Cloud Computing is Transforming the Manufacturing Industry
Posted May 10, 2013 & filed under Uncategorized
Information Technology and Manufacturing may seem like two completely different worlds, but occasionally the stars align to create a symbiotic relationship between the two. With the revolution of cloud computing consuming much of the limelight in the IT world, it was only a matter of time before cloud-based applications were integrated within existing manufacturing and distribution company software.
As reported by Louis Columbus of Business 2 Community, “Many (within the industry) are evaluating cloud based manufacturing applications including Enterprise Resource Planning (ERP) and several have adopted cloud-based applications across their companies.”
Columbus reports, however, that some confusion has arisen within the industry about the integration of cloud applications like Service as a Software (SaaS). According to Cindy Jutras, CEO of MintJutras, “49% of respondents in the manufacturing & distribution industries do not understand the difference between single- and multi-tenant SaaS architectures.”
With more and more manufacturers looking to the applications to increase the speed and accuracy of productivity, cloud software now makes up 22% of manufacturing and distribution software today, according to Jutras, and that number could increase to 45% within ten years.
So what exactly does cloud computing do for the manufacturing and distribution industries? Columbus highlights these major points:
Speed:
Cloud-based platforms are accelerating new product development and introduction (NPDI) strategies, which require large amounts of collaboration early on in their design cycles, thus shortening their time-to-market. Greater collaboration also leads to quicker launches of supplier portals, and manufacturers using Vendor Managed Inventories (VMIs) are able to deliver real-time order status and forecasts quickly.
Accuracy:
Manufacturers using build-to-order, configure-to-order and engineer-to-order business models can use cloud-based platforms to capture company-wide intelligence and manage rules. A large part of this comes from the use of analytics, business intelligence (BI), and rules engines that can provide the insight to streamline operating processes.
Additionally, cloud-based automation applications are being used to plan, execute, and track the results of marketing campaigns to better focus in on and target potential buyers. They can also be used to track and manage indirect and direct channel sales results. Using dashboards from a single cloud platform to report back statuses by individual representatives to sales managers allows them to ascertain the profitability of each deal.
Efficiency:
Reliance on two-tier ERP strategies has allowed for greater efficiency in material planning, supplier management, and reduction in logistics cost. Systems like Acumatica, Cincom, Microsoft, NetSuite, and Plex are leading the way to give manufacturers more independence from the single ERP vendors that control their operations.
Cloud-based Human Resource Management (HRM) has also unified global manufacturing locations, allowing for contract manufacturer Flextronics to use Workday to optimize workforce allocations across manufacturing centers.
Cost Reduction:
Automating customer service, support, and common order status inquiries online has reduced the costs and increased the time advantages of using new technology. Manufacturers have also begun to integrate these systems into distributed order management, pricing, and content management platforms.
Innovation:
The competitive landscape is currently being altered by the addition of cloud integrated services. By revising older products and launching new product generations with embedded services manufacturers can avoid price wars that undercut their profits.
The Endgame:
The benefits of cloud computing have been made apparent to many manufacturers and distributers, and with further integration among the IT and manufacturing industries it is only a matter of time before cloud applications become the standard.
By Kevin Withers
