Overcoming Hidden Manufacturing IT Costs

Currently, I am coaching an information technology (IT) manager who wants to replace some in-house-built production information systems with a standard solution.

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He finds it difficult to convince the production manager of the advantages of his idea. His colleague is very happy with the custom-built systems and has no clue that these lead to high IT support costs. “The systems are there; we don't have any expenses any more, do we?” he said. He didn’t even know that the IT department was paying for licenses and labor costs for support from the guys who built it. The IT manager was having nightmares about what would happen if one of those guys would leave the company.

In another manufacturing enterprise, the production manager is aware of those hidden costs. They are using several custom-built systems. The worst-case scenario is that in projects, those third-parties have to work together, which leads to double or even triple costs. This production manager went to the central IT department and asked: “Could you take over the support of these systems?” For the IT manager, this would mean extension of his team with at least three specialists. And that would only solve the problem of this specific factory.

In this specific case, the IT manager and the production manager agreed that replacement of all those local systems with one standard system is a good idea. Getting the support of the production managers of the other plants was not hard. They all agreed that this would be cost-efficient from the IT support point of view, and, moreover, that such a system would give them more insight into inefficiencies, waste and other improvement possibilities. Now it was time for them to convince higher management, which is easier said than done.

Burden or weapon?

“Often, the executives consider the factories a burden instead of a strategic weapon. And after high investments in central enterprise resource planning (ERP) systems, they are surprised to hear that this hasn't completely solved the problem. Finally, when it became clear that a standard production information system would lead to the possibility of benchmarking the factories and making strategic decisions based on this information, they agreed.

Now, budget is available and they will have to go through several phases to define user requirements, select a solution, implement the solution and establish a central competence center. Defining an information system template for all the factories is not easy. They will have to compare factories, find similarities and decide how to deal with differences. Many people have to be involved in the global team that defines the template—people from IT, production, engineering, quality and planning. These are exactly the people who are always asked to become project members of every global project. They have important knowledge and are always very busy. So this is yet another challenge to overcome.
 
During definition of the template, it is also important to involve the people who will become members of the future competence center. Also, it is a good idea to have one person at every plant who can solve local issues. Of course there’s a risk that this local person is going to build custom solutions for the local site. This should be avoided.
So many difficult steps have to be taken to solve the issue of manufacturing IT cost inefficiencies. It will take years. The only way to be successful is by taking small steps. Start with step 1: Create awareness of these hidden costs. Then the rest will follow naturally.

Bianca Scholten, bianca.scholten@task24.nl, is a Principal at IT integration firm TASK24, in The Netherlands, and a voting member of the SP95 committee. Her books, “The Road to Integration; a Guide to Applying the ISA-95 Standard in Manufacturing,” and “MES Guide for Executives: Why and How to Select, Implement and Maintain a Manufacturing Execution System,” are available at www.ISA.org

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