207. Justifying MES/MOM Systems to Business Leaders, Business Case Justification and Return on Investment (ROI) Assessment

Course Length:

CoA Classroom: 2 Hours; Post Event: 50 minutes for self-study and out-course assessment test
CEUs:  0.3

Description:

Based on discussions with industry leaders and domain experts, the courses explain the topic of constructing a compelling business plan with a defendable ROI business justification for MES/MOM systems. Exchange ideas, ask questions, and get answers! Understand how other companies attack the issue of justifying plant and corporate investments in MES/MOM projects and learn what tools and processes help.

End users, vendors, and integrators must work together to build the adaptable 21st Century manufacturing plant for a "pull" economy. Only by working together can the best approach to justify operations management solutions for a skeptical business and/or IT leaders as THE methodology/technology combination for fast market response and creation can be achieved. Explained are how to quantify the form of operations process, its inefficiencies, its solution alternatives/compromises, benefits, and plant migration path. Also discussed are risk management and mitigation strategies, solution competition (internal and external), impact to decision makers, business drivers, and the overall capital approval process. The session concludes with a specific discussion of the challenges of scoping and justifying a project to the CIO/CFO level of a company. Justification is not a software demo or even an ROI study, it is contextualizing the business value to the business drivers while quantifying the risk. The audience will be armed to understand and address the competition (internal and external) for scarce resources that exists in today's manufacturers.

Discover through dialogue participation with industry leaders, peers and GE domain experts to discuss compelling industry topics of constructing a business justification for Production management. Exchange ideas, ask questions and get answers! Understand how other companies attack the issue of justifying plant or corporate projects and learn what tools and processes help.

End user, vendor and integrator need to work together to build the flexible 21st Century manufacturing plant to enable the developing "pull" economy. Together, we need to justify the production management solution to the business leaders as the technology for fast market response and even market creation. Together, quantify the inefficiencies, risks, rewards, migration path, alternative/compromises, competition (internal/external), decision makers, business drivers, and approval process, than it gets simple.

Learner will be able to:

1. List key business elements used to justify MES/MOM projects
2. Identify solution competition (internal and external), impact to decision makers, and business drivers
3. Identify overall capital approval process
4. Identify the basic financials for the IT business justification
5. Describe ROI benefits equations and risk mitigation strategies

Learner will cover:
In Part 1, the presentation explains the challenges of scoping and justifying an MES project to the CIO/CFO level of a company. Justification is not a software demo or even an ROI study; it is contextualizing the business value to the business drivers while quantifying the risk. The competition comes in many forms: Enterprise and Automation vendors as well as internal initiatives.

In Part 2, an ROI workshop explains how to balance tangible benefits, assumed results, risk factors and mitigation strategies into a defendable business justification.

1. Justification Components
    a. Executives Key Priorities
    b. Focus on Key Business Elements for MOM
        i. Speak Language of Business Decision Makers
        ii. MOM Form and Fit to Business Needs
        iii. Company Investment Metrics
        iv. CFO's Economic Reality
        v. Plant Manager's Environment
        vi. Customer's Expectations and Supply Chain Form
        vii. MOM Business Drivers & KPIs
        viii. MOM Form and MOM / ERP Functional Segregation
        ix. Internal Competition
        x. Be Aware of The Real Obstacles
2. The Basic Financials
     a. Weighted Average Cost of Capital (WACC)
     b. Payback Period
     c. Net Present Value
     d. Internal Rate of Return
     e. Modified Internal Rate of Return
     f. Real Options Analysis
     g. Primary Objective: Create shareholder value!
     h. Understand the Financial Balance Sheet
3. ROI Modeling
     a. Macro vs. Detailed ROI Approaches
     b. Performance Measurement focuses on many levels
     c. Identify MOM System and Project(s)
     d. Benefits: Identify and map to production wastes streams and Business Drivers
     e. Benefit Calculation: Assumptions and Adoption Rates
     f. Inputs: Benchmarks and Expected Improvements
     g. Investment: Systems and Support
     h. ROI Summary
     i. ROI Risk Mitigation
     j. Build on Strategic Benefits
     k. Emerging Trends
     l. Conclusion

Assessment Test and Exercises:

1. In-Course Formative Assessment Test: 10 Questions, Open notes in discussion, Answers recorded in Test Form
2. Out-Course Summative Assessment Test: 10 Questions, Open notes in self study, Answers recorded in Test Form

Course Prerequisites: None

Reference Materials:
1. MESA Guidebook: Lean Manufacturing Strategic Initiative Guidebook