Manufacturing industry is undergoing a major revolution which is driven by smart technologies and IT, particularly cloud computing. The digital revolution is now breaching the walls of manufacturing as it continues to disrupt media, finance, consumer products, healthcare and other sectors. According to Mckinsey report digital manufacturing technologies will transform every link in the manufacturing value chain, from research and development, supply chain and factory operations to marketing, sales and service departments.
It is no surprise that manufacturers are waking up to the opportunities and threats of digitization. In the United States the major research institutes are speeding up new manufacturing technologies to market. Similar efforts are underway across the globe, including Germany’s Industry 4.0 effort and China’s Made in China 2025.
The ways people and organizations use information has shifted dramatically. Many large manufacturers who already had a global presence invested heavily in on-premise ERP systems over the years in an effort to leverage data into business intelligence. Unfortunately, those legacy systems proved insufficient to the global challenges because of high operating costs, frequent customization, outdated hardware, limited functionality and limited access to data.
Digital technologies will allow companies to connect and unleash seamless flow of data across the value chain linking every phase of product life cycle, from design, sourcing, testing and production to distribution, point of sale. When experts examine manufacturing value drivers and map them to digital levers, several opportunities for companies are found to create value by improving operational effectiveness and product innovation. Some of the examples include the following:
- Manufacturers started to use data analytics to optimize factory operations, boost equipment utilization and product quality while reducing energy consumption
- As per one of the IDC predictions by 2019, 75% of Manufacturing Value Chains Will Undergo an Operating Model Transformation with Digitally Connected Processes That Improve Responsiveness and Productivity by 15%.
- Pharmaceutical manufacturers are using digital thread to improve quality control: continuously monitoring conditions within tablet presses and other critical equipment. A few companies are now relying on infrared technology to detect counterfeit medicines and contaminants without the conventional destructive tests—at production-line speeds.
- Leading consumer packaged goods companies are using digital tools to improve distribution and build bonds with relationship. They are using digital tools to respond even faster to consumer preferences and reduce supply chain costs.
- The aerospace and defense industry is using digital tools to integrate and enormously complex supply network.
Cloud adoption by manufacturers
While going through the top predictions made by IDC one can understand that in 2016 90% of manufacturers will impose their global standards on all operations, including outsourced operations and suppliers, to decrease risk and increase market opportunities. In another survey by IDC on worldwide cloud adoption by manufacturing industry, trends show that the adoption rate of public clouds is 66% and 68% have private cloud, out of 593 respondents across 17 countries including India.
Manufacturing industry is becoming more and more dependent on cloud models for the following reasons:
- Manufacturers pursue a cloud strategy to achieve business goals by focusing on business systems, processes, models and performance to develop long standing relationships with customers.
- To realize the full automation in industrial and operational management systems. Clouds due to their computing abilities ensure effectiveness in producing physical goods and to manage product lifecycles.
- Clouds provide efficient information flows along with easing complexities in implementing fully automated workflows in operations.
- Provide greater supply chain visibility and improved forecasting accuracy through the use of cloud based applications.
- Organizations are enabled for more growth, remain competitive and at the same time explore new markets.
- Offers the ability to solve system integration problems easily. Cloud based enterprise software, ERP, CRM, SCM systems and other manufacturing systems can automatically scale up or down as required.
IDC Manufacturing Insights explains that manufacturing industry is in the middle of a digital transformation where manufacturers want to operate and service customers globally. Trends indicate there is more dependency on cloud service providers for technology resources and operational support at low costs. Cloud service models are poised to provide significant value to manufacturers by integrating emerging technologies such as IoT, sensors, big data analytics and so on. In summary, cloud computing and digital services are an effective way to access, analyze and share large volume of information across the manufacturing industry.