Will cloud deployment rescue manufacturing from slow growth doom?

  • May 29, 2015
  • Infor
  • News

By Larry Korak, Industry & Solution Strategy Director, Infor

Manufacturing seems caught in the clutches of a slow-moving, profit sucking beast—unable to break free. With the sluggish rate of recovery hovering around 1.8 to 2.2 percent since 2009, many US manufacturers are desperate to gain some traction toward double digit growth. But how and where will they find the turbo boost required to fully escape the impact of the Great Recession? Manufacturers only have to look up to discover one possible rescuer: The Cloud.

Cloud deployment provides the pie-in-the-sky inspiration manufacturers need right now. It offers the opportunity to achieve multidimensional growth—that is both dramatic and timely, two important factors for manufacturers becoming impatient with organic growth and eager to beat global competitors to emerging opportunities. It also allows manufacturers to reduce maintenance costs, scale quickly, and shorten lengthy processes.

There’s a lot at stake. Despite the hometown hardships caused by plant closings and worker lay-offs, Americans have not given up on the role manufacturing plays in the economy, according to research conducted by Deloitte and the Manufacturing Institute. Survey results show that 86 percent agree that manufacturing is directly linked to the standard of living, and 77 percent believe it is very important to national security. The traditional tactics for retrenching and rebuilding have had minimal gains, and it’s time to make further changes.

Cloud deployment holds silver-lining answers

Next generation ERP solutions meet many manufacturers’ needs to improve speed and performance, but the arduous implementation process can be discouraging. Plus, cash-strapped companies hit hard by the recession need other alternatives. Because cloud solutions have monthly subscription rates and can be covered as an operating expense, rather than a hefty one-time capital investment, even companies with limited capital reserves can take advantage of new best practices and modern, flexible architecture. Cloud deployment of game-changing software solutions will allow manufacturers to adopt the customer-centric approach that today’s market conditions demand. Now, compare this to an on-premise deployment, where the costs don’t just stop after you build and finish the data center. There will be ongoing maintenance, needs for upgrades, power bills, cooling costs, administrative needs and this will continue to mount up year after year. Money thrown at maintaining an on-premise data center can be used productively for more modern solutions.

How Cloud Solutions Support Multi-Dimensional Growth

Although cloud deployment in itself is not the cure-all answer to manufacturing’s woes, it does open the door that would enable organizations to achieve several critical goals. What happens once the door is opened, though, still requires additional efforts. Below are five additional ways cloud that deployment can set the groundwork for further growth for manufacturers around the globe:

1. Bringing the supply chain closer

The market conditions which once made outsourcing and off-shoring such an attractive option for manufacturers are rapidly changing. With labor costs jumping in China and India, and public outcry against plants with unsafe working conditions, manufacturers are examining reshoring options.

The high cost of transportation and the consumer demand for accelerated delivery and service also help make the case for moving plants and distribution hubs nearer to headquarters, product engineers and consumers. Cloud deployment helps manufacturers set up new branches, divisions and distribution centers without the time and expense associated with on premise hardware set up and implementation. Cloud deployment enables the new location to be operational in weeks, not months.

2. Speeding visibility to newly acquired plants

Mergers and acquisitions provide another growth tactic. In a recent survey, nearly 45 percent of manufacturing participants said their company is likely to pursue M&A opportunities in the next 12 to 18 months. When two organizations merge, so does their software, hardware, infrastructure and processes. The cloud provides a safe, efficient, and economical way to avoid disruption and creates a smoother path to synching all of these processes. In order to minimize disruption to the core business and maintain visibility to multiple operations after the merger, one integrated end-to-end system needs to be deployed as quickly as possible. Cloud deployment is the number one option to speed this process, completing the full benefits of the M&A effort and making the switch easier on all parties involved.

3. Putting the customer first

Today’s customer, whether it is a B2B or B2B2C business model, have extremely high expectations, little brand loyalty and they voice any disappointment loudly through social channels. In fact, IDC summed it up by saying: “Future manufacturers will have to meet customer expectations for speed, flexibility, and capability. They will need to be faster in understanding emerging demand trends, introducing new products to the market and meeting very specific customer fulfillment needs, in multiple global markets, each having different expectations for product features, quality, and costs. In the future, fulfilling customers' needs through a "make-to-individual" approach — fulfilling clients with a single, specifically tailored, customized product, made on demand — will be the norm.”

In order to meet these expectations, manufacturers are increasingly turning to advanced ERP solutions to help streamline the complexity. With cloud deployment, manufacturers can step up their performance abilities quickly. They can focus on product innovation and customer relationships and spend less time on managing IT infrastructure.

4. Looking at the complete picture

As manufacturers learn to better adapt to a global economy, they will undoubtedly also need to better monitor a global network of suppliers, contractors and partners. A complete real-time view of the end-to-end value chain will be essential to creating the collaborative and customer-centric approach desired. 

It also adds that full end-to-end supply chain visibility is an ambitious goal, as almost half of surveyed manufacturers say their current supply chain visibility ends at their immediate suppliers. Cloud deployment, with its unlimited bandwidth and flexible storage capabilities, supports this type of multi-prong approach to communication, data storage and data sharing between enterprises. 

5. Leave the upgrades to someone else

Cloud deployment completely eliminates the need to maintain and upgrade software versions to stay on top of fast-changing IT innovations. The time consuming and costly need to continually update systems is eliminated, including the need to manage security. Without the continual upgrade distraction, manufacturers can focus those resources on other important issues, and they will have the most up-to-date tools to help them out-perform the competition.

So what’s the view from the cloud?

As manufacturers brace for the next chapter, it is clear that the technology-savvy, alert and agile will come out ahead – and that cloud deployment will be a major factor. The sooner manufacturers get on the path, the sooner they can reach the next level of customer satisfaction, product innovation, and global competitiveness – and hopefully use their competitive edge to regain market-share and bring jobs back to their communities.

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