The Economics of Error Proofing

1
The Economics of Error Proofing

• Kevin Prouty
• Sr. Director
• Manufacturing Solutions Group

2
Magnitude of Cost Escalation

• Internal Resolution
• 100,000
• Customer/OEM Resolution
• 1,000,000
• Consumer Resolution
• 10,000,000

3
Error Proofing is a Given

• The Benefits Regardless of Solution
• Lower Scrap - ppm
• Elimination of Sorting Expense - Productivity
• Increased Inventory Accuracy Carry costs
• Reduction in Warranty Expense - Chargebacks
• Elimination of Containment Expenses - Carry
  costs and productivity
• Customer Relationship Intangible/Revenue Growth

4
The Questions about Error Proofing

• Hit on Productivity
• Ongoing Support of Solution
• Initial Capital Outlay
• Employee Buy-in
• Which type of Solution

5
What is my definition of OEE

• Overall Enterprise Efficiency
• Productivity that includes indirect and direct in
  a manufacturing organization
• Quality is a measure of the perfect order
• Utilization is the time that a facility or
  machine is available when needed

6
OEE as a benchmark
Source AMR Research, Gartner, ARC
7
The Financial Decision

• Multiple ways to implement
• Use Overall Enterprise Effectiveness as a Tool
• Look beyond minimal compliance
• Larger than just a single plant or line

8
Implementation Scenarios

• Completely Manual
• Barcode-based with basic handheld data input
• Automated data collection with wired handhelds
• Automated data collection with wireless mobile
  computers and devices
• Centrally managed application and devices Direct
  Part Markeing as key marking technology

9
Implementation Comparison
Source AMR Research, Gartner, ARC
10
Paper-based Systems

• Little invested cost
• Big hit on both direct and indirect labor
• Error prone
• 0.00 return on investment
• Costs you every day you run it

11
Manual Barcode Systems

• Lower invested cost
• Less error prone at line
• Leaves holes in validation
• True ROI against in months
• Has little impact on margins in the end

12
Automated Barcode Systems

• Minimum system for no productivity impact
• Error proofing the line
• Leaves holes in validation
• ROI is about 6 months
• Typically can shift margins 25 over a year

13
Mobile Computer-based Systems

• Actual improvement in productivity
• Closing in on 6-sigma orders
• True ROI in 6 months
• Can double margins within a year
• Significantly higher support costs
• Entering realm of leasing potential

14
Centrally Managed System

• Major jump in lowering TCO
• At 6-sigma for order
• Enforces global corporate compliance
• ROI in 8 months
• 4x margin for typical supplier implementing error
  proofing

15
Managing Total Cost of Ownership (TCO)

• Packaged SW
• Standardize on HW
• Central diagnostics capabilities
• Central application and device management
• Outsource support
• Leasing

16
Investment Results
Total Cost of Ownership
Source AMR Research, Gartner, ARC
17
Mobility
Enterprise Mobility (Point of Activity to
Business Systems)
Point of Activity
Business Operation Systems
Mobile Systems
GPRS SMS GSM CDMA WCDMA WAP 802.11x

• ERP
• Warehouse/Inventory
• CRM
• Asset Management
• Dashboards

18
The Mobility Effect is causing chaos at the edge
19
Central Management is Key
Mobility
m
Mass Device Deployment
MSA-Mobility Solutions Agents
Active Performance Management

• Execution of device provisioning
• Status monitoring (battery, RF, CPU, etc.)
• Forwarding of data to Mobility Services Platform

Device/Application Monitoring
Battery
Signal
Access Ports
20
Recommendations

• Use built in scanners where possible
• Cost of manual scans estimated to be .10 to .25
  per scan
• Eliminate the human interface wherever possible
• Use mobile handhelds, dont tether your operators
• Eliminate labels and label expense with DPM
• Put servers in each plant, but manage centrally
• Manage application and devices centrally. TCO is
  20 lower with a well designed management system
• Consider leasing software and equipment.
  Shifting the balance from capital to expense line
  can make the difference in getting approval and
  payback
• Outsource system support