1.MES Industry Overview

1. MES definition and classification

MES (Manufacturing Execution System), I .e. manufacturing execution system, is a workshop-oriented management information system between the upper planning management system and the bottom industrial control system. It can optimize and manage the whole production process from the order to the completion of the product through information transmission. It can guide, start, respond and record the workshop production activities by using timely and accurate data, and can make rapid response to the changes of production conditions, thereby reducing non-value-added activities and increasing efficiency.

According to the development stage, MES products can be divided into traditional MES, integrated MES and intelligent MES.

Traditional MES products have a long history of development, including single-function MES (dedicated MES) and integrated MES. Dedicated MES is mainly developed for a specific industry or field, with a single function and difficult to integrate with other systems; integrated MES is to integrate multiple dedicated MES together to form a complete system, which can realize information sharing and collaboration across departments or enterprises.

From the form of expression, the integrable MES has the characteristics of a dedicated MES system, that is, some functions in the I-MES can be sold separately as reusable components, and at the same time, it has the characteristics of integrated MES, that is, it can realize the integration between the upper and lower layers.

Intelligent MES will be knowledge-based, cloud-based, data-based, constraint-based optimization, and have real-time, flexible and configurable functions.

2. MES industry chain analysis: industrial chain supporting more perfect, rich downstream applications

The MES industry chain is a knowledge-linked functional network chain composed of all enterprises and organizations that provide software products or services for the implementation, use and maintenance of MES systems for enterprises, with software products or services as inputs and software products or services as outputs.

Its upstream is computer hardware equipment suppliers and database, middleware, backup management software and other system software suppliers.; midstreamMES software suppliers mainly include foreign capital and domestic capital, with many participants; downstream is the application market, mainly including various types of manufacturing enterprises.

MES upstream for hardware and software suppliers, including Zhongke Shuguang, China Great Wall, China Software, Puyuan Information and other enterprises.

MES suppliers in the middle reaches of the industrial chain are divided into two camps: domestic and foreign investment. Foreign-funded enterprises include Siemens, GE, SAP, Rockwell, etc. Domestic-funded enterprises include Zhejiang Central Control, Shanghai Baoxin, Saiyi Information, Dingjie Information, etc.

The downstream of the industrial chain includes a number of industries, and is currently well penetrated in steel/metallurgy, automotive, petrochemical, computer communications and other industries.

2.MES industry development history: the industry is gradually moving towards standardization, ushering in new development opportunities

Before 1999, China's MES industry was mainly in the introduction stage. In the 1980 s, Baosteel, as a pioneer in reform and opening up, introduced MES management system and became the first enterprise in China to apply MES.

From 2000 to 2010, the Chinese market experienced a transformation from dismantling, research to marketing. With the rapid development of domestic manufacturing industry, the demand for MES is gradually increasing, and domestic and foreign enterprises have entered the market to develop MES products suitable for different industries and fields.

After 2011, the MES market in the petrochemical field has gradually matured and the MES market has continued to spread. With the country's requirements for the transformation and upgrading of the manufacturing industry, MES has begun to penetrate into discrete manufacturing fields, such as automobiles, electronics, and machinery.

After 2015, the MES market ushered in a historic opportunity. The Chinese government proposed the "Made in China 2025" to bring a broader market and inject new vitality into the MES industry. With the advancement of intelligent manufacturing and digital economy, MES has begun to develop in the direction of intelligence, cloud and data.

3.MES industry policy background: focus on promoting intelligent manufacturing

2022 is the year of the 20th National Congress of the Communist Party of China and an important year for the implementation of the "14th Five-Year Plan". The digital development of my country's industry is in full swing, and grasping new opportunities for digital development is an important proposition. The State Council, the Ministry of Industry and Information Technology, and the National Development and Reform Commission have issued a series of policies to support and encourage the development of the MES industry, focusing on promoting intelligent manufacturing.

