Until recently, manufacturing execution systems, or MES, were the Rodney Dangerfield of the supply chain: they got no respect from the broad world of manufacturing.

While warehouse management systems grew at a 20% annual clip for several years, MES plugged along with growth rates that barely beat the rate of inflation. Furthermore, most sales were to high tech chip manufacturers.

That is changing, says Bill Hakanson, Executive Director, MESA International, Pittsburgh, Pa., the trade association that represents the industry. Today, the industry is growing at a pace that equals the WMS industry.

MES, it seems, has been discovered by traditional manufacturers like Rosina Food Products, which increased overall production throughput by 76% and increased productivity 65% after implementing an MES solution. The same is true of Avery Dennison, which reduced unplanned downtime by 33% and reduced on-hand work in process inventory by 50%.

Quite simply, it's the same factors driving the need for improved WMS systems in the warehouse: smaller orders, shorter lead times, increased customer service, mass customization, and outsourcing. Most importantly, MES provides much needed real-time visibility into the operations on the shop floor like work in process (WIP), just like a WMS does into the warehouse.

"Information about the status of orders is critical to the supply chain today," says Jonathan Kall, president of Interwave Technology, Inc., an Exton, Pa., MES consulting firm that worked with Rosina and Avery Dennison.

"The MES captures that information and provides a magnifying glass into your plant to show you where are the bottlenecks," explains Kall.

Just what is an MES? AMR Research, Boston, Mass., has identified three characteristics of an MES system.

It tracks products on the plant floor, managing the workload and reporting on transactions to ERP systems.

It electronically dispatches the orders or product requirements to shop floor personnel, allowing the schedule to change quickly in response to unexpected demand or breakdowns.

Finally, it provides other data services to the shop floor such as quality tracking, electronic work instructions, and lot traceability, among others.

Despite those common characteristics, the systems are not exactly monolithic.

"Every software vendor had something called MES and every system was different," says Michael McClellan, president of MES Solutions, Inc, a consulting firm in Terrebonne, Ore., and an MES pioneer. "That's one of the reasons why MES has had a tough time in the marketplace."

Nevertheless, people are seeing functional similarities between MES and WMS that had been overlooked before.

Both, for instance, are supply chain execution systems. They accept a master plan from an enterprise level system, and then execute the orders on the warehouse or factory floor.

And both create a critical real-time link between corporate level ERP systems, and the automated systems that control machinery and equipment on the floor.

That last point is central to the interest in MES today.

"Manufacturers spent millions implementing ERP systems and automating their plants only to discover that there was nothing in between to connect the two," says Kevin Prouty, research director, manufacturing strategies, AMR Research, Boston, Mass.

MES provides that connection between the plant and the rest of the enterprise, making true real-time visibility onto the shop floor a reality.

MES systems have typically caught on in industries with a rapid turnover of product, like the chip industry. They are also used where lot tracking for regulatory purposes was an imperative to doing business, like aircraft manufacturers, pharmaceuticals, and automotive.

But there was less interest from traditional make-to-stock manufacturing systems who had no compelling need for real-time information.

What's new is the beginnings of a broad shift from a make-to-stock model (what some analysts call make, store, and sell) to a make-to-order supply chain model (also called sell, source, and ship) enabled by the Internet. That same shift is behind the growth of new warehouse management applications like inventory visibility and event management.

As lead times shrink and trading partners collaborate over the Internet, real-time information is invaluable.

"Customers today can configure their orders online," says Rob Rudder, vice president of business development for CAMSTAR, a San Jose, Calif., provider of MES solutions. "Unless you can view all of the processes in real time, you don't know whether you can take or fill an order. MES is becoming an important infrastructure to give real-time, make-to-order responses."

What's more, the factory floor has generally been ignored as a source of information about system improvements. "A lot of companies have done a great job with WMS in their warehouses," says Nelson Nones, director of global marketing for Apriso Corp., Long Beach, Calif. "The next place to raise the bar on productivity is on the plant floor. To make that happen, you need an MES system that is responsive without building up your finished goods."

Today's MES plays multiple roles in an overall supply chain solution. But to make the transformation from a standalone application to an integral part of a supply chain suite, MES systems need to integrate in ways they have never integrated before.

In a collaborative manufacturing system, for instance, the first point of integration is likely to be with an engineering and design system. "Product life cycles are getting shorter," says Nones. "The challenge is to collaborate on new product design with my vendors, and to do it on the fly. With hundreds of new products being introduced, you need an MES system to take that information right from a design system and execute on the new products."

Likewise, MES ties together the different systems of third party manufacturers in a supply chain that relies on outsourcing. "Companies are demanding information from their contract manufacturers, from real-time order status to the genealogy of how the product was made," says Jonathan Kall of Interwave Technologies. "At the end of the day, the company's name still goes on the product. An MES system tied into the supply chain can disseminate that information."

Production information might also link back to maintenance management systems in the case of a break down, or just to synchronize plant activities with maintenance schedules.

Likewise, that information is being sent back to supply chain planning systems to provide a real-time view of how assets are being consumed and products are being produced. Some goes all the way back to customer relationship management systems (CRM).

"As customers go online to place their orders, the MES of the future has to have strong and viable links to planning and CRM systems to make an accurate and feasible commitment to the customer," says Nelson Nones of Apriso. "The trick becomes getting that order to the factory as quickly as possible to commence operations on the basis of a demand pull schedule."

Finally, there is a tie between manufacturing and warehousing: expect the MES of the future to also provide real-time alerts to a WMS system about what finished goods are available or about to be shipped.

"At the end of the day," says Rob Rudder of CAMSTAR, "it's about creating an information hub that will synchronize, control and coordinate how you use your resources throughout the whole enterprise."

In such a vision of the supply chain, the MES can leave its Rodney Dangerfield past behind, and earn the respect it has sought for years.

• Reduced manufacturing cycle time by an average of 45%
• Reduced data entry time, usually by 75% or more
• Reduced work in process (WIP) by 24%
• Reduced paperwork between shifts by 61%
• Reduced lead times by 27%
• Improved product quality and reduced defects by an average of 18%
• Eliminated lost paperwork/blueprints by an average of 56%

Source: MESA International

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