MOM/MES must become an operational expense for midmarket growth

There is really no such thing as an "average" plant. But if we call an average plant's MOM or MES solution a system with 200 nodes spread across 10 process cells or production lines (20 nodes or clients per line) on a single server that is doing production order tracking, tracing, geneology, and basic QC, the cost of that system would be approximately $200 K for software and $200-300K for implementation services (ERP and equipment interfaces included). So for one plant, it is $500K for an integrated MOM system. This price has only slightly been reduced as the MOM/MES products on the market (which are only tool kits) have continued to increase their functionality set over the last 10 years. Why? First, while the functionality set for single product has perhaps increased by 50%, the amount of that functionality applied any one plant is only 10-20%. As well, the majority of the cost of the system is in the interfaces and reports which still are as customized today as they were 10 years ago. The cost of the interfaces and reports is typically 40% of the services. With all this in mind, 00K is large capital expense which can only be made by companies over $500 million since they can build some 70% common components and spread the cost across multiple plants. The midmarket manufacturer can not afford this expense. Let's take the $500-million company. It has 10% profit -- which is $50 million. Only 10% of that goes into capital expendures, which is $5 million. ALL cap-ex products, including equipment, facilities, expansions, IT, etc. come out of this. So until some vender makes that $500K expenses based on performance ROI and a 3-5 year lease, midmarket manufacturers will not be able to modernize their plants for make-to-order pull supply chains that are required by the global market in the 21st century. We need innovative providers to modernize North American manufacturing.
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  • <p>Multiple Erp Systems</p> <p>Your blog makes very interesting reading. I'm sure others will think so too I look forward to reading their comments.</p>


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