Proactive Investors – November 24, 2014
Memex Automation (CVE:OEE) is taking the manufacturing world by storm with its M2M solution, MERLIN, which drives manufacturing efficiencies and enables shop floors to communicate with management in real-time.
MERLIN is a full suite of hardware and software. The hardware adapters turn each of a manufacturer’s machines into a web server, while the software measures plant capacity and its utilization. The hardware adapters connect machines to management via MTConnect, an open-source, royalty-free XML standard that convert the manufacturing asset into a web server.
The MERLIN software tracks a large number of MTConnect data inputs that measure overall equipment effectiveness (OEE) in real time, as well as other operational machine information. Customers can address production bottlenecks as they happen, convert idle time back into production and ultimately improve throughput. Short for Manufacturing Execution Real-Time Lean Information Network, MERLIN is designed to boost shop floor productivity, increase income from operations and reduce operating costs.
The system also does away with the traditional labor intensive method of operators recording data on a time card, a second person entering the data and a third person massaging the data into reports, reducing employee costs and eliminating roles that require people to manually collect, enter and work on the data. Using the MERLIN system, the data is collected in real-time, analyzed immediately into actionable information, defining how to make more revenue and margin per asset for production teams.
“MERLIN has certainly proven its worth,” says CEO, David McPhail. “The average IRR rates of invested capital are 400 percent based on 70 client installations. The average breakeven is less than a three months.”
The company just recently signed an order from GE Power & Water in South Carolina, for the installation of 34 MTConnect-based universal machine hardware adapters.
“[GE Power & Water] have 400 machines in one plant. They ordered 34 MTConnect hardware adapters to start, and they’re phasing it in,” says McPhail.
The hardware adapters will connect to GE’s own dashboard software, allowing the company to better measure and manage production. Memex’s system is flexible enough so that it can be sold either together with its MERLIN software or as a standalone universal machine interface. In GE’s case, the hardware adapters were sold independently of MERLIN’s software, as a method to obtain data from manufacturing machines.
“Our adapters are not limited. They speak MTConnect, giving companies the latitude to develop their own applications or use ours,” says McPhail.
The company’s clients also include Mazak, the world’s largest machine tool manufacturer, which said that MERLIN-related efforts to reduce downtime yielded a 42 percent improvement in utilization of the monitored machines. Mazak also reduced operator downtime by 100 hours per month, and enabled the production team to return in-house 400 hours per month of previously outsourced work.
Customers like Edmonton, Alberta-based Innovative Mechanical Solutions have also raved about MERLIN in industry press, pointing out how the system became an employee motivator, as it encouraged operator performance.
The word is spreading about MERLIN’s power. At the IMTS conference, the largest manufacturing technology trades show in North America, Memex generated 738 unique new company leads. Interestingly at this year’s IMTS, Mazak demonstrated MERLIN running live throughout its 800,000 square foot plant.
“We’re now busy following up on all of these leads and converting as much to revenue as we can,” says the chief executive officer. “We’re in one of the true greenfield opportunities that exist in manufacturing,” McPhail says.
Given the market consists of 16 million computer numerically controlled (CNC) machines and three other machines for each CNC on the average factory floor, the market for MERLIN is huge, with some 64 million manufacturing machines globally. Memex is targeting its massive addressable market directly and through its significant distribution channels, which include Microsoft, Mazak’s CNC and Optonics divisions, and a dealer network that includes coverage in the USA, Mexico, and Europe.
The company recently released a new MTConnect fully configurable hardware adapter that can be installed in less than one hour, and can be used with older FANUC-controlled machines. Fanuc controls comprise approximately 50 percent of the market, according to Memex.
The company is also working on MERLIN 3.0, an HTML 5-based release of its platform. The new release will add three additional modules, creating additional significant business intelligence to its current offering, says Memex.
“We will streamline the process and allow companies to make improvements not only on percentage of efficiency, but also in dollars of margin per machine per hour in the new release,” affirms McPhail.
About 95% of the company’s clients are based in North America, while the remainder is located in Europe and the Middle East. Currently focused in the US and Canada, the company has plans to start marketing and selling in Europe next year.
Memex is cashed up, having raised $2 million in August. The company is deploying capital to increase market awareness of its product and to convert opportunity into money.
The MERLIN system also has the advantage of widespread appeal. Practically, the product applies to any discrete manufacturer. For example, in April, Memex announced it sold $106,000 of MERLIN to Toronto-based Club Coffee, a custom coffee roaster. “While many of our clients are focused in aerospace and defense, MERLIN is “genre-agnostic” and applies to any process on any equipment,” says McPhail.
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