Could this be the year that the $850 million market for manufacturing execution software (MES) finally takes off?

That's a question supply chain experts have asked many times before. But this time really might be different. That's because several trends are converging to drive real interest in MES.

The first is that many companies are discovering the gaps between what they need and what their newly installed ERP systems can do.

"A lot of C-level executives are realizing that even with an ERP system, they still don't have real-time visibility into their manufacturing operations," says Alison Smith, senior research analyst with AMR Research (617-542-6600). An MES system can provide the real-time link between the shop floor and the executive suite.

The second trend is industry consolidation. Once made up of hundreds of niche players, the MES market is consolidating around a small group of market leaders who have been in the industry for years.

At the same time, industrial heavyweights like GE, Siemens, Rockwell Automation and Honeywell are providing solutions.

Those leaders are broadening their footprints to offer a full suite of manufacturing solutions.

"MES, automation and business intelligence are coming together under one umbrella," says Kevin Bernier, director of plant intelligence solutions, GE Fanuc (800-433-2682). "Instead of buying disparate systems from multiple providers, we're moving toward a few providers who can bring it all together."

That functionality is becoming easier to implement, too.

"MES systems are evolving from monolithic applications to a modular approach that allows customers to buy just the functionality that they need," says Matt Bauer, director of information solutions marketing, Rockwell Automation (888-577-2787).

Consolidation, expanded functionality, and quicker and cheaper implementations have worked together to keep the MES market moving forward.

Vertical expertise is a third trend. That allows providers to offer off-the-shelf solutions incorporating best practices for industry-specific problems.

"That's important because users are tired of building custom solutions from scratch for their operations every time they open a new plant," says Maryanne Steidinger, senior strategic market development manager, Siemens Energy & Automation (215-646-7400).

What's more, the technology now works as advertised—a bonus that can't be underestimated. "As an industry, our solutions can now do what we dreamed about doing ten years ago," says John Beans, vice president of marketing, Datasweep (800-251-7946).

Finally, this is all playing out against a backdrop of new regulations that require companies to exercise more control over the life cycle of their products. MES meets those requirements because it tracks, traces and reports on the raw materials, components, and parts that go into finished goods as well as the disposition of those products.

Beyond those developments, the new generation of MES solutions is meeting the needs of companies that must manage manufacturing across multiple sites and even with multiple manufacturers in an outsourced, contract-manufacturing environment.

AMR Research has dubbed this trend "collaborative manufacturing execution" or CEM. "With complex supply chains, you have to figure contract manufacturers into the mix," says AMR's Smith. "That's because if something goes wrong, your contractors aren't responsible for recalling the product, you are. So, you need systems that will give you a handle into what's going on wherever your product is being produced."

In a collaborative manufacturing environment, the MES receives an order from an ERP system and then makes an intelligent decision on where to produce the order based on capabilities, capacity and price. Next, the system publishes the instructions for the best way to manufacture the product to whoever needs that information.

"The MES is not only managing the orders, it's tracking the detailed information flow and reacting to changes on a real-time basis," says Tom Comstock vice president of product marketing for Brooks Software (978-262-2400). "If a tool goes down in facility A, the system can make the intelligent decision to move production to facility B."

That last example illustrates a new level of intelligence being programmed into MES, especially about the performance of a manufacturing operation.

"The previous generation of MES collected production information," says Carter Johnson, vice president of strategy and business development, Visiprise (770-619-4200). "Today's system can make intelligent use of that data."

For example, yesterday's MES tracked the feeds and speeds of equipment and the yields and scrap on materials. Today's systems can correlate that information to key financial performance indicators and feed it back to other systems, like an ERP system.

In the past, manufacturing processes inside a plant, even with an MES system, were a black box to the rest of the enterprise. In part that was a function of the state of supply chain technology.

"Even if you could have made the information available, most companies didn't have systems in place that could do anything with that data," says Bauer of Rockwell Automation. "Since then, there's been a tremendous level of investment in ERP systems at the enterprise level and in automation systems on the shop floor. The MES system can now collect information from the automation layer and feed it to the enterprise layer."

There are also synergies to be had by integrating the MES solution with other supply chain solutions, like a warehouse management system.

"If the MES detects that we're consuming more raw materials than planned on the line, it can key the warehouse to get more raw materials," Bauer says. "At the same time, the system can correct the line so that it's not using as much."

Thanks to new initiatives like the waste electrical and electronic equipment (WEEE) and Restrictions on Hazardous Substances (RoHS) in Europe, the track and trace capabilities of MES systems have never been more important. They are also a primary reason why the software is expanding from the semi-conductor industry into aerospace, automotive, pharmaceuticals and medical devices.

"Compliance and enforcement is driving a lot of the industry today," says Joseph Vinhais, vice president of regulatory compliance, Camstar (408-559-5700). "You now have a lot of requirements to meet, and a lot of people running around to review documentation, do analysis and make sure all the signatures are in place. There are a lot of costs associated with that paper trail, and even more costs if you do it wrong."

Just how big are those costs?

"There are estimates that up to 40% of direct manufacturing in an FDA-regulated company can be traced to compliance," says Beans of Datasweep. "If you can streamline that process, you can really lower your costs."

An MES system enforces the routing and conformity to the regulations. That's because the systems can be programmed to stop the production process at a particular spot if anything is amiss. The system also collects that lot, batch and production information that allows a manufacturer to limit the scope of a recall if there is a product failure.

"The data you need to be in compliance is around production," says Vinhais. "An MES lets you get your hands around that data."