The "Guiding Opinions on Further Promoting the Construction of a Manufacturing Power" puts forward the overall requirements and main tasks for accelerating the construction of a manufacturing power, and clarifies the goals by 2025 and 2035. Among them, it is proposed to accelerate the demonstration application and engineering construction of intelligent manufacturing, and strengthen the construction of intelligent manufacturing standard system.

The "Guiding Opinions on Promoting the High-quality Development of Industrial Internet Platforms" puts forward the overall requirements and main tasks for accelerating the high-quality development of industrial Internet platforms, and clarifies the goals by 2025 and 2035. Among them, it is proposed to strengthen the industrial Internet platform and manufacturing execution system (MES), enterprise resource planning (ERP), production and operation management (POM) and other system integration applications, and strengthen the industrial Internet platform security system construction.

The "Guiding Opinions on Promoting the High-quality Development of the Digital Economy and Serving the Real Economy" puts forward the overall requirements and main tasks for accelerating the high-quality development of the digital economy and serving the real economy, and clarifies the goals for 2025 and 2035.

Among them, it is proposed to strengthen the deep integration of digital technology and manufacturing industry, promote the transformation and upgrading of digital, networked and intelligent manufacturing industry, and strengthen the construction of digital technology standard system.

4.Analysis on the Development Status of MES Industry

1. China's MES market size continues to grow

The scale of China's MES market is growing rapidly. Among them, the market share of the process field and discrete field is basically flat, but with the promotion of national de-capacity and supply-side structural adjustment, the process field will maintain a relatively stable low-speed growth, and with the gradual increase in the proportion of electrical applications MES, the process field continues to grow rapidly.

Currently DomesticMES has a short history of development, unlike ERP, CAD and other more mature industrial software, MES penetration is not high. According to Shangpu Consulting Group, China's MES market will reach 12.8 billion billion yuan in 2021, up 16.36 percent year-on-year. In 2022, the size of China's MES market will reach 14.9 billion billion yuan, up 16.41 percent year-on-year;, ChinaMES market size will reach 17.4 billion billion yuan, up 16.78 year on year.

2. Data collection is the primary requirement of MES users

According to Champ ConsultingAgainst ChinaMES product user survey data show that the current data collection, process and tide management, production analysis and reporting, production Kanban, material management, quality management module application rate is high, more than 80%. On the whole, enterprises in the production process, materials and quality management application coverage is better. Data collection, production analysis and reporting, and production kanban application ratios have increased significantly. Among them, data collection has become the most widely used functional module, with the application ratio rising from 75% to 94%, the application ratio of production analysis and reports rising sharply from 36% to nearly 89%, and the application ratio of production kanban rising from 28% to 88%.

According to Shangpu Consulting, this reflects the growing demand for real-time, accurate and comprehensive production data, as well as the increasing emphasis on data visualization and analysis. Data acquisition is the basis and premise of MES system, and it is also the key link to realize intelligent manufacturing. In the future, with the development and application of industrial Internet platform and big data technology, data collection will be more intelligent, automated and refined.

3. Cooperative development and secondary development model welcomed by the market

Judging from the mode of users applying MES products, from 2014 to 2022, the user application mode has changed obviously: first, the independent development mode has been greatly reduced, from 38% in 2014 to 16% in 2021, and users have reduced new investment resources to independently develop MES software; Secondly, the proportion of secondary development after cooperative development and purchase of software has increased significantly, the proportion of cooperative development in 2022 is 38%, and the proportion of secondary development after purchasing software is 24%, which shows that more and more enterprises actively participate in the process of software development and improve the success rate of projects. Finally, the proportion of direct purchase of commercialized software basically fluctuates slightly, and will remain at about 25% in 2022, reflecting the slow development of commercialization of MES products, due to significant differences in different industries, it is difficult to form a MES system that can be used in different industries.

