- By Janice Abel
- November 24, 2020
- ARC Advisory Group
- Feature
Summary
ARC Advisory Group and Automation.com recently collaborated on a web survey to gauge the current take up of various manufacturing execution system (MES)-related functionalities in the context of digital transformation. This article summarizes our key takeaways from this survey using only those respondents who identified as end users.
ARC Advisory Group and automation.com recently collaborated on a web survey to gauge the current take up of various manufacturing execution system (MES)-related functionalities in the context of digital transformation. This article summarizes our key takeaways from this survey using only those respondents who identified as end users.
Readers should note that for the purpose of this survey, MES and MOM (manufacturing operations management) are synonymous. MES/MOM solutions help fill the traditional gap between operational-level automation systems like DCS, PLC, and SCADA and enterprise-level business or ERP systems. MES takes information from the automation systems, business systems, and (increasingly) edge devices and the Cloud to manage the process, events, notifications and workflows. In general, MES enables collaboration and visibility in real time and improves efficiencies and performance to help industrial organizations reduce costs and gain competitive advantage.
While the scope of MES keeps evolving, typical applications today include:
Planning & scheduling for the manufacturing or operations environment (including batch management, where applicable)< >Workflow & process management, quality management, energy management, and track & trace MES could also include manufacturing intelligence applications, such as analytics and digital dashboards.
MES solutions are typically specialized by industry.
Many suppliers include specialized, configurable reports, dashboards, or other functionalities that make sense for a particular application or industry. For example, batch management capabilities for specialty chemicals, pharmaceuticals, and food & beverages and track & trace or serialization capabilities for highly regulated industries such as pharmaceuticals.
About the survey
ARC and automation.com conducted the survey in March and September of 2020. While ARC also covers MES for discrete manufacturing industries, as the chart shows, this particular survey drew the majority of respondents from the process, batch, and hybrid manufacturing industries. The largest number of respondents are from the chemical industry, followed by metals, oil & gas, pharmaceutical and biotech, pulp & paper and food & beverages. In general, this represents a very good cross section of process industries.
In addition, the global distribution of survey participants helps provide an idea of what’s really happening in MES around the world. As the chart shows, 55 percent of respondents are from North America, 22 percent from EMEA, 13 percent from Asia, and 10 percent from Latin America. We received some excellent responses from suppliers, systems integrators, and other consultants (and certainly appreciate their insights); but to be able to focus in on what end users are doing we have filtered out any non-end user responses from our analysis.
MES digital transformation maturity model
ARC has developed a multi-level digital transformation maturity model for this MES survey to help end user organizations determine where they stand in their respective digital transformation journeys relative to peer organizations. The survey questions all relate back to this multi-level model, which progresses from initial exploration, to limited application, to significant application, to proficient application, and–finally–to best-in-class.
At the Exploring level, end user organizations have one or more basic, but typically siloed MES applications in place with some data integration. At the Limited level, the basic MES functionality (now including limited visualization) is in place in one or two plants, with somewhat more data integration and thus fewer data and functional silos and improved interoperability between applications. At the Significant MES implementation level, MES functionality extends across entire plants, often with multiple plants connected across the enterprise. At this level, MES solutions are integrated to most manufacturing-related data sources, with increased visibility into the production and related supply chain processes. At the Proficient level, organizations have further developed their visualization capabilities and begun to incorporate (or integrate to) some of the newer, more advanced digital capabilities. These could include artificial intelligence (AI), machine learning (ML), digital twins, robotics, new digital sensors, etc. Where appropriate, these capabilities could reside on premise, in the Cloud, or at the edge. Best in Class organizations have further refined and expanded these capabilities to support enterprise-wide visibility and collaboration. Relative to MES, this represents a highly mature level of digital transformation.
Survey results
To be able to gauge the impact of the different maturity levels on plant and enterprise performance, we asked respondents to indicate the respective levels in their worst-performing plant, an average-performing plant, and best-performing plant. 
As the chart shows, in the worst-performing plants, approximately 75 percent of respondents are either not doing anything in this area, or–if so–doing so on either an exploratory or limited basis. In average-performing plants, 40 percent of respondents have implemented MES applications on a limited basis. And in the best-performing plants, more than half of our respondent believe they have either achieved digital transformation proficiency with MES or at least are making significant use of these applications.
We’ll let readers come to their own conclusions about what the above means and how it could possibly apply to their own businesses. For more information on this survey and other digital transformation reports, readers can visit the website.
We asked our survey respondents about their MES adoption by application type and then sorted the data by both application type and the indicated MES digital transformation maturity level of the plant or enterprise.
Production execution, production management, performance management, and planning & scheduling have the highest adoption level in high-performing plants. Workflow management, labor management, and energy had the least levels of adoption. ARC believes this could because, while important, these applications are often sold and implemented separately from MES.
Cloud is playing a more important role in digital transformation to help accommodate the enormous volume of production and other manufacturing-related data being collected, cleansed, analyzed, and stored across today’s industrial enterprises as well as support data and application sharing across sites. So, we also asked our survey respondents about how they are deploying their MES various applications. We grouped the deployment options into Public cloud, Private cloud, Public/Private clouds; or On-premise deployment. One issue we encountered here is that the definition of “cloud” can vary somewhat from person to person and from organization to organization. Nevertheless, cloud deployment is a big part of connected operations and supporting actionable intelligence.
As the chart shows, the largest group of respondents still prefer to keep their critical MES applications on-premise. s the promise of the Cloud increases (along with further improvements in cloud cybersecurity and associated user confidence), ARC believes that this is likely to change in the future. However, ARC also believes, that in certain industries, some applications will remain on-premise permanently due to either the nature of the application itself or legal, regulatory, and/or intellectual property issues.
Not surprisingly, we learned that advanced analytics, including ML and AI, are the applications most often deployed in the Cloud. Significantly, many companies are moving their data to the Cloud, but keeping the applications on-site. Another consideration when interpreting the deployment chart, is that a large percentage of our survey respondents are from the process industries and ARC has seen multiple indications that cloud deployments could be more widespread in discrete manufacturing industries than in the process industries.
It will be interesting to see if and how the survey responses change when we update the survey in 2021.
We also asked about the value of digital transformation in MES by application. This value does not necessarily have to be in expressed in monetary terms. It could also involve intangibles such as ease of use, improved collaboration, safety improvements, or company cultural or morale improvements. As shown in the chart, most respondents perceived that their organizations are receiving a positive ROI from their MES-related digital transformation investments. However, the degree of value achieved varies by the application type, the industry, and the specific company where the technology is being applied and measured. But it appears that for every MES application on the survey, users were able to obtain greater than 50 percent ROI. However, the average for returns was from between 1 to 20 percent and, for in some application areas, respondents did not report any value. The top value received were in in the areas of production performance improvements (which are usually measured) and cost reductions.
Join in the conversation
Automation.com readers will agree that these are very exciting times to be involved in the industrial automation space. ARC will continue to update the results of this and our other digital transformation-related surveys and other research in our ongoing efforts to stay on top of this important and extremely dynamic area. ARC encourages you to join in the conversation and get your voice heard by participating in our surveys and other research.
Another option is participation in the end user-driven Digital Transformation Council. Council members benefit from access to community of peers. They can tap into the latest thinking from thought leaders, download research documents from the Council Library, participate in quarterly web meetings and other events, interact with ARC senior analysts, and request facilitated meetings with suppliers or other community members.
Finally, ARC encourages technology end users and suppliers alike to join us online at the 25th Annual ARC Industry Forum, “Accelerating Digital Transformation in a Post-COVID World,” Feb. 8-11, 2021. While the 2021 Forum will be held in a virtual environment due to the COVID-19 pandemic, ARC is making every effort to ensure that the presentations, workshops, and networking opportunities are as valuable as ever.
About The Author
Janice Abel is a principal consultant with ARC Advisory Group.
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