MES market performs strongly whilst latest round of consolidation opens up development of next generation products

Citation

(2000), "MES market performs strongly whilst latest round of consolidation opens up development of next generation products", Assembly Automation, Vol. 20 No. 4. https://doi.org/10.1108/aa.2000.03320dab.011

MES market performs strongly whilst latest round of consolidation opens up development of next generation products

MES market performs strongly whilst latest round of consolidation opens up development of next generation products

Keywords: Manufacturing systems

Datamonitor's new report, MES in Europe, takes an in-depth view of the European MES markets between 1996 and 2004.

Key findings to emerge from the report reveal:

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  Strong historical and medium term growth is likely to reduce in the face of "solution evolution" after 2002.

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  Competitive positioning through partnerships wins enterprise software players large market shares. Go-it-alone automation sotution vendors provide the competitive chattenge.

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  Consolidation in the MES market paves the way for the next generation of Web-enabted products.

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  Strong historical and medium term growth is likely to reduce in the face of "solution evolution" after 2002.

The current market value of manufacturing execution systems (see Figure 2) projects and software in Europe is just over $700 million, having grown from a value of just $330m in 1996. Growth over the last two years, however, has slowed as market conditions, especially in Germany and France, have been less buoyant. The dip in demand echoes the fall in orders over the last year seen by most competitors in the manufacturing IT market and vendors of ERP systems in particular. This can be attributed to a post Y2k investment shortfall – massive investments were made in new hardware and software to ensure plant systems would not suffer from failure at the turn of the millennium, meaning less investment is available or needed at this time.

Figure 2 The European market for MES by country, 2000

In the medium term, the market is expected to grow between 16 per cent and 18 per cent per year, reaching a value of $1.3bn by 2005. However, the rate of growth is expected to decline as the MES market loses ground to new software product concepts such as MEA (manufacturing enterprise applications) and ORP (optimization of resources and planning) (see Figure 3).

Manufacturing execution systems (MES) are a variety of software products designed to improve control of the manufacturing process. At its core, MES offers a total plant monitoring system for materials, machinery, and labour resources, aimed at providing pro-active plant intelligence, such as preventative maintenance and stock level requirements. The product may be delivered as a fully configured ready-to-run system from a system vendor or as a commodity (or boxed) software product for configuration either by the end-user or software consultants. MES offers real time production monitoring and control of applications such as work-in-progress, machine usage, downtime, and inventories. Production requirements of all types from statistical quality control techniques through to maintenance scheduling can be included in the software. Individual product history and traceability can be stored to meet total quality management requirements of ISO 9001. Enterprise production systems (EPS) are essentially similar in scope to MES and are included within the MES definition in this report. MESA International defines MES as follows: "Manufacturing execution systems (MES) deliver information enabling the optimization of production activities from order launch to finished goods. Using current and accurate data, MES guides, initiates, responds to, and reports on plant activities as they occur. The resulting rapid response to changing conditions, coupled with a focus on reducing non-value-added activities, drives effective plant opertaions and processes. MES improves the return on operational assests as well as on-time delivery, inventory turns, gross margin, and cash flow performance. MES provides mission-critical information about production activities across the enterprise and supply chain via bi-directional communications".

Figure 3European market forecast for MES, 2000-2005

Market leaders for MES in Europe are SAP and Siemens (see Figure 4), which often work in partnership. Both companies have only recently focused on the MES market. SAP's activity in this market is normally in support of sales of R/3 ERP installations to its customer base in discrete manufacturing, process and fast moving consumer goods manufacturing industries. Siemens launched its Industrial Framework concept in 1999. The two partners dominate the German market, which represents a large proportion of total European business. In addition they have a significant market share in all other European national markets.

Figure 4Competitive shares in the European market for MES

ABB and Honeywell lead the other MES market competitors. Both companies have focused on particular industry sectors (including paper, steel, and pharmaceuticals) and enjoy strong positions in more than one country. Aspen Technology is also industry orientated, with a large share of refining, chemical and petrochemical MES business across all European markets.

Invensys and Emerson Electric have less consistent and established MES market positions. They win MES business mostly as an adjunct to their process automation safes. Rockwell is in a similar position but is strongest in the discrete manufacturing industries.

Whilst partnerships have proved a winning combination for Siemens and SAP in the European MES market, consolidation elsewhere has heralded the go-ahead for the exciting possibilities of the development of next generation, Web-enabled MES solutions.

CIMNET Inc. recently announced it was merging with two other companies. The three-way merger between CIMNET, Applied Statistics Inc., and Advanced Systems & Designs Inc. promises to "create an integrated portfolio of industrial production and quality management solutions", including MES factory floor management and real-time SPC (statistical process control) solutions, to optimise manufacturing processes.

The above merger is only the latest consolidation the US manufacturing software market has seen, although only some of these have had an impact on the European market. Market consolidation in Europe has been more orientated towards consolidating distribution networks and acquiring technology.

At present, manufacturing industry uses the Internet as a commerce and communications tool, and breaking stories regarding the latest innovation and eVenture are coming thick and fast in early 2000.

Indeed, the Internet will become increasingly important as the vehicle for exchange of information at the business systems level. Initially this is in the form of inter-company traffic, but business-to-business electronic commerce will expand rapidly. SCM systems are already geared to meet this demand, but as yet inter-company Internet trading in Europe is still in its infancy.

The Internet with indeed begin to offer manufacturers new opportunities in relation to production control software. Already, OPC or Active-X control and process visualisation components can be selected from suppliers' catalogues, and then downloaded and customised for use in an open control or process visualisation environment. Other suppliers offer software to use the Internet, or corporate intranet, to acquire on-line views of production data from remote sites or plant locations as an alternative to fixed or dial-up telemetry systems. The potential cost saving in using the Internet for this purpose must be balanced with the current disadvantages in reliability, particularly at peak times on the Web, and the lack of effective security of information, or at least, the perceived lack of security by end-users – which is just as important.

Datamonitor is an independent market analysis firm that publishes a wide portfolio of strategic business information. Datamonitor has expertise in the following industry sectors: automotive and transport; consumer goods; energy; financial services; healthcare; industrial; medical equipment; technology.

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