AMR: Manufacturing Execution System Market Topped $1B in '04
June 29, 2005
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Revenue for the global Manufacturing Execution System (MES) market reached an estimated $1.06B in 2004, a 50% increase since 2001, according to AMR Research. Compliance initiatives and Enterprise Resource Planning (ERP) maturity were the two major drivers that combined to create a perfect environment for MES market expansion, said AMR Research.
"In 2001, the vast majority of the Fortune 1000 manufacturers AMR Research surveyed were in the throes of massive ERP rollouts," said Alison Smith, senior research analyst at AMR Research. "As these draw to a close, manufacturers are realizing that their ability to effectively measure and manage the performance of their manufacturing assets hasn’t proportionately improved."
AMR Research's recent report - MES Market Rides Perfect Storm Through $1B Barrier - identifies three reasons for this imbalance:
- Focus on application rationalization. In the rush to rationalize ERP systems to support standardizing business initiatives during the dot-com era, manufacturing, inventory management and plant scheduling played second fiddle.
- Lack of a real-time enterprise. ERP systems require production actuals to deliver the next level of benefit to an organization. In the absence of real-time manufacturing data, ERP will continue to drive business on a set of erroneous data.
- Myth of lower total cost of ownership (TCO). While lower TCO and the prospect of maintaining a single, omnipotent application have been seductive selling points at the corporate level, reality is settling in at the plant level. If ERP has to be heavily customized to support manufacturing, as is often the case, lower TCO goes out the window.
Since 2001, an increasing number of companies have begun to use MES to make the connection between enterprise systems and manufacturing. Industry specific examples of this include:
- The A&D market for MES grew from an estimated $23M in 2001 to $57M in 2004 – an increase of nearly 150%.
- MES revenue from sales into the food, beverage, and consumer products segment more than doubled from $30M in 2001 to $61M in 2004. The increase is due to the need to rapidly and consistently manage production across a high mix of brands and globally distributed manufacturing facilities.
- Quality control and warranty cost-recovery initiatives in the automotive industry caused MES revenue from sales into this segment to hit $52M in 2004, up from $21M in 2001.
- The computer, electronics and semiconductor market grew 39%, from $201M in 2001 to $280M in 2004.
Despite consolidation in the last five years, the MES market, according to AMR, continues to support a myriad of best-of-breed vendors - no single vendor dominates the market. AMR Research predicted large automation vendors such as GE Fanuc, Invensys, Rockwell and Siemens will increase their footprints in specific vertical segments.
Automation and pure-play vendors saw the largest growth over the past three years, according to AMR Research. Automation vendor revenue grew $208M (75%) from 2001 to 2004 while pure-play vendors grew $140M (114%).
Source: AMR Research.