completed surveys, the top 12% show that the average Top Shop versus the average of the “Other” shops are 70% more likely to do Continuous Improvement, 75% more likely to do Value Stream Analysis, 150% more likely to do Theory of Constraints and have 12% higher OEE. (These results are all from data driven activities).  Over half of the completed surveys indicated that they were Job Shop environments.  Top Shops show that the days between order placed and product delivery is 39% less, and the Top Shop customer growth rate is double that of the “Other” shops.

Overall, the “Adapt or Die” scenario is about launching a new information revolution on the already existing equipment, focusing on speed and proficiency.  The real question is “how fast can we implement real-time data collection and incorporate the education to leverage the new information revolution?”  If you are not in front of the competition, you are behind it, and chances are that you will experience several set backs along the way.

– Robert Hansen

Author OEE: A Powerful Production/Maintenance Tool for Increased Profits

R.C. Hansen Consulting, LLC.

[1] 20% More Profit for Free – Last weeks Memex blog