Ken Perino knows what it feels like to sit across from an FDA or an ISO auditor. They drop in periodically to make sure that SonoSite Inc. (Bothell, WA), a manufacturer of ultrasound equipment for the medical industry, is meeting all U.S. government and international regulations. And the day the auditor arrives typically ends (or begins) with a couple of aspirin.
The auditors check everything from who made the components, to the flow of the manufacturing process, to the authorization of the operator, and defective parts tracing. When Perino first started this interaction with the authorities, he was offering up data collected on paper and a kludge home-grown system. Now he uses a state-of-the-art manufacturing execution system (MES)-and audits are much less daunting.
"MES helps companies meet the regulations that are governing them by providing software that makes the business process more bullet-proof," explains Perino, SonoSite Inc.'s manager of product and supplier quality. "It makes my job easier."
But all manufacturing execution systems are not created equal. There is no 800-pound gorilla ruling this camp. And the options are increasing, which can make choosing the right product a difficult endeavor.
Indeed, this market has been reshaping itself for years. Manufacturing execution systems used to be only about tracking plant-floor production. About three years ago it became increasingly important to find a way to push that information into the enterprise applications-then out to the supply chain-and most recently to tie product design and lifecycle management into the mix.
The result is a new breed of MES that's not really MES at all-not a single application anyway. Indeed, it's turning into a collaboration of capabilities that can come from a variety of vendors. Hence, the appearance of automation and enterprise resource planning (ERP) suppliers in this segment is swelling. In some cases the new entrants are stepping on the toes of traditional manufacturing execution systems vendors. In other cases they are partnering with them, or scooping them up in an acquisition (see sidebar, page 20). In every case, however, it is clear that this space offers new opportunity.
For suppliers, it's a growth initiative. "The business climate is changing because of the need to generate greater revenue and exposure," says Scott Bornstein, marketing director at Intercim Inc. (Minneapolis, MN). "In the past, MES never gained widespread demand because it was the ERP and other enterprise solutions that were in demand." But as the ERP market became saturated, the vendors needed ways to increase revenue and expand their footprint. "One of the ways to do that is to attract more licensing sales through MES capabilities," Bornstein explains.
Case in point: In 1999 IFS AB (Linkoping, Sweden), an ERP vendor, acquired Intercim. Last year, however, IFS made an about-face and sold the MES supplier. "Intercim has system neutrality," says Bornstein. "When we were owned by IFS we couldn't associate ourselves with IFS because our customer base had other ERPs. It was better for IFS to develop their own manufacturing capabilities in hopes of increasing their licenses for their ERP components."
Mid-market ERP suppliers, such as Epicor Software Corp. (Irvine, CA), can get away with bundling MES, ERP, and supplier relationship applications. "We come in with an embedded end-to-end solution that takes all of the silos and brings them together as a complete entity," says Paul Farrell, Epicor Software's senior director of product marketing. Moreover, Epicor's MES portion does not just skim over the essentials of production management. It offers real-time information on specifications coming through engineering all the way to the customer, Farrell says.
Larger ERP suppliers, however, that have built a solution set around the business side of the house just can't go that deep into plant operations. Even as SAP America (Walldorf, Germany), Oracle Corp. (Redwood Shores, CA), and PeopleSoft Inc. (Pleasanton, CA), try to build out their manufacturing components, they are quickly realizing they can't compete with some of the fine-tuned functions of MES.
"ERP vendors are telling us they see big revenue value in manufacturing as a vertical," notes Lou Unkeless, vice president of marketing at Datasweep Inc. (San Jose, CA). "They are looking at different ways to add value in that area, but they don't have the shop-floor experience." As a result, these ERP companies are approaching MES vendors to help fill the gap. Datasweep Inc. and PeopleSoft Inc., for instance, share 14 joint customers.
The notion that ERP cannot be turned into MES is backed up by customers themselves. SonoSite's Perino, who ultimately chose Datasweep as his MES, did take a look at Oracle first. He was familiar with the application, given the fact that he was the program manager who installed that ERP system at the company, and he knew that it had some production capabilities. Ultimately, however, Oracle didn't offer enough MES substance. "Oracle has an ability to run the production floor, but the amount of detail and clarity of the tracking-the who built what, when, and all of the defects associated with a specific product-wasn't there at the time."
