Tag Archives: oee

The Trap of Enterprise Software

Do you know how ERP software is sold? It’s fairly straightforward. Every CEO has a similar problem… they want to know how much everything in their company costs, vs. how much value it brings to the company. ERP vendors meet with executives and show them pretty graphs.

Then, of course, the company signs a contract with the ERP vendor for hundreds of thousands of dollars to install, configure, and support the system for one year. By the time the project is complete it costs twice what it was supposed to and all the end users are frustrated because it’s so tedious to use.

How does this happen? Why did the CEO think they were buying into a low-risk off-the-shelf product?

The CEO was lulled into a false sense of security by the pretty graphs. Any programmer can tell you that charts are a solved problem. If you give any programmer a database full of rich and meaningful data, they can whip up pretty reports, even very complicated ones, in a matter of days. The hard part is filling the database with accurate and complete information! If you buy an off-the-shelf ERP application, getting the data into their system is the hard part. You either need to write tons of custom code to copy the data from existing systems, or you need to change your business workflows to conform to this new software.

Consider another favorite of enterprise software applications: OEE. In order to calculate your true OEE you need the following:

  1. Availability
  2. Performance
  3. Quality

It’s that first item, Availability, that’s really interesting. Basically it’s the ratio of actual equipment uptime vs. scheduled production time. Let’s say you’re buying an “automated OEE solution,” so it’s going to pull the status of the equipment (running or not running) from the PLC. It doesn’t really matter because that isn’t enough information to calculate your Availability. You need a production schedule to begin with. Who enters this data? Does it already exist? In what form? Excel? A proprietary ERP or MES system? What custom code has to be written to get this production schedule into a format that the “shrink-wrapped” OEE software can understand? Does the company have to convert to using the OEE software’s proprietary scheduling system? Do we have to enter the schedule twice?

If you have to do all that work, why are you buying an OEE software package? If the production schedule is already in your ERP system, and you have in-house expertise to get the running status out of the equipment, why bother converting the schedule into some other format? The equations for OEE are grade 5 math. Any programmer can make pretty OEE graphs if they already have the data they need. What value does the OEE software actually bring?

When you think about enterprise software, remember that most of the real value is in the accuracy and meaningfulness of the data in the database. Money should be invested in acquiring, storing, curating, and documenting that data. Once you’ve accomplished that, then you can add your whiz-bang charts. Don’t go putting the cart before the horse.