The European Manufacturing Execution Systems (MES) Market
A New Study By Frost & Sullivan
12-Aug-2002
Promise Of Efficiency Improvements Through Greater Real-Time Data
Accessibility Spurs Demand For Manufacturing Execution Systems
Over recent years, companies have ramped up investments in improving control
operations on the plant floor with Programmable Logic Controllers (PLCs) and,
at the next level, Supervisory Control and Data Acquisition Systems (SCADA)
that provide real-time display and visualisation of plant processes, enabling
operator interaction and the functionality of flagging alarms.
At the same time, a whole raft of companies separately invested in business
systems such as enterprise resource planning (ERP) to automate the financial
operations and aspects of the business, such as orders, sales and basic
procurement activities.
To enhance operational efficiency, companies will need to synchronise the
production process with business processes by integrating these two very
separate entities, namely control systems and business systems. The
integration of these independent categories is defined as Manufacturing
Execution Systems (MES).
MES solutions enable instantaneous real-time communication between control
systems and existing ERP technology. In addition, systems incorporating
web-enabled information portals provide management with the facility to
communicate to their distributed operations at disparate locations. This
prospect is of particular interest to companies with a genuinely global
footprint.
According to a new study by Frost & Sullivan, the international marketing
consulting company, a rising total of companies are continuing to invest
significant funds in MES solutions which provide greater transparency of
procedures from the "shop-floor-to-top-floor", boosting competitive advantage
in their respective markets. This trend was particularly evident in the
automotive industry, where a number of factors including improving overall
efficiency, have provided the impetus for growth in the MES market in recent
years.
New investment programmes should herald soaring sales across a range of user
sectors attracted by enhanced knowledge in real-time of their operations.
Growth in demand from the important food and beverage market is expected to
rise significantly, in addition to further interest from other industries that
realise the benefits which this technology can yield,^Ô explains Brian
Flannery, Industry Analyst at Frost & Sullivan.
For a wide variety of applications, the weakening economy demands greater
efficiencies. Fewer personnel, shorter production cycles and the reduction of
budgets will prompt the purchase of PC-based software and hardware solutions
that allow access to relatively inexpensive off-the-shelf or 'out-of-box'
solutions with their attributes of greater flexibility and user-friendliness
during the configuration process. The move toward 'out-of-box' MES products
will become increasingly popular towards the end of the forecast period,
generating a significant proportion of additional demand.
Further aided by technological advancements across all aspects of
collaborative manufacturing incorporating control information and data
acquisition technologies, the European MES market is set to penetrate a broad
spectrum of end-users. Recording sales worth $976.6 million in 2001, Frost &
Sullivan expects the European MES market to be worth $2.12 billion in 2008.
Nevertheless, there are still challenges ahead. ERP suppliers^Ò imminent
launches of new solutions, which will ultimately penetrate the MES market,
will exert pressure on overall MES sales. Attracted by the buoyancy of the MES
market, ERP suppliers will turn their attention to the provision of their own
variation of MES solutions by synchronising their present business systems
with plant floor control. This trend could potentially lead to the MES sector
being increasingly sidelined, the study warns.
At present, suppliers of MES solutions are not affected by intense competitive
price pressure, however, this scenario is likely to change in future years
when further standardisation of solutions will lead to greater system
comparisons.
^ÓLarge suppliers, in particular, may look towards increasing the
standardisation of their software and hardware products, improving the ability
to plug-and-play "out-of-box" solutions in an effort to keep system prices
low. Smaller companies would be expected to concentrate their efforts on core
competencies, thus ensuring survival through focusing their attention on
improving their expertise and service products in specialist or niche market
areas,^Ô Mr Flannery comments.
Accounting for 65.3 per cent of total revenues in 2001, services constitute
the largest product segment within the total European MES market. The
complexity of the installation and the sophisticated level of operations and
functions that an MES solution is expected to perform are responsible for the
high proportion of revenues allocated towards the services sector.
Capitalising on its vast product range and dominant market share in almost
every European region and application area, Siemens is leading the field as
the most prominent contender in the European MES market. Other significant
companies with a strong share of the overall market include GE Fanuc and
Honeywell-POMS, that can attribute their positions in the market to their
respective involvement and significant presence in the automotive and
pharmaceutical industries. Other notable vendors are Rockwell Automation,
Propack-Data, Werum, Teradyne and the software houses of Wonderware and
Intellution.
Prospective customers cite system performance, service, quality and
reliability as the most crucial factors determining their purchasing
decisions. ^ÓStrategies for the future include further developments to improve
the user-friendliness of product ranges and focus on existing core
competencies to strengthen market position, and often these will be
facilitated through a process of mergers and acquisitions with rival
suppliers.^Ô
^ÓIn addition, improved customer care and after-sales services will be key
factors that require further attention from suppliers in order to remain
competitive in an increasingly challenging industry,^Ô Mr Flannery concludes.
The Study can be purchased from:
Frost & Sullivan
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