Manufacturers today face enormous complexity. From operations to supply chains to logistics, the intricate challenges of competing in a global market are at an apex — and on top of it all, customers are savvy, demanding, and well aware they have lots of options.
At the same time, manufacturers must deal with an unprecedented series of technological trends:
- A Big Data wave that continues to surge
- The rise of the Smart Factory
- The Internet of Things (IoT)
In order to gain control, increase visibility, and optimize efficiency, many in manufacturing are embracing a digital strategy and turning to the cloud to help them execute it.
Manufacturers lag behind other sectors of industry when it comes to cloud adoption, according to a report by Haug, Kretschmer and Strobel entitled “Cloud Adaptiveness Within Industry Sectors.” The report also found that the potential for improvement in manufacturing is much greater than in many other areas. After studying numerous manufacturing operations, researchers concluded that those operating in the cloud exhibited a higher average labor productivity compared to those who have not adopted cloud-based applications.
So how far along are manufacturers on their cloud journey? Surprisingly far — and moving fast. A 2015 study by International Data Corp. (IDC) revealed that 66% of manufacturers used public cloud services for two or more applications. Just two years later, the 2017 State of Manufacturing Technology report found that 90% of respondents were using cloud-based productivity applications. As competitive pressure from early adopters, digital transformers, and nascent innovators increases, the pace and scope of cloud technology adoption will grow exponentially.
Confidence in cloud technology is rising due to several factors. Manufacturers have become aware of a greater maturity and sophistication among cloud applications that better aligns with the complex and advanced nature of their challenges. Mission-critical ERP, MES, supply chain, MRO and process control applications have successfully transitioned from on-premise to cloud-based platforms in recent years. As this transition picks up pace, more options will become available, fueling healthy competition and filling in gaps with innovative solutions.
As always, security is a critical factor. Manufacturing is highly regulated, and quality is often a public safety issue. Cyber security risks caused many to be cautious about cloud adoption. But now, the security safeguards integrated into public cloud infrastructures are far more comprehensive than anything most companies can manage in house. Some of the largest data breaches of lately — JP Morgan and Sony, for example — took place in companies that favored in-house data centers and security applications. Manufacturers recognize that internal data centers are tough to secure and that the cloud simplifies their security program.
Don’t forget about the need for speed. After all, manufacturing plants are fine-tuned models of efficiency and uptime. That’s why latency is one of the top reasons manufacturers hesitate to adopt cloud solutions. They can’t afford process lag due to a congested Internet or application-based bottlenecks. However, the pace of technology has largely eliminated that concern. Multi-core processors loaded with vast memory capacity and racks of solid state drives offer enough performance to overcome virtually any networking issue. And there are always premium options for those with mission-critical applications.
As their doubts recede in the face of maturing technology, and mainstream adoption, manufacturers are ramping up their cloud initiatives. Within five years, half of all software usage among manufacturers will be cloud-hosted services. A study by the Economist Intelligence Unit confirms this outlook: 60% of those in manufacturing believe cloud computing will be very important in supporting production processes. Significant percentages of respondents also viewed the cloud as a means to improving supply chain management, design, prototyping, inventory, orders and distribution.
It is clear we have reached an inflection point. Manufacturers no longer debate about moving to the cloud. The discussion has shifted to which applications and processes to migrate and how to get them there expediently.
Those that make the transition successfully gain greater efficiency, streamlined operations, heightened productivity, faster and more accurate design and precise traceability. Their maintenance efforts are enhanced by automated work orders, predictive analytics and the management of spare parts.
Strategically, effective cloud adopters find it easier to forge a path towards greater digitization. Their efforts to run in-depth analytics across in-house data siloes are often time consuming, expensive, and fraught with difficulties. Cloud-enabling applications and data makes it easier to centralize information, opening the door to digitized workflows, integrated operations, and automation.
iBASEt Digital Manufacturing solutions are helping manufacturers embrace the cloud and streamline their pathway to a secure, productive and digitized future. For more information, visit www.iBASEt.com.