20% More Profit – For Free

The Modern Machine Shop magazine’s 2012 “Top Shop” survey results indicated that the median point of “other” machine shops (approximately the bottom 90% of shops sending in >350 surveys) was at a financial performance level seventy six percent below the TS median point for profit per machine.  Couple this with the information that TS are 150% more likely to apply Theory Of Constraints TOC methodology in their business/operating decisions and that TS are data driven.   Why is this an advantage?

One big reason for the TS competitive advantage could be in the data collection and analysis of true OEE by product at each machine in their product flow-lines.  This provides the actual throughput minutes per machine by product and allows an analysis similar to the “Bob’s Bolt Company” (pgs. 250 -260 of “The Constraints Management Handbook” by Cox and Spencer, St. Lucie Press/APICS series, Boca Raton, FL.) The example provides the necessary financial and operating information and examines a Line of Business with 4 products being produced by a series of 3 work stations. (A matrix of 12 ‘throughput minutes required by work station’ data points.)

It goes through the details of determining the best weekly product mix selection based on Market Demand using 1.) Traditional Cost Accounting using Product Profit, 2.) Traditional Cost Accounting using Contribution per Direct Labor Hour, and 3.) Theory Of Constraints and Exploiting the Systems Constraint(s).  The example results were $1508 profit for both methods 1 and 2, however method 3 resulted in $2265 profit, a 50% increase in profits and a different product mix selection!  Perhaps the data points were biased to favor the theme of the book?

To determine the strength of using the TOC approach, the author of this article took the 12 input data points and randomly applied them to the four product flow-lines 25 times and repeated the analysis of the three approaches for each new configuration.  The results were quite enlightening.

In every case, the TOC approach results either equaled the better of the other 2 approaches or exceeded both approaches (12 out of 25 times).  And the average profit using the TOC approach was twenty percent higher for the 25 investigations.

Perhaps you are not doing shop floor auto-data collection and using TOC as an advantage which means you are probably miss-using your existing assets (people, machines, materials) and unknowingly selecting the wrong weekly product mix?

 – Robert Hansen

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

R.C. Hansen Consulting, LLC.



Top 5 Reasons to use Memex MERLIN MES for OEE & DNC

Serial communications is old outdated technology.  It has slow transfer speeds, it is slow to load today’s big programs into controls, and it is especially unreliable on long distance runs.  MERLIN is built on today’s modern, reliable IT Ethernet network structure.

To help deliver operational efficiency with production visibility to your manufacturing enterprise, here are the top 5 reasons to work with the award winning Memex MERLIN for OEE and DNC.

1)  Memex MERLIN is a true Manufacturing Execution System.

  • MERLIN MES is vertically and horizontally integrated across the enterprise.
    • Vertically integrated means that it executes ERP’s planned production schedule.  It takes all the work orders from your ERP system, mirrors them on a machine and manufacturing cell or assembly basis, and at completion (end of work order and end of shift) sends the ERP an upload of actual results on how production actually ran.  This enables a comparison to be made of how the production ran for an accurate time and cost picture.
    • Horizontally integrated means that the complete shop floor flow-line of production is viewed and communicated in real-time.  This enables situational analysis, bottleneck identification, and resources to be allocated (when and where they’re needed) in the shortest period of time –  all with historical, traceable reporting.
    • Integration means objective visibility about utilization.  True OEE metrics, product run and cost standards, and the requirements of the operator for resources (engineering, maintenance, crane, dunnage, 1st off quality check, etc.) can all be communicated to all stakeholders in real-time.

2)  MERLIN is an independent and unobtrusive monitoring solution.

  • Software protocols and hardware network connectivity (if required) that are electrically (optically) isolated from the control.
  • MERLIN does not affect the machine’s performance.  It does not use programs or memory, it simply listens to the machine.

3)  Memex MERLIN system can operate independent of any DNC solution.

  • Any existing DNC solutions in your site can still be used in conjunction with MERLIN
  • Or, if you  prefer, you can use MERLIN’s built in DNC.

4)  MERLIN is built on the latest & proven technology of the Microsoft platform.

  • MERLIN incorporates MTConnect, OPC, Focas and other advanced protocols for machine communication.
  • It is built on reliable Ethernet network (wired or wireless) rather than the older, slower, and unreliable serial based communication technology.

5)  Memex MERLIN system really is the BEST VALUE solution.

  • MERLIN has delivered our customers 10% to 50% or more improvement in efficiency, all thanks to its horizontal and vertical integration,
  • It adheres to ISA-95 standards of machine connectivity and fits with your IT network infrastructure.
  • It is a safe and proven technology that is being used globally.

