Manufacturing Leaders Are Making Significant Cloud Investments to Remain Ahead of the Competition
Manufacturing experienced rapid change over the last decade, and the pandemic only accelerated this change. In the mid-2010s, it became known as the Fourth Industrial Revolution because the fusion of emergent technologies was the most disruptive industrial force since the invention of the computer sparked the digital revolution.
Now, advanced technologies like cloud computing, artificial intelligence (AI), and the Internet of Things (IoT) optimize the supply chain. And we’re lucky it does — the pandemic crippled manufacturing, as 78.3% of these businesses anticipated a major financial impact and more than one-third admitted to facing supply chain issues at the onset of the crisis. Since then, major ports in the U.S. and China have been heavily congested (although recent reports estimate ship backlogs were reduced by almost 90% and aging cargo dropped 46% in Los Angeles).
How bad could the situation have gotten without the help of cloud technologies? It’s unfathomable. Thankfully, manufacturing leaders continue making significant cloud investments to remain ahead of the competition and improve the global supply chain.
Manufacturing in the Cloud
Cloud computing specifically helped manufacturers survive and even grow through the global lockdowns. Supply chains were stretched beyond their limits in what’s now known as the Global Supply Chain Crisis. This includes a global chip shortage that stunted the 2021 holiday season, food security issues, and increased consumer spending (especially in the U.S.).
Research shows manufacturers with the highest levels of cloud adoption are most likely to optimize core workflows and find cost-effective solutions. While they spend more on cloud resources, Wipro FullStride Cloud Services research finds that the ROI of 42% experienced by businesses adopting cloud technology far outpaces competitors not leveraging the technology beyond a beginner’s level (24%).
That’s because the supply-chain issues, while getting better, still haven’t subsided since the start of the pandemic nearly three years ago. And they’re not going away anytime soon, either. There are multiple factors keeping it in play, including a global worker shortage.
There has consistently been more than 800,000 unfilled manufacturing job openings over the past year in the U.S. alone, with 2.1 million vacancies expected by 2030, according to Deloitte. This is caused by two factors: a skills gap and the push for remote work. Less than half (46%) of manufacturers have remote-monitoring processes in place today.
Although manufacturing has razor-thin margins, companies are still managing to raise their cloud spending budgets. Take the results of a recent poll by Wipro FullStride Cloud Services of 130 manufacturers with average revenues of $23 billion and with profit margins near 10% (a hair above the industry average of 9.6%) as a prime example: Those manufacturers implemented an average of 39.5 cloud initiatives, and they are expected to run 79% of their applications in the cloud.
How are they doing it?
A Cloudy Future
Manufacturing leaders need to establish themselves as innovative leaders, and that involves a lot of rebranding. The old idea of manufacturing is a throwback to a century ago; today’s manufacturing jobs are high-tech positions involving more high-level analysis than manual labor. Automation and predictive maintenance allow machines to do the assembly line work while humans spend their time working on more important things like innovation and customer relations.
Running these technologies from the cloud makes factories more responsive to customer needs and market trends in real-time. Consider how Amazon built arguably the most effective global distribution network that provides real-time inventory and supply tracking for both customers and management. Leveraging cloud technology has helped lower costs and bring products to market faster.
Still, it’s not uncommon for manufacturers to hold onto physical infrastructure for an entire human lifetime. Cloud technology makes it possible to integrate old equipment to future-proof the entire operation, and that’s exactly what manufacturing leaders are doing. But with the cloud comes a need for cybersecurity.
Cybersecurity spending is a priority for hybrid-cloud manufacturers, although only 29% of cloud leaders report making significant progress in risk management, according to Wipro FullStride Cloud Services. This is changing, as the pandemic’s rise in cybercrime caused a push from global governments (including CISA in the U.S.) to heighten cybersecurity awareness and implement a zero-trust architecture.
Cloudy With a Chance of Profits
To get the most out of cloud investments, manufacturers need a partner. Cloud is an emerging technology, and manufacturing leaders may not understand how to implement it for the highest possible ROI. But cloud-based businesses with specializations in manufacturing can guide you through how to save money by leveraging the cloud.
Cloud-based digital twins are also useful in reducing the costs associated with equipment repairs. Having a machine break down halts the entire assembly line and costs the company a lot of money — in fact, 91% of businesses lose at least $300,000 per hour in downtime. Predictive maintenance lets you closely monitor equipment and predict failures before they occur, drastically reducing unplanned downtime and optimizing costs.
These cloud-based savings free up liquidity to invest in other emerging technologies, like AI, edge computing, and 5G. The combination of these investments can help scale the business and allow for more agility. As a result, you will be able to create a wider range of SKUs with higher quality and pivot as necessary to meet ever-changing consumer and market demands.
Prepped to Succeed with Cloud Technology
We’re still in the early stages of a revolutionary change in modern industry that’s fueled by innovative new technologies. Cloud, IoT, and AI are among the advanced tech that manufacturing leaders use to gain deeper insights, optimize processes, and become more efficient and cost-effective. These initial investments by technological leaders are providing long-term ROI that’s already paying for itself.
Moving key functions to the cloud enables more powerful capabilities for existing equipment while adapting to the changing workforce. And it’s how the industry is going to finally overcome the detrimental effects of the pandemic and the global lockdowns that followed. We’re not out of the woods yet, but we will be soon enough, thanks to modern technology.
As the SVP of Wipro FullStride Cloud Services, Sudhir Kesavan oversees the business transformation of Wipro’s largest clients via the cloud. He is also responsible for the build-out of consulting and advisory services, engineering capabilities, and technology innovation for horizontal and industry-specific accelerators at the heart of enterprise digital transformation.
Hyosung Makes Strategic Investment in Bakken Energy