A Manufacturing Revolution Starts in the Cloud

If the hype is true, the supply chain is on the brink of a revolution, with cloud computing improving everything from product design to vendor management inventory — and now manufacturing, too.

A recent Forbes article lists 10 ways the cloud will shake up the manufacturing part of the chain. Here's a hat tip to the cloud-based ideas that hold promise, if manufacturers truly embrace them.

  • More rapid migration to collaboration portals : With cloud tools, companies can quickly pilot, assess, and launch supplier-manufacturer-customer collaboration platforms and quality management dashboards. They can also implement better inventory management applications.
  • Raising the competitive bