Business disruption is inevitable, especially during a pandemic. Few industries have had to bear the brunt of the COVID-19 crisis more than manufacturing. In Europe, factory shutdowns have led to approximately 1.5 million motor vehicles worth of production lost in the auto industry so far. With a wide array of operations on lockdown internationally, many manufacturers expect to experience weak links in their supply chains — at least in the foreseeable future.
As a result, companies are preparing to take on the long-term challenge of continuing — and growing — operations with minimal interruptions. One of the best solutions involves moving to the cloud.
A large manufacturer of radio transceivers and radio systems made the move to cloud-based manufacturing solutions eight years ago, smartening its factory, warehousing, logistics, and processes. When other manufacturers began dealing with issues due to the Coronavirus crisis, they experienced less disruption because its production line could be reorganized to produce different products as per the market demand. Others will likely follow suit; nearly half of all organization-level software usage for manufacturers will be cloud-based by 2023.
Manufacturers anticipate a demand drop, so it’s critical to keep a close eye on demand patterns and tweak production to keep operating costs low. A cloud-based core simply aids in optimizing that level of efficiency. What's more, the use of cloud computing in manufacturing can provide the infrastructure for remote work, should the need present itself again.
There's another key advantage to cloud-based manufacturing. It can equip manufacturers with asset utilization-based pricing that optimize operating costs. This will be key as manufacturers pivot toward servitization. The future of the industry lies in selling products-as-services, where manufacturers can monitor equipment to ensure optimized uptime.
Industry 4.0 is all about leveraging advanced technologies to add connectivity and automation to every facet of the manufacturing process. Sensors, networks, servers, and devices integrated with shop-floor machinery can be interconnected via the cloud, and then equipped to exchange data to become a smarter, more efficient manufacturer that can quickly overcome obstacles.
The benefits of cloud-based manufacturing
The cloud is the best option to streamline all the data from the supply chain and the shop floor to customer service and delivery. It will also enable manufacturers to adopt and build new technologies faster. Transforming to a cloud-based organization will:
1. Increase supply chain visibility
The 2019 MHI Annual Industry Report found that 80% of companies feel the supply chain model will be predominantly digital within the next five years. A large part of this is due to visibility. Cloud-based GPS and RFID, combined with advanced analytics built on the cloud, enable real-time tracking, carrier performance monitoring, and automated dashboard reporting. Should something go awry, customer service can quickly step in to proactively intervene, identify risk, and minimize further delivery disruptions.
2. Support demand forecasting and planning
Using technologies such as blockchain and AI, manufacturers can respond with greater agility to business volatility and inventory investment opportunities. In fact, IDC found that a quarter of OEMs will likely be using blockchain to source spare parts by 2023. This could lead to an increase in usable parts by 60%, thereby reducing expedite costs by 45%. During the same period, 60% of G2000 manufacturers will be turning to AI robotics to automate tasks. Automation can help fill skill gaps in supply chain, which would increase both efficiency and productivity.
3. Build resiliency for the future
An interconnected, interdependent network is key to sustainable success. According to IDC, half of all manufacturers will be moving in this direction by 2021, investing in AI and similar technologies to encourage supply chain resilience. Such investments are expected to lead to a 15% increase in productivity. An outcome-based model can lessen the uncertainty and complexity of the new normal brought about by COVID-19.
Don’t get left behind
It’s never too late for manufacturers to implement measures that can alleviate immediate and future challenges. Drive the integrated adoption by partnering with a provider that has expertise in managing large-scale, long term projects, and then move your operations to the cloud to mitigate future disruptions.