In today’s world, manufacturers must compete on a global plane. With the growth of international business comes the need to adopt digital technologies in order to gain visibility into operations across facilities and territories. The advent of these aspiring digitally transformed manufacturers has created numerous challenges that cannot be addressed by standard back-office planning systems. This post examines the current challenges faced by digitally-savvy manufacturers and how manufacturing execution systems (MES) help address them to enable business growth.
Introduction to MES Software
MES software sometimes referred to as manufacturing operations management (MOM) software, is the layer that connects enterprise resource planning (ERP), supply chain management (SCM), and product lifecycle management (PLM) or product data management (PDM) software with the actual plant equipment and labor. According to the International Society of Automation, the MES or MOM is the third level of the ISA-95 model (see figure 1).
Figure 1. Typical MES capabilities, according to the ISA-95 Model
Traditionally, ERP, SCM, and PLM systems do a good job of planning and sending the actual orders or batches to the manufacturing plant. But once those orders are in progress on the shop floor, these white-collar planning or product design enterprise systems are unable to track, control, and monitor the actual transformation of the needed raw materials into the desired finished goods.
Those back-office enterprise systems cannot really know which exact components were used to build the product. For example, what if the shop floor ran out of the originally designed parts but approved substitutes were used to complete the batch? Feedback from the shop floor is needed, whether in a pedestrian way (via manual paper input, phone conversations, etc.) or via digital means (through direct software integration and mapped data streams) with nearly instant insights.
Why Consider MES Software?
In addition to the limitations outlined above, back-office enterprise systems cannot achieve the following:
- assign priority to each shop order;
- maintain exact work-in-process (WIP) quantity information;
- know the current shop order status and actual output data for capacity control purposes;
- know the quantity by location and by shop order for WIP inventory (and accounting);
- provide a measurement of efficiency, use, and productivity of the labor and equipment,
- and more.
MES software also provides the shop floor control and visibility needed to effectively deal with multifaceted traceability requirements. Using real-time big data streams from transactions collected from the shop floor, MES software can link supplier information, lot numbers, serial numbers, time or date stamps, and other relevant records to the appropriate finished goods, back to the original ERP work orders.
Without this near real-time data insight, inaccurate schedules result in unrealistic production plans, unwanted longer cycle times, and bloated WIP and other inventories that cushion any demand uncertainty and lack of visibility. Yet the imperative for manufacturers is to do more with less—and to do it faster and more cost-effectively than before. Manufacturers are experiencing rising material prices, such as tariffs for rare metals and ores, and overhead costs, such as the rising minimum wage and fair wages in trade deals. They are thus looking for ways to implement leaner processes and better visibility into the shop floor, gaining quicker turnarounds to keep inventory low.
To assist manufacturers in accomplishing this, MES or MOM software offers feedback on near real-time production operations, as well as the necessary details for informed decision-making. Unlike an ERP system, which measures transactions in days, weeks, and months, MES software measures movement on the shop floor in hours, minutes, and seconds. But, on the other hand, MES software does not measure customer information. So although the software provides information, for example, on how many good widgets and how many defective parts were produced in a certain period of time, it cannot provide information on which customers will be satisfied by these batches.
Thus, MES software complements the capabilities of ERP, SCM, and PLM software (and vice versa; see figure 2), helping leverage an organization’s information technology (IT) investment. The two types of planning and execution systems collectively supply information, thereby creating more accurate schedules that result in realistic production plans, shorter cycle times, fewer WIP items, and fewer inventories.
Enter Digital Supply Chains
Today’s fiercely competitive global manufacturing arena demands ever lower costs, more product variants, faster new product introductions, and better compliance with the quality standards and complex regulatory requirements set by different countries and/or industries. Facing these new demands, many manufacturing companies have moved beyond quaint paper-based processes and have started implementing streamlined digital business processes for their shop floors.
In a global digital supply chain world, strategic objectives go beyond traditional tactical operations objectives such as productivity, quality, overall equipment effectiveness (OEE), and cost. They have resulted in several digital transformation trends and the need to:
- produce smart connected products, with consumer engagement;
- offer personalization—that is, the order of one;
- offer products as a service;
- design products to order;
- provide lights-out automation, and
- offer guided vehicles.
To be realized, many of these aspirations will require much tighter integration between operations and the business than is seen today.
In addition, today’s globally dispersed supply chains are becoming truly digital, whereby basically everything, in all of the factories and subsidiaries around the world, can be connected in the cloud. Materials, manufacturing and testing equipment, all data collection points, and people can be equipped with Internet of Things (IoT) devices that continually emanate signals on the current status and provide preemptive alerts to maximize runtime and hence efficiency.
MES and ERP Work in Unison
Without cloud-enabled MES or MOM software integrated with back-office planning systems, it is very hard, if not impossible, to have all global factory data visible anytime and anywhere. As an example, consider a global manufacturer with more than 50 factories worldwide and with more than 20,000 pieces of manufacturing equipment being connected to the cloud via IoT sensors. Managers need to have near-real-time availability of the data on parts per minute (PPM), test, quality, WIP inventory and throughput, line down, and other indicators to gain the necessary insights.
An astute MOM system can configure automatic alerts or escalations when any of thousands of key performance indicators (KPIs) fall outside of preset limits. This way, a senior vice president (SVP) of Global Operations, for example, with a dozen or so factories can receive real-time alerts on WIP inventories, yields, throughputs, and more. The chief purchasing officer (CPO) can enjoy complete global supply chain visibility and promptly act on any burning issues.
As another example, imagine an SVP of Global Quality/Regulatory Affairs who can now enforce a global quality framework with full traceability and component verification as well as electronic uploads of test and quality records. In addition, barcode labels can be used to track any deviations down to the assembly line, allowing for lockout of an operator workstation, owing to a connection between a badge scan and online mandated training records and the certification database.
Challenges Addressed by MES Software
To recap, global manufacturing companies face numerous challenges that an astute MES solution can help them the address, such as the following:
- Lack of visibility: An MES system can address this issue by offering real-time control of all the operations.
- Bloated inventories and WIP levels: The lack of visibility translates into supply chain tardiness and uncertainty, which gets mitigated via unneeded safety stocks and buffers. Bloated inventories, however, tie up working capital and can result in costly obsolescence and write-offs. MES solutions can address this issue by offering near real-time visibility and insights.
- Poor customer satisfaction: Unrealistic promises can lead to unfulfilled expectations and poor customer satisfaction. Astute MES software can help companies optimize their production sequencing—and deliver more realistic schedules and shorter cycle times.
- Higher scrap rates (lower quality): Lack of visibility of ERP systems translates into a belated reaction to fixing issues with lower quality, let alone preventing the production of any low-quality items on the shop floor. Again, an MES solution can address this issue by offering near real-time visibility and relevant insights.
In conclusion, MES software is a worthwhile investment. With the expected increase in global manufacturers that have digitally transformed their business, the use of cloud ERP and MES software solutions could confer complementary and synergistic benefits to facilitate business growth. To learn more, check out our MES overview and searchable list of top MES solutions.