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How will Cloud Computing Benefit the Manufacturing Industry?

I have been working in the IT industry for nearly 20 years now and I have always worked very closely with the manufacturing sector. In this time I have been fortunate to work for companies in the Product Lifecycle Management (PLM), Enterprise Resource Planning (ERP) and Business to Business (B2B) IT sectors. Over this time I have seen new IT trends come and go, but one trend that I think will be around for some time is Cloud Computing.

The manufacturing sector is truly global in nature and has a diverse range of suppliers working in both established and emerging markets. Now I have discussed B2B in the emerging markets in previous blog posts so I do not intend discussing the benefits of why companies should establish a presence in these regions as they are fairly well documented. What I would like to try and cover in this blog post is why cloud computing will help change the way in which manufacturers run their operations around the world.

It is really only the last few years that collaborative tools have started to be more widely used across manufacturing companies, whether it is exchanging large CADCAM files, production information or simply improving the way in which suppliers exchange information with their customers, in my mind collaboration has been undertaken in a somewhat ad-hoc way.  This may be because of the limitations of the various IT systems or more likely due to the resistance to want to use collaborative tools across the manufacturing sector. From a design perspective, collaboration tools have seen relatively slow adoption due to the sensitive nature of product related information and the reluctance to send design information outside of a company’s firewall.  But with new, secure communication protocols such as OFTP2 being introduced to the automotive sector and the ability to encrypt information to make it more secure, will manufacturers start to lose their inhibitions and exchange design information more freely?

With the drive to lower costs, manufacturers have established a presence in the emerging markets such as China and India and one of the first problems they face is trying to connect a remote plant or office to the company’s central IT platform. In many cases, a western manufacturer will send IT personnel to the new plant to help get the IT infrastructure up and running. They may have to stay onsite for a lengthy period of time to ensure that the remote employees are up to speed with the new IT systems. In fact there is a chance that the remote employees may have to be supported onsite for many months until the production systems stabilize and information begins to flow seamlessly from the various IT systems back to the HQ environment.

Now what about if you could simply connect a new plant into a ‘Manufacturing Cloud’ and this cloud contained everything that was required to get the new plant online and up and running as quickly as possible, with minimum resources being applied? Cloud environments are widely regarded as being made up of three core components, Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and finally Software as a Service (SaaS).  So these three components have the ability to replicate an entire behind the firewall IT environment within a hosted or Cloud based environment. Many software companies are now offering SaaS type applications, for example SAP with their Business by Design Solution which is effectively an ERP system in the Cloud. From a PaaS perspective, GXS Trading Grid for example offers the world’s largest Integration Cloud Platform allowing more than 150,000 trading partners to connect with each other.

The combination of SaaS, IaaS and PaaS will allow manufacturers to establish a presence in virtually any location around the world. They will be able to connect plants to an IT infrastructure using a ‘Manufacturing Cloud Template’, ie everything that is required to get the plant up and running, for example PLM collaboration tools, ERP applications, B2B and community management tools will all be pre-configured according to a user’s role within the business and they will be able to be deployed with minimal effort. If Facebook can have 500 million users interacting and exchanging information on their website on a daily basis then it must be possible to replicate this concept across say 1000 employees at the new plant and 500 trading partners who may be providing goods and services on a daily basis to keep the new plant running.

In fact a recent article in Industryweek by ARC President Andy Chanta highlighted the importance of building Cloud based, company wide networks to bridge the gap between the various departments within a manufacturing operation. Andy goes on to say that U.S manufacturers in particular “need to become more innovation centric to increase their global competiveness”, and increased use of technology is key to this.

Many of today’s manufacturers are seeing their global aspirations being eroded due to having to work with legacy IT systems which make it difficult to extend an IT infrastructure in to other regions of the world.  Cloud based infrastructures allow manufacturers to overcome these restrictions and allow them to seek new business opportunities in any region of the world.

Key to Cloud adoption across the manufacturing sector will be having support from all management levels within the company, including the CEO. If companies are able to realize significant cost savings by adopting cloud based services and it allows real time information to flow freely across a seamless ‘collaboration network’ then it will allow the company to make more informed decisions with regards to company strategy and future growth of the business.

Another quote I liked from Andy was that “manufacturers have done a good job over the past decade of optimizing and automating their supply chains.  Now the focus needs to be on “end-to-end” integration that fosters collaboration between R&D, engineering, operations and functions”.

 

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Mark Morley

As Director, Strategic Product Marketing for Business Network, Mark leads the product marketing efforts for B2B Managed Services, drives industry and regional alignment with overall Business Network product strategy and looks at how new disruptive technologies will impact future supply chains. Mark also has over 23 years industry experience across the discrete manufacturing sector.

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