When Perino went looking for an MES partner two years ago, his choice was limited to the vendors that offered functions that met his regulatory needs. But today MES vendors are increasingly adding more value by specializing, especially for the medical device market. Medical device manufacturers need to implement good manufacturing practices around traceability due to FDA pressures. For that reason, companies like Camstar Systems Inc. (Campbell, CA) introduced a tailored MES solution for medical devices last February. Others, like Intercim and HMS Software Inc. (Concord, MA), specialists in aerospace and defense, are beginning to branch out toward the medical world as well.
Whatever the specialty, these smaller MES companies are finding that, while they can't compete with the size and scale of the larger ERP companies, they can win over customers on capabilities alone. "About four or five years ago, SAP moved into the MES world and we've been fighting them ever since," says Alexander Houtzeel, president of HMS Software. "In most of the cases, we've won on the rebound." That's because the world of aircraft manufacturing is so complex, it requires a big investment just to capture the level of detail required by customers.
The bottom line is that if a manufacturer needs a general-purpose MES, the ERP supplier might fit the bill. But in most cases, each industry has nuances that only a tailored solution can meet. So the best approach is a best-of-breed product that is easily integrated into ERP. And the MES companies are offering those connections. Camstar, for example, has a dedicated integration team that uses the company's LiveConnect modules to bring together its InSite MES product with ERP, and even product lifecycle management (PLM) or customer relationship management (CRM) applications. "Eighty percent of the time there are touch points that we can just drop right in, and the other 20% is customizable," explains John Beans, Camstar's vice president of marketing. "But it is worth it for us to invest in developing these standard adapters."
That's because MES can't stand alone in today's collaborative environment. Not only must it be able to reach up and outside of the production operations, but it must also be able to extend across the plant and engineering realms. That's why automation vendors are getting into the game.
Many times automation vendors simply align themselves with established MES vendors. For example, Datasweep provides its MES-based software, called Advantage, to GE Fanuc Automation Americas Inc. (Charlottesville, VA), which the automation company privately labels as Cimplicity Advantage. Other times there are outright acquisitions. GE Fanuc recognized early on that the manufacturing execution layer is a vital piece of the automation-to-enterprise puzzle. They continue to leverage the Datasweep alliance, but are expanding their footprint with MES acquisitions as well.
In that vein, GE Fanuc purchased Mountain Systems Inc. last year as a way to gain access to a larger customer base. This year, the company will start to outline an even bigger vision leveraging its new MES ability. They call it "Plant IT". It's an open architecture that can bring together existing controls platforms through a human-machine interface (HMI) with a plant reference, original equipment effictiveness, and quality modules. "Other aspects are equally important like product lifecycle management, supply chain planning and execution, and services for the plant and enterprise," explains Kevin Roach, vice president of GE Fanuc's solutions business. "But MES is a core piece of Plant IT."
Others, like Honeywell Process Solutions (Phoenix, AZ), Siemens Corp. (Alpharetta, GA), and even Wonderware (Lake Forest, CA; an Invensys plc company), recognize the MES opportunity. And then there is Rockwell Automation (Milwaukee, WI), a vendor that seems to be reinventing itself around MES software and services. Over the last five years, Rockwell Automation has made five acquisitions, positioning itself squarely in this space. The most recent purchase of MES integrator Interwave Technology Inc. (Exton, PA) is allowing the company to become more aggressive. "Now, with the Interwave acquisition, you'll see offerings that share a common thread, such as the same database structure or ways of being able to take one piece and expand it into additional areas," explains Don Lazzari, Rockwell Automation's director of MES marketing. "But it's not just a single application," he adds.
Indeed, MES is a different animal these days. But it doesn't have to be a beast. As long as the integration is there to bring it all together, be it from the automation side, the enterprise resourse planning side, or the best-of-breed application itself, manufacturing execution systems solutions will make a huge difference in the way your company operates.
More importantly, it can alleviate occasional headaches even more effectively than aspirin-just ask Ken Perino. MA