Around 90% of manufacturers had already implemented or were in the process of implementing cloud computing in their operations by 2022 and more are looking to transition . This widespread adoption demonstrates how indispensable cloud computing in manufacturing has become. Instead of investing in and managing physical hardware and software infrastructure, manufacturers can rely on cloud solutions and services to supply them at a much lower cost. It improves operational efficiency, reduces costs, and increases automation by eliminating the need for extensive infrastructure and maintenance.
Let’s explore the benefits and use cases of cloud computing in manufacturing.
What cloud computing brings to manufacturing
But why do so many manufacturing companies opt for cloud computing? Here are some of the main benefits cloud computing brings to manufacturing:
- Cost optimization: Cloud computing eliminates the need for manufacturers to over-provision their IT infrastructure to accommodate peak demand. Instead, they can provision the required capacity at any given time, leading to cost savings by avoiding the purchase, installation, configuration, and management of on-premises infrastructure.
- Scalability: Cloud solutions can be effortlessly scaled to accommodate long-term business expansion and handle temporary fluctuations in demand. Even small disruptions due to overextension in manufacturing can cause enormous losses.
- Improved troubleshooting: Quickly identifying and addressing issues prevents costly production interruptions. Real-time monitoring and diagnostic tools can pinpoint the root causes of problems, enabling swift resolutions. Remote support reduces the need for on-site visits, saving time and resources.
- Data storage and processing: Cloud computing enables the storage and processing of large amounts of data without investing in advanced in-house systems. It is essential for implementing Industry 4.0 technologies like Artificial Intelligence, Machine Learning, and Industrial Internet of Things (IIoT) connectivity.
- Security: A breach in manufacturing IT systems can disrupt operations and compromise product quality. Cloud providers like AWS, GCP, and Azure offer strong security measures, including encryption, multi-factor authentication, and constant monitoring. Unlike on-premises solutions, cloud software receives regular updates and patches to address security vulnerabilities.
- Global reach: Cloud providers offer a global network, enabling manufacturers to connect systems globally and effortlessly expand operations.
Maximizing payoff on cloud computing
McKinsey's research into the impact of cloud computing in manufacturing reveals a nuanced reality. While the value cloud adoption brings is significant, the results do not meet the expectations of an industry-wide technological revolution .
McKinsey found that the actual benefits of cloud computing are often misunderstood. Many companies underestimate the business opportunities it presents and focus too much on its IT cost-saving aspect. For instance, the research shows that only about 5% of the cloud's total potential value is IT-related. The remaining 95% of its estimated $600B value potential lies mainly in business functions like manufacturing and supply chain, as well as in procurement, contributing 2 to 3 percentage points to EBIT margin. In manufacturing, the value is largely driven by Industry 4.0 and Industrial Internet of Things (IIoT) applications, which are effectively enabled and scaled through cloud technology.
Use cases of cloud computing in modern manufacturing
Cloud technology in manufacturing can optimize many different business processes. Let’s look into it.
Supply chain management
With cloud-based solutions, manufacturers can gain real-time insights into their supply chain. This allows them to identify bottlenecks, anticipate demand fluctuations, and make data-driven decisions to optimize operations. With enhanced collaboration and visibility, manufacturers can improve overall supply chain efficiency and responsiveness, reducing costs and increasing customer satisfaction.
Cloud inventory management solutions provide manufacturers with a centralized platform to track inventory, manage suppliers, and automate key replenishment processes. By analyzing historical data, demand patterns, and market trends, manufacturers can accurately forecast demand and adjust inventory levels accordingly. This proactive approach to inventory management helps manufacturers minimize carrying costs, reduce stockouts, and improve order fulfillment rates.
Predictive maintenance and quality control
Cloud-based predictive maintenance solutions enable remote and real-time equipment condition monitoring. This data can be used in machine learning algorithms to detect early signs of equipment failure and automatically schedule maintenance. It minimizes downtime, optimizes maintenance schedules, and improves overall equipment effectiveness.
The same technology can be employed for identifying faulty items. Continuously monitoring and enhancing quality establishes a solid reputation for delivering high-quality products, resulting in increased customer loyalty and market competitiveness.
Cloud-based production planning solutions generate production schedules that maximize efficiency and minimize downtime. Real-time visibility into production operations enables manufacturers to identify bottlenecks, adjust schedules, and allocate resources effectively. It reduces lead times, improves on-time delivery rates, and enhances overall product quality.
Real-life examples of cloud computing elevating manufacturing
The potential benefits of cloud computing in manufacturing are extensive and diverse. It can be challenging to envision how these benefits are realized in actual businesses. N-iX has assisted multiple manufacturing companies in adopting cloud computing. Let’s look at the real-world applications of cloud technology that N-iX developed to help our clients enhance their operations.
Cutting costs by migrating to cloud
Our first client is a global producer of IoT devices and services. They were looking to cut costs and ensure future scalability of their systems. To address these challenges, N-iX embarked on a cloud migration project, transitioning the client's IoT SaaS platform to cloud. The new infrastructure was designed to be cloud-agnostic, ensuring smooth operation across various cloud environments, including AWS, Azure, and Minikube, if new needs emerge in the future.
Expanding product offering with microservices
Migrating to cloud enabled integration of microservices, expanding the toolkit of the systems and thus the product offering of our client. N-iX enhanced the capabilities of the client's SaaS platform by integrating various third-party tools, such as Elasticsearch, Graphite, Grafana, Graylog, and Prometheus. These tools provided a comprehensive view of system performance, data trends, and potential issues. It enables the client to make data-driven decisions and ensure that their IoT solutions are operating at their best.
International logistics platform
Our other client is a multinational manufacturing company based in Germany. They manage 700 warehouses and 235 factories across 60 countries. However, their ERP and logistics system systems could not match their needs as the company grew. Our client required a comparable expansion and optimization of their systems.
N-iX team has built a scalable cloud infrastructure based on Azure Kubernetes and Kubeflow which made the new logistics system a truly long-term solution with scaling capabilities. The system can further be customized with microservices for any demand that may arise.
Embracing industry 4.0 technology
One of the opportunities that were opened by migrating to cloud was integrating computer vision (CV). A CV algorithm used cameras set up around the warehouse to update the current location of every item as they move as well as determine the status of the logistic processes in real-time. Our solution removed the need for paperwork and manual registration, reducing the risk of human error, significantly improving the accuracy of tracking, and accelerating dock turnaround time.
Improving production chain visibility
The large number of factories that our client operates formed a complex and interconnected supply chain. They had a massive amount of branched production data that was managed by different people and several SAP systems. This created a particular need for clear visibility and real-time updates of production data. N-iX has developed a company-wide cloud-based solution and shortened the database update time from over half a day to approximately 5 minutes. Shorter update times are necessary to quickly identify and resolve production issues, improve quality, and enhance equipment.
These real-world applications of cloud computing in manufacturing show its ability to improve efficiency, innovation, and competitiveness. As technology continues to advance, adopting cloud solutions will continue to be an essential strategy for manufacturing companies aiming to succeed in the modern business environment.
Manufacturers embracing cloud technology not only gain a competitive advantage but also foster innovation and quickly adapt to industry shifts. In essence, cloud computing in manufacturing helps excel in a fast-paced and competitive environment, enabling businesses to produce high-quality products, meet evolving customer demands, and maintain their industry leadership.
Why choose N-iX to elevate your manufacturing with cloud computing
1. Clearing the air on cloud: How industrial companies can capture cloud technology’s full business value, McKinsey
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