The Evolving Role of Manufacturing Execution Systems (MESs) In Operational Excellence

The modern manufacturer has tremendous pressure to simultaneously increase capacity and reduce the costs of production. Demand for Manufacturing Execution Systems (MESs) is expected to be strong in the coming years as manufacturers align operations with Industry 4.0. While the MES market is worth US$2.4 billion this year, that number will balloon to US$5.4 billion in 2031—growing at a Compound Annual Growth Rate (CAGR) of 8.9%. With the introduction of cloud-based MES solutions, Small and Medium Enterprises (SMEs) are going to be a big chunk of the pie.

Market Overview

The modern manufacturer has tremendous pressure to simultaneously increase capacity and reduce the costs of production. Demand within the Manufacturing Execution System (MES) market is expected to be strong in the coming years as manufacturers align operations with Industry 4.0. While the MES market is worth US$2.4 billion this year, that number will balloon to US$5.4 billion in 2031—growing at a Compound Annual Growth Rate (CAGR) of 8.9%. With the introduction of cloud-based MES solutions, Small and Medium Enterprises (SMEs) are going to be a big chunk of the pie.

“First, MESs provide significant improvements to a company’s visibility into shop floor operations, with strong visualization tools to use the extensive data collected and managed by the software. Second, they provide agility and flexibility with regard to supplier networks.” – James Prestwood, Analyst at ABI Research

Having the ability to track and monitor the production of manufactured goods in the factory in real time brings greater visibility into business processes, whether that’s workers, machines, accurate inventory counts, etc. Then, these data can be used to make better strategic decisions. On top of increased production efficiency, some other forces that drive manufacturers toward MES software are:

• The Increased Number of Industrial Internet of Things (IIoT) Assets: As manufacturers introduce more IIoT devices to their plants, there’s a need for organizing and contextualizing large sums of data.
• Shift toward Customized Manufacturing: Manufacturers are shedding the old way of mass manufacturing and focusing more on mass personalization. However, this necessitates substantial visibility and control over operations.
• Data Traceability and Regulatory Pressure: Many industries like pharmaceuticals, medical devices, aerospace & defense, and food & beverage are heavily regulated. Manufacturers must digitize their data collection in order to carry out audits quickly and accurately and ensure adherence to industry compliance.
• Need for More Efficient Workers: The number of young people willing to make a career as a factory laborer is limited. Manufacturers need to find ways to get the most out of their existing labor force by optimizing workflows and automating as many processes as possible.
• Sustainability Efforts: When goods can be tracked and production processes are automated, this greatly improves the efficiency of a plant. And when a plant runs more efficiently, that means less material is wasted, the frequency of transportation of materials is not as prevalent, and the energy consumption is greatly reduced.

Key Decision Items

Embrace the SaaS Model for Small and Medium-Sized Manufacturers

MESs are increasingly being delivered through the cloud, which is welcome news for SMEs that have historically been hindered by working with lower Capital Expenditure (CAPEX) budgets. Besides being less expensive than traditional on-premises solutions, a Software-as-a-Service (SaaS) cloud-based MES solution is also more flexible, easier to implement, requires less maintenance, and integrates smoothly with Enterprise Resource Planning (ERP) systems. The subscription pricing model is based on the number of users and production lines in use, as opposed to a one-time perpetual licensing fee.

Vendors should take a cloud-first approach to their software, as manufacturers seek scalable MES solutions. Instead of worrying about the expensive replacement of an outdated MES, manufacturers can rest easy knowing that their investment will evolve with their growing needs because the provider simply adds new features over time. Going forward, new entrants in the MES software space can capitalize on the attractiveness of cloud-nativity and make it their differentiation strategy.

Consolidate the MES with the ERP and Other Enterprise Software

While ERP and MES solutions have traditionally been siloed, the two are more intertwined than ever. Data that stem from the ERP system are crucial for an MES to successfully manage production processes. At the same time, an MES generates data that the ERP system requires for managing the numerous business operations for which it’s responsible.

Manufacturers are advised to identify vendors that can provide an integrated enterprise software solution, instead of an independent package that only comes with MES software. For MES suppliers, expanding the MES solution to include other enterprise software systems is a key feature that smart factory decision makers are seeking. This means vendors must either start supporting other enterprise software applications or strike up alliances with other software providers to create a shared ecosystem.

Prioritize Plant-Agnostic MES Solutions

Customized MES software, currently the most common deployment, is challenging to apply to other plants or factories of the same company. Often, the software is set up differently and uses its own separate sets of data. To address this issue, manufacturers should shop for MES solutions in which data flow works uniformly across all plants. This will allow for a more comprehensive overview of global operations and production processes. One effective answer to this problem is the use of a preconfigured MES solution that serves as a template and is a big step toward MES standardization.

Avoid Rushing a Decision

Usually, MES solutions are wide-ranging, while a manufacturer’s operations don’t necessarily demand all the features. This presents further convolution to the vendor selection process. Choosing the wrong MES solution would mean a manufacturer will waste a great deal of time implementing it, not to mention the financial investment. For the best results, companies must thoroughly scrutinize their production needs and define long-term objectives. Only then can the right platform be identified.

To illustrate, food production requires both primary packaging and secondary packaging. Each type of packaging requires a different style of manufacturing (continuous process for primary packaging and batch function for secondary packaging). For that reason, an MES that is compatible with both processes would be ideal for food manufacturers.

Suppliers Must Put Themselves in the Customer’s Shoes

MES suppliers need to be empathetic to the difficulty manufacturers face in choosing a vendor. There is a plethora of MES products on the market, each one similar to another. The key to marketing success is to clearly state differentiating factors. That could mean emphasizing cloud-nativity in advertisements or creating a landing page that explains how the product serves a specific vertical. After being exposed to generic brand after generic brand, a potential customer will find uniqueness to be a breath of fresh air.

Key Market Players to Watch

• 42Q
• ABB
• Aegis Software
• Apprentice
• AspenTech
• AVEVA
• Critical Manufacturing
• Dassault Systèmes
• EazyWorks
• Emerson
• Epicor
• GE Digital

Dig Deeper for the Full Picture

To learn more about how MES software improves manufacturing plants, best practices when implementing a solution, how the market is maturing, and who some of the main vendors are, download ABI Research’s Manufacturing Execution Systems (MES): Their Future and Place In the Modern Factory research report.

Not ready for the report yet? Check out our following blog posts:

• Using Warehouse Management Systems for Automation
• Digital Transformation in Manufacturing: Drivers and Solutions
• Various Examples of Manufacturing Technologies

This content is part of the company’s Industrial & Manufacturing Research Service.