10 Ways Cloud Computing Will Drive Manufacturing Growth In 2018

Driving the demand for cloud computing is the need to bring more speed, scale and accuracy to manufacturing firms’ operations.

The potential of manufacturing to continually reinvent, revitalize and strengthen is evident in the growth happening, from the largest production centers to the smallest, busiest shop floors. In fact, manufacturers’ global spending on cloud computing platforms is predicted to reach $4.2B this year attaining a 23 percent growth rate in 2018, reaching $5.18B next year according to IDC. And global spending on Cloud Enterprise Resource Planning (ERP) software is predicted to increase from $19.1B in 2017 to $28.8B in 2028, attaining a Compound Annual Growth Rate (CAGR) of 7 percent according to Statista.

Driving the demand for cloud computing is the need to bring more speed, scale and accuracy to manufacturing firms’ operations. Several of the manufacturers I’ve spoken with have better backlogs than they’ve had in years. The challenge is keeping up. At the same time, CEOs and senior management teams at these companies are in unanimous agreement that strategies aimed at speeding up time-to-market, improving product quality, and listening to customers are paying off.

The fastest onramp to attaining their goals is through cloud-based apps and platforms. With application user interfaces that can be configured to their needs and speed of deployment, these cloud solutions are in many manufacturers’ plans for 2018 as they seek it to accelerate their expansion while increasing profitability. In 2018, there are ten key ways cloud computing will drive manufacturing growth.

Quality is no longer siloed. Instead, each process needed to deliver an excellent product is integrated together across all production centers. Every aspect of quality — from inbound inspection to reducing scrap and rework by screening out defective parts, components, and subassemblies — gains greater value company-wide when a cloud-based application is used to track, analyze and report quality status by center and product. When track and traceability are integrated with inbound inspection and quality management, it’s possible to stop entire lots of defective parts before they even enter the warehouse. Cloud platforms and applications make it possible for these quality strategies to be synchronized all locations with real-time data.    

Manufacturing cycle times are accelerated. This is made possible through the greater insights available with cloud-based manufacturing intelligence systems. By definition, manufacturing cycle time quantifies the amount of elapsed time from when an order is taken until the product is produced and entered into finished goods inventory. The greater the level of insight into how cycle times can be improved, the more competitive any manufacturer is. This area is one of the primary catalysts revolutionizing ERP systems’ values delivered in 2018. And IDC projects that, by 2019, 10 percent of manufacturers will have started to deploy cloud-based execution models that depend on edge analytics to enable the seamless handover of data to enterprise applications and to achieve real-time visibility, supply chain integration, and increased operational flexibility.

Insights into overall equipment effectiveness (OEE) get stronger. Knowing how the OEE levels by machine and how their relative levels of health impact workflows and team productivity are key to getting more done in less time on the shop floor. Cloud platforms enable a system of record that includes OEE to the machinery and tool level, providing insights into which areas are performing well and which need to improve. Using cloud-based platforms to capture, track and analyze the health of every machine and tool on the shop floor, manufacturers are empowered to improve efficiency and avoid unnecessary costs.

Automating compliance and reporting saves valuable time. The U.S. Food & Drug Administration (FDA) Code of Federal Regulations (CFR) Title 21 requires that every manufacturer maintain device history records to the batch, lot and unit level. Additionally, medical device manufacturers need to comply with Current Good Manufacturing Practice (CGMP) and ISO 13485 and 9001 standards. For these manufacturers, cloud-based compliance applications that are capable of producing federal device history records (DHRs) remove the burden of associates having to manually catalog and report records to prepare industry and government filings.

Real-time tracking and traceability become easier to achieve. The more production locations a manufacturer has, the more important supply chain visibility is to maintaining quality levels and gaining greater track and traceability data and intelligence. Cloud-based applications that handle tracking and traceability and can scale across supplier networks save many manufacturers from the high, unpredictable expenses of a product recall by catching product quality problems early.

APIs let help scale manufacturing strategies faster than ever. Application Programmer Interfaces (APIs) are helping to drive the proliferation of cloud apps and platforms across manufacturers’ many production and plant locations. Serving as the glue between diverse applications, databases, and systems, APIs create real-time integration links to enable more efficient data sharing, collaboration, and greater transaction accuracy and efficiency. Last year, Forbes highlighted 2017 as the Year of the API Economy. Since then, integration costs have continued to plummet as APIs become more pervasive and broader in scope.

Cloud-based systems enable higher supply chain performance. Knowing inventory levels throughout supply chains makes inventory planning and management more efficient for each production center. Cloud-based inventory management system (IMS) and ERP systems over time generate data sets that tend to show patterns, making it possible to anticipate shifts in demand. This insight contributes to greater forecast accuracy and the potential to optimize manufacturing schedules and production planning across all warehouse locations. And with cloud-based IMS, ERP and analytics systems designed to optimize inventory, order management, and fulfillment, manufacturers see profit and revenue growth gains.

Order cycle times and rework are reduced. Product quality problems often begin when an incorrect or incomplete order is created. Errors in pricing, quoting, product configuration, or delivery instructions all introduce errors, slow down orders, and drive down product quality. Automating pricing, quoting and customer approval workflows using a cloud-based application helps to reduce order cycle times and improve quality.

Integrating teams’ functions increases new product introduction success. Instead of rushing new products into an initial manufacturing run, manufacturers who excel at product quality are willing to sacrifice a few weeks to get the product right. Readiness reviews and the highest priority problems or bugs are fixed, and the schedule gets shifted to support higher quality. Cloud-based applications are integrating product development, engineering, supply chain management, and production planning teams on a single platform and on a global scale to reach higher product quality levels.

Perfect order performance is tracked across multiple production centers for the first time. Perfect order performance measures how effective a manufacturer is at delivering complete, accurate, damage-free orders to customers on time. The more complex the product lines and configuration options —including build-to-order, configure-to-order and engineer-to-order workflows — the more challenging it is to attain a high, perfect order level. Greater analytics and insights gained from real-time integration of cloud-based ERP solutions, which serve as the system of record, and monitoring help complex manufacturers attained higher perfect order levels over time.  

Louis Columbus is a principle at manufacturing enterprise resource planning company IQMS.

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