According to Shangpu Consulting, this reflects the increasing personalized demand for MES systems and the increasing emphasis on the flexibility and configurability of MES systems. Cooperative development and secondary development models can better meet the customization needs of enterprises, while also reducing costs and risks. In the future, with the intelligent, cloud and data development of MES system, cooperative development and secondary development mode will be more common and convenient.

4. The eastern regional market is relatively active.

From the regional distribution of winning events in the industry, the number of events in the eastern region, central region, western region and northeast region in China's MES industrial control software winning events from 2021 to 2022 is gradually decreasing, with the eastern region accounting for 43%, the largest scale.

Shangpu Consulting believes that this reflects that the eastern region is relatively ahead of other regions in terms of manufacturing development level, informatization investment level, and market demand scale. The eastern region has more leading manufacturing enterprises and high-tech enterprises, which have high demand and cognition for MES system, and also have strong financial and technical support. In the future, with the country's attention and support for regional coordinated development, the MES market in the Midwest and Northeast will also grow.

5. The field of engineering construction has become a hot downstream field in recent years.

From 2021 to 2022, there were 161 winning bids in the "engineering construction" industry, accounting for 25.20 per cent, followed by "communications electronics" with 121 winning bids and "machinery and equipment" with 101 winning bids, accounting for 18.94 per cent and 15.81 per cent, respectively.

Champ Consulting believes that this reflects that the engineering and construction field has become a popular downstream application field for MES systems in recent years. The field of engineering construction involves many sub-industries, such as housing construction, municipal engineering, water conservancy engineering, transportation, etc., with the characteristics of long project cycle, many participants, complex management and so on. MES system can effectively monitor, schedule, optimize and trace the construction process of the project, improve the quality and efficiency of the project, and reduce the cost and risk. In the future, with the continuous investment and promotion of infrastructure construction, the MES market in the field of engineering construction will maintain a high growth momentum.

5.Analysis of Competition Pattern of MES Industry

1. Regional competition: Beijing industry supporting better

In terms of the regional distribution of enterprises, combined with the distribution of listed enterprises related to China's MES industry, the provinces with better industrial agglomeration effect are Beijing, Shanghai, Guangdong and so on. Among them, Beijing has gathered relatively more industrial chain supporting enterprises, and the industrial competitiveness is stronger.

Shangpu Consulting believes that this reflects that Beijing is relatively superior to other provinces in terms of information technology innovation capabilities, human resource advantages, and policy environment support, which is conducive to the development and growth of the MES industry. Beijing has many universities, scientific research institutions and innovation platforms, which can provide technical support and talent reserve for MES industry; at the same time, Beijing is also the center of national policy formulation and implementation, which can provide policy guidance and support for MES industry.

2. Enterprise competition: foreign-funded enterprises occupy the leading position, and domestic enterprises actively participate in the competition.

In 2022, China's MES supplier market pattern is still dominated by foreign-funded enterprises, and domestic enterprises increase investment to compete for market share. Siemens has the largest market share, accounting for 11.5 per cent, followed by SAP, with 8.2 per cent of the market, and Shanghai Baoxin ranked third with 7.5 per cent.

In 2022, the overall market concentration of China's MES industry is low, with CR3 only 26.5 percent and CR5 only 34.8 percent, indicating that the market is more competitive, with domestic and foreign companies actively seizing the market and not forming a clear leader.

Shangpu Consulting believes that this reflects that foreign-funded enterprises have strong technical advantages, brand influence and customer resources in the field of MES, which can meet the needs of some large enterprises or multinational enterprises, while domestic enterprises have strong competitiveness in localization, customization and service, which can meet the needs of some small and medium-sized enterprises or specific industries. In the future, with the technological innovation and market expansion of domestic enterprises, the market concentration of China's MES industry is expected to increase.

6.Development Prospect and Trend Forecast of MES Industry

1. Development trend of China's MES industry: Market concentration of China's MES industry is expected to increase

China's MES industry market is growing well, benefiting from the implementation of major strategies such as China's intelligent manufacturing and digital economy, and is ushering in new development opportunities, and the market scale will continue to grow rapidly. With the rapid development of information technology, the application scope of MES is rapidly expanding, and the discrete industry will be the focus of MES market development in the future.

According to data from the Champ Consulting Group,ChinaThe MES industry will maintain a growth rate of about 16% and is expectedToBy the end of 2023, the size of China's MES market will reach 17.4 billion billion yuan.

Shangpu Consulting believes that with the continuous efforts of domestic and foreign enterprises in technological innovation, product optimization and service improvement, as well as the continuous improvement of users' demand and awareness of MES system, China's MES industry will show the following development trends:

Market concentration in China's MES industry is expected to increase. With the promotion of industry standardization and standardization, as well as the improvement of users' requirements for the quality and performance of MES system, some excellent suppliers will stand out and form strong brand effect and customer stickiness. At the same time, some small or weak suppliers will face the pressure of elimination or merger and acquisition, resulting in further concentration of market share.

China's MES industry will develop in the direction of intelligence, cloud and data. With the development and application of new technologies such as artificial intelligence, cloud computing, and big data, the MES system will have stronger functions such as autonomous learning, adaptive adjustment, and automatic optimization to achieve intelligent management of the production process. At the same time, the MES system will use the cloud platform to achieve cross-regional, cross-enterprise, cross-industry information sharing and collaboration, improve resource utilization and collaboration efficiency. In addition, the MES system will use big data technology to conduct in-depth mining and analysis of production data to provide more valuable support and guidance for production decision-making.

China's MES industry will strengthen its integration with industrial Internet platforms. With the construction and promotion of the industrial Internet platform, the MES system will become an important part of the industrial Internet platform, realizing seamless docking and integration with the platform. Through the industrial Internet platform, the MES system will be able to obtain more production data and resources, and achieve a higher level of optimization and management. At the same time, the MES system will also provide more data and services for the industrial Internet platform, and provide support for the operation and development of the platform.

2. MES Industry International Competitiveness Promotion Strategy

Shangpu Consulting believes that to enhance the international competitiveness of China's MES industry, we need to start from the following aspects:

Strengthen technological innovation and R & D investment. Technology is the core competitiveness of the MES industry. To enhance international competitiveness, it is necessary to continuously strengthen technological innovation and R & D investment, master core technologies and intellectual property rights, improve product quality and performance, and meet the diverse needs of users. At the same time, it is necessary to strengthen cooperation with universities, scientific research institutions, innovation platforms, etc., and use external resources to accelerate technology transformation and application.

Strengthen the standard system construction and promotion. Standards are the foundation and guarantee of the MES industry. To enhance international competitiveness, it is necessary to strengthen the construction and promotion of the standard system, form unified norms and requirements, and promote the standardization and standardization of the industry. At the same time, it is necessary to strengthen communication and coordination with international standards organizations, participate in the formulation and revision of international standards, and increase international discourse power and influence.

Enhance and expand service capacity. Service is the extension and value-added of the MES industry. To enhance international competitiveness, it is necessary to strengthen the improvement and expansion of service capabilities, provide all-round, full-cycle, and full-coverage service support, and enhance user satisfaction and loyalty. At the same time, it is necessary to strengthen communication and exchanges with users, understand user needs and feedback, and continuously optimize product functions and service content.

Strengthen market development and cooperation. The market is the goal and driving force of the MES industry. To enhance international competitiveness, it is necessary to strengthen market development and cooperation, expand market share and coverage, and increase market revenue and profits. At the same time, it is necessary to strengthen cooperation and exchanges with domestic and foreign counterparts, form a healthy competition and cooperation relationship, and jointly promote the development and progress of the MES industry.

Conclusion

Manufacturing Execution System (MES) is a kind of management information system for shop floor, which can optimize the management of production process and improve the efficiency and quality. Champ ConsultingRight.The market scale, competition pattern and development trend of MES industry are analyzed, and strategic suggestions to enhance international competitiveness are put forward.