27 Jul Why manufacturers must overcome the cloud adoption hurdle
The integral transition to cloud platforms has moved the manufacturing industry into a new kind of digital revolution. Much like the dramatic overhaul of industrial processes that occurred with the advent of mechanization and the assembly line centuries ago, the cloud offers a wave of opportunities for manufacturers that integrate their operations accordingly.
The Economist calls this transformation the "third industrial revolution" for its capacity to streamline manufacturing processes from the production floor and throughout the supply chain. However, not all manufacturers are on board just yet, mainly due to their lack of familiarity with how the cloud operates and the perception that moving to the cloud would be costly, time-consuming and potentially open themselves up to cyberattacks.
In fact, a report from Gartner found 30 percent of surveyed organizations planned to keep their Enterprise Resource Planning (ERP) systems on-site for the foreseeable future, while another 17 percent stated they were unsure what their plans were for cloud adoption.
These findings highlight a lingering concern for many, but the logistical benefits of moving to the cloud are too great for manufacturers to fall back on paper-based or manual processes simply out of fear of the unknown. Here's why the transition to the cloud is so important:
"Manufacturers that use their own software and IT solutions must pay for internal staffing and updates."
Manage internal resources effectively
Manufacturers rely on real-time updates of products and procedures – items that need to be tracked and accounted for by floor managers and relayed to the appropriate department leaders. While manual data entry, logbooks or excel sheets can aid in this task, these outdated processes are simply too slow to encompass the entire operational capacity of small and mid-sized manufacturers, let alone those of larger companies.
That's why manufacturers are implementing state-of-the-art Manufacturing Execution Systems (MES) to optimize daily operations. MES manage resources, personnel, input, product life cycles and the documentation of important data pertaining to materials. Instead of computing these components by hand, MES track and store this information in the cloud, essentially removing the need for traditional record-keeping. Additionally, resources that were once tied down to these everyday functions can then be freed up for more efficient use elsewhere, such as driving sales growth, reaching new customers or improving workflow.
At the same time, the cost of storing operational data on-site is enormous. Data from Microsoft indicated 11 percent of IT spending goes toward maintaining existing infrastructure. Manufacturers that still use their own software and IT solutions must pay for internal staffing and updates, as well as the cost of fixing any problems that arise.
Moving operations to the cloud, however, means less technical support is required because all updates and maintenance are handled off-site. As a matter of cost-efficiency, fewer IT resources are needed internally, and those that remain can be used to troubleshoot any communication barriers and ensuring other workers and managers are receiving the documents they need in real time.
Manufacturers that delay cloud adoption aren't able to appropriately manage their resources in an efficient way, especially when compared to their competitors.
Avoid losing out to competitors
As is the case with many business environments, stalled production means ground lost to competitors. In the manufacturing space, this is particularly noteworthy because the industry continuously onboards new technologies that are faster, more efficient and more productive. In a matter of years, older business models can become obsolete.
Adapting to change is a critical component of manufacturing success, placing a high priority on cloud integration. Roughly 70 percent of the Fortune 1000 companies in existence in 2005 are no longer in business – that's how quickly the market changes, according to Sand Hill, a provider of business strategy solutions.
In terms of the cloud, competitors aren't hanging around for slower, less resourceful companies to make a move. As a measure of just how necessary it is to stay on top of the latest technological innovations, Gartner indicated nearly half of organizations will be moving their core operations to the cloud within the next five years.
Cloud-operated MES are faster, cheaper and quicker to deploy than any other system currently in use, and provide the type of speed and efficiency that manufacturers in highly competitive markets need.
Forgoing the cloud at this point in time is accompanied by an inherent risk of losing market share, both now and even more so in the future. As Forbes contributor Joe McKendrick noted, the cloud is inextricably linked to greater flexibility, allowing companies to maneuver with ease. The cloud is an on-demand service that allows new applications, products and solutions to be configured in just minutes, offering manufacturers the ability to make business decisions more quickly and enter new markets with less friction or hesitance.
The key to future manufacturing success lies in the full-scale internalization of how the cloud's benefits can be used as a tool for greater productivity while mitigating worries over its perceived weaknesses.