To find out more about these 5 points, and even more reasons why Memex MERLIN is the best MES solution, contact Memex sales today at 866-573-3895 or via email to salesgroup@memex.ca

To learn more about Memex’s MERLIN, check out these short videos on topics covered in Memex’s OEE Solution Series webinars.

An accurate OEE resource

Memex has been working very closely with the team from MTConnect. We also have an excellent rapport with Mr. Robert Hansen, author and consultant of OEE.

Robert authored an awesome resource book on OEE… but I’ll let Mr. Dave Edstrom, CEO of  tell you about it.. http://photonsandelectrons.blogspot.ca/2012/12/great-manufacturing-book-overall.html

For anyone really looking for a practical resource written in a direct clear illustrative manner, then this would be my first choice.

Also, you may want to check out Bob Hansen’s unpretentious web page for more information on his video series “OEE college”.  http://www.oee-college.com/

An excellent series of training sessions designed in bite sized segments for everyone in your organization. Great for lunch and learns! I’m speaking from experience…

Memex can provide extreme value in collecting and presenting critical production data, but the end user also needs to understand WHAT the data means in terms of effective long term sustainable efficiency improvements. The MERLIN system can leverage at least a 10% productivity boost in a very short period of time. Enough to qualify a rather short ROI period. But the real value is in leveraging the visibility and actionable data to grow your productivity by as much as 100%. All of this leads to a very impressive profitability gain.

Tim Smith,
Memex Automation

Why Lord Kelvin Would Love MTConnect

Every now and then we read an article that has immense depth and meaning for our industry. Below is one such article, just published, written by an esteemed colleague, Dave Edstrom, Director, The Office of Strategic Innovation, AMT – The Association For Manufacturing Technology. I reproduce it here with all credit to Dave.


  • The big reason why only 4 to 5 percent of all machine tools are being monitored today comes down to two reasons, technical and cultural.
  • The value of any manufacturing shop floor’s network is the number of pieces of manufacturing equipment that can speak MTConnect squared.
  • Think of MTConnect as Bluetooth for manufacturing.
  • In order to quantify how well a manufacturing plant or job shop is doing, you first must easily get the data and put it in a standard quantified form. {Note he refers to Job Shop in the same thinking as a manufacturing plant}
  • “MTConnect — to measure is to know.”

Why Lord Kelvin Would Love MTConnect

NIST was my account for six years starting in the mid 1980s when I was at Sun Microsystems. I loved having NIST as an account because, as a Systems Engineer, NIST was always doing something very interesting and pushing the limits on what Sun could provide in terms of computing power. One of my first visits to NIST, I was brought into a conference room and saw the following engraved in the floor:
“I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the state of Science, whatever the matter may be.”
Lord Kelvin (Sir William Thomson)

That phrase is built into the DNA of computer science and science in general. To provide a simple example of this, when you walk into a data center that houses thousands of computers in countless racks, you will find that every single one of those computers is monitored extremely closely. According to industry and academic experts only 4 to 5 percent of machine tools are monitored today. This percentage is mind boggling to me. How can any plant possibly make intelligent decisions if they can not quantify what a machine tool is doing?
The big reason why only 4 to 5 percent of all machine tools are being monitored today comes down to two reasons, technical and cultural. Too often when you speak to someone at a smaller job shop or plant, the reason for not monitoring is the cost and/or time to implement. MTConnect addresses the technical side of the challenge by making it is easy to get data off a machine tool in an open, royalty-free and standard fashion. MTConnect ‘s motto is “Different Devices, Common Connection.” MTConnect is all about dramatically lowering the barrier to entry to enabling a machine tool to speak to the rest of the world in an open fashion.
MTConnect can address the technical side of this challenge, but how do you change the culture component of this equation? As we all know, culture is a huge issue when driving change. This is true whether it is in a business or any other activity that involves humans. Education is the key to driving culture changes. There are many lessons from the computer industry that can be applied to manufacturing to drive change in the culture through education.
Let’s look at some of the laws in the computer industry and see if there are similarities in manufacturing. Bob Metcalfe, the inventor of Ethernet, made a statement that has now become known as “Metcalfe’s Law.” Metcalfe’s Law basically states that the value of any network is the number of users or devices connected to the network squared. If we apply Metcalfe’s Law to manufacturing, we would modify it slightly to state: The value of any manufacturing shop floor’s network is the number of pieces of manufacturing equipment that can speak MTConnect squared. Why MTConnect squared and not just the number of pieces of manufacturing equipment squared? Because it is MTConnect that makes these pieces of equipment able to all speak the language of the internet, which is XML. XML is an abbreviation for eXtensible Markup Language and it is the default language on the internet today. XML makes it extremely easy for software applications to talk to MTConnect-enabled manufacturing equipment.
One of the most common misconceptions about MTConnect is that it is an application that you purchase. MTConnect is a protocol that defines how manufacturing equipment will speak to the outside world as well as dictionary of what these manufacturing terms mean. Think of MTConnect as Bluetooth for manufacturing with a dictionary of terms. Why do I emphasize the dictionary? Because the dictionary gives meaning to the manufacturing terms. For example, imagine the English language without a dictionary. What would we have? We would have 26 letters but no words. Without a dictionary of words, we would have everyone defining their own words, and that is exactly what we had with manufacturing prior to MTConnect
Former Secretary of Defense Donald Rumsfeld liked to say, “there are known knowns, known unknowns and unknown unknowns.” Stated another way, “you don’t know what you don’t know.” The real purpose of MTConnect is to quantify the known unknowns and provide the framework to discover the unknown unknowns. You can’t manage what you don’t know. And unless you are quantifying what you don’t know, then you are shooting from the hip, which is never a good idea.
So, why would Lord Kelvin LOVE MTConnect? Because in order to quantify how well a manufacturing plant or job shop is doing, you first must easily get the data and put it in a standard quantified form. That is exactly what MTConnect does. Getting the data in an open and royalty-free way is what will allow you to first monitor what you are doing and then to share the information with all your applications and all your partners. While the most obvious use of getting common information out of a piece of equipment is monitoring, that is just the tip of the iceberg. The real win with MTConnect is when quantified information is available anytime, anywhere to any application, to any partner and on any device, it drives up productivity. I imagine Lord Kelvin would change MTConnect’s mantra to: “MTConnect — to measure is to know.”

Dave Edstrom
Director, The Office of Strategic Innovation
AMT – The Association For Manufacturing Technology

Rules for Manufacturing Efficiency

Your company’s success is increasingly tied to improving manufacturing performance and improving it quickly.
Manufacturers are increasing their focus on the bottom line. This scrutiny is leading to renewed attention on manufacturing, where the most significant assets (plant and equipment) and costs are.  Manufacturers need to cut costs, increase cash flow and become more responsive to changing market conditions.

The following are 17 rules to pay attention to that will drive profitability to the bottom line.

Enhance Asset Utilization and Efficiency
Improving manufacturing efficiency is a pre-requisite to better profitability and corporate success. Enhancing manufacturing performance yields huge advantages – from cost reductions to a stronger competitive position – which can be passed on to shareholders or customers.  The trick is to be highly efficient while improving quality, expanding your product portfolio, and becoming more demand driven.

Flexibility Improves Efficiency
Being efficient while responsive to shifting customer demand requires an enterprise-wide manufacturing transformation: moving from Manufacturing-to-Forecast (MTF) to Build-to-Order (BTO) which can create a dramatic payoff.  Greater flexibility lets you allocate production across plants, shifts or suppliers, resulting in a faster response to changing conditions and improved overall plant utilization. Greater efficiency reduces Work in Process (WIP), labor, scrap and rework, saving both time and money.

Culture of Continuous Improvement
Having an enterprise platform for manufacturing operations real-time Key Performance Metrics such as OEE provides global visibility, across your operations.  These capabilities let you easily identify and replicate best practices across your global operations while instilling a culture of continuous improvement across production, warehouse, quality, maintenance and labor activities.
Standardized best-practices reduce cycle and takt times across your operations, helping to ensure On Time Delivery (OTD). Global, real-time visibility that is actionable on a 24/7 basis enables immediate resolution to operational disruptions.

Synchronize Material with Production
Reduce idle inventories and execute Lean initiatives to achieve operational excellence.  By synchronizing material flows across production, warehouse and quality operations you can reduce costs and improve cash flow – get the right materials to the right plant at the right time.  Material synchronization means your material flows are in tight coordination with actual demand – finished goods roll off the line based on customer demand, and WIP is “pulled” through the plant to meet sequenced final assembly demands.  Cash flow improves from reduced inventory levels.  Waste from obsolescence is reduced and facility requirements for storage are minimized.

Enhance Lean Initiatives Globally
Lean, demand-driven manufacturers can further reduce idle WIP and inventory buffers while gaining agility to respond faster and more accurately to customer demand. Electronic replenishment and e-Kanban sizing, triggered by actual demand and consumption can help optimize global operations. Costs go down, efficiency goes up and customer satisfaction escalates.

Just-In-Time, Sequenced Operations
Applying material synchronization one step further, Just-In-Time, sequenced production can further reduce excess inventories, for a truly demand driven production.  Track, view and coordinate the flow of goods from supplier to customer shipment.  You’ll need real time visibility and actionable control of your entire material flow – in-transit, landed, WIP and finished goods inventories – to enable precise synchronization of material and production demand.

Improve Quality
Best-in-Class quality means building your product “right the first time,” resulting in reduced waste, fewer returned items, lower warranty costs and higher customer satisfaction.  Implementing a platform for continuous quality improvement is a way to ensure profitability, achieve regulatory compliance, maintain brand integrity and provide sustainable competitive advantage.

Get it Right the First Time
Directed manufacturing and real-time decision support systems can enforce best practices and Poka Yoke to prevent errors, a minimum requirement for Six Sigma.  Quality processes based on real-time data validation can greatly improve first time yields.  Automated, paperless processes eliminate manual data entry errors.  Automated alerts can quarantine materials or even halt production for out of spec materials to cut costs.  An approach to automated data collection with real-time metrics across all manufacturing operations can greatly improve the likelihood your product will be built right, the first time, and every time.

Traceability and Containment
A comprehensive application across manufacturing operations managing materials, labor, equipment, tooling, processes and suppliers insures “interlocking traceability” of all product and process data. The precise interactions of all manufacturing elements can be used to identify and contain quality problems before they reach the customer. Automated traceability and containment processes can greatly reduce manufacturing, warranty and recall claim costs.

Accelerate New Product Introductions
Introduce new products faster by synchronizing engineering with production. Real-time integration of production specifications with engineering design helps evaluate how product components or processes can be modified to improve output, increase quality or enhance product performance.
In today’s “digital” world with rapid data dissemination surrounding global product launches, manufacturers must respond faster to market changes while flawlessly executing new product introductions.

Real-time Visibility to Operational and Design Data
With the growing complexity of new product designs, manufacturers are increasingly turning to virtual design programs to model product performance.  Establishing a continuous, real-time feedback loop between production and design applications can provide critical visibility to better product design, improved quality and an overall compressed timeframe for new product introductions.  Furthermore, sufficient flexibility can be maintained to perform ad hoc changes as often as needed when converting digital designs into physical products, thereby staying ahead of the competition.

Reduce Manufacturing IT Costs
Complexity, process integration and systems disparity may be a reality, but are an unnecessary evil that can hurt production performance, force unnecessary training, waste resources and limit your ability to respond quickly to changing market conditions. Multiple, redundant systems across the plant can lead to unnecessary implementation, maintenance and upgrade costs.

Single Platform Enables IT Rationalization
Leading companies seek to consolidate and rationalize disparate applications – ideally into a strategic platform across manufacturing operations.  Integration, maintenance and support costs can be reduced significantly.  Linking a manufacturing system platform to ERP and the Automation layer creates a comprehensive solution for manufacturing operational excellence.

Core Deployment Program
Create a “Center of Excellence” of best practice manufacturing processes within a central ‘lab’ or ‘testing environment,’ which can then be rolled out to other locations as a “Core” deployment program for your manufacturing processes.  Up to 80 percent of these processes can typically be standardized, helping to accelerate multi-location deployments and simplify future updates as new best practices are identified.

Leverage ERP for What it Does Best
Many manufacturers have invested heavily in an ERP system to improve operations and have been successful within Finance, HR and other corporate departments. ERP implementations have struggled, or worse, in gaining acceptance in the plant.  Instead, industry leaders are leveraging ERP by connecting it to a manufacturing system to enable real-time visibility, control and synchronization across manufacturing operations, corporate planning and scheduling.

Focus on Planning in ERP, not Execution
Many attempts to directly extend ERP to the plant floor have ended in budget overruns, reduced functionality from what was originally conceived, or even complete failure. Corporate financial planning tools were simply not designed to manage complex, dynamic 24/7 real-time environments.

Let Manufacturing Shop Floor System Drive Production
This approach can provide real-time visibility, control and synchronization across your operations, while letting you truly leverage existing planning systems to effectively deliver value to the plant floor while reducing ERP customization. Benefits from such an approach include improved operational performance, accelerated ERP connectivity to the plants, minimized project risks and an overall reduction in IT costs.

Memex continues its tradition of serving the discrete manufacturing sector, supplying component hardware, memory upgrades, and visionary shop floor communication technology. Memex products allow a manufacturer to realize the impact of OEE Profitability.