The Rise of Cloud Computing in Manufacturing

Cloud computing is the innovation manufacturers need to go paperless.

Manufacturers have traditionally lagged with IT expenditure and the adoption of the latest digital technologies. However, one of the most significant IT developments in recent years—cloud computing—is beginning to turn the tables.

Manufacturers of many kinds and scales are finding exactly what they need in cloud-based enterprise resource planning (ERP) and other systems to remake themselves into more competitive, connected, and capable forms. An industry once rightfully thought of as slow-moving in technological terms has suddenly taken a place at the head of the pack.

Spreadsheets and PowerPoint Give Way to Cloud-Based ERP

Even with several facilities to oversee, the managers of industrial wheel manufacturer Accuride were used to doing many great things by hand. A labor-intensive, Excel-based system revolving around reports submitted by production-line workers gave company leaders insights into materials usage, output, defects, and other business-critical data points, but was not ideal.

The Evansville, Indiana-based company began transitioning to a cloud-based ERP platform offered by Plex Systems three years ago.

“We now are able to get that information directly from the machines, taking out three layers of wasted time,” Accuride IT Director Paul Wright said.

With the sophisticated ERP software tooling hosted, maintained, and upgraded by the vendor, as the cloud arrangement entails, Accuride can monitor every working machine continually and accurately instead of devoting precious resources to having workers gather far fewer data.

“We’re able to understand manufacturing performance in real time, directly connected to the machines,” Wright observed. “The level of visibility we have is almost like being on the factory floor.”

According to market researcher International Data Corp, cloud computing already accounts for about $70 billion in global annual revenue, and the world’s discrete and process manufacturers already stand as two of the top five consumers. Even while a great many manufacturers remain bound to monolithic, on-site ERP tools or even ad-hoc systems like Accuride used to employ, the shift to the cloud is happening quickly and all across the industry. Eighty-eight percent of all businesses surveyed for a recent CIO.com report now rely on the public cloud in some form, and it is manufacturers who are often making the use of the resource.

A Better Fit for the Modern Manufacturing Environment

Cloud-hosted Software-as-a-Service (SaaS) can do a lot more than give managers better visibility into everyday manufacturing operations. By capturing so much information at scale, these modern systems enable “big data” approaches to business intelligence that would otherwise go unused.

The cloud is also better suited to a contemporary manufacturing reality where operations spread across the globe. Based in Bozeman, Montana, for example, high-end outdoor gear producer Mystery Ranch needs to keep up with contract manufacturers in Vietnam, the Philippines, and elsewhere, with the arrangements changing with some regularity.

A traditional, self-hosted ERP system would not account for that kind of flexibility, being designed for long-term service at a particular site. With a necessary focus on remote management that stems from the very nature of the software, cloud-based systems help Mystery Ranch “work smarter, not harder,” in the words of one of the company’s IT managers.

Just as important for relatively small companies like Mystery Ranch, turning to cloud-based SaaS options means doing away with a range of traditional IT hassles. The slow, expensive upgrade cycles typical of self-hosted ERP, customer relationship management (CRM), and other enterprise-style systems give way to continual fixes and improvements delivered by the vendor itself. Instead of securing often-pricey IT expertise to help with the on-site management of a sophisticated system, cloud-connected manufacturers enjoy the attendant benefits while remaining focused on their essential missions.

Bringing Customers, Suppliers, and Contractors Into the Loop

The cloud also makes it easy for manufacturers to connect more closely with those they serve and depend upon. The decentralized nature of cloud ERP and CRM makes it easier to inform and learn directly from suppliers, clients, and others, with the all the necessary data being amenable to sharing.

That opens up opportunities for vendor-managed inventory arrangements, better oversight of supplier activities and stock levels, and more responsive service to customers. Even typically stodgy manufacturers, merely by making use of the available cloud-based services, can find themselves becoming more agile and streamlined as a result.

Like anything else, of course, the cloud is not a panacea for manufacturers. Wary of breaking things that work, manufacturing industry respondents to a SaaS-related survey conducted by research firm Mint Jutras highlighted a need to be able to hold off on upgrades, when appropriate. Raised concerns about the costs of transitioning from on-site ERP systems to those hosted in the cloud, along with having the ability to go back if things failed to work out.

Even with those issues and others like security and data protection still being hashed out, the move to the cloud has become a fixture of the manufacturing industry. The same Mint Jutras study targets cloud-hosted services to account for nearly half of all organization-level software usage among manufacturers by 2023, a figure that will include companies of all sizes.

For the largest players in the industry, moving to the cloud can mean getting a steady stream of support and upgrades, without all the expense traditionally associated with on-site hosting. For smaller manufacturers, the cost-effectiveness of the cloud puts a huge range of enterprise-grade capabilities within reach for the first time, for everything from ERP and CRM to human resources management. For every manufacturer, the flexible, connected, decentralized nature of the cloud often turns out to be an attractive fit for the modern business world, where the very same traits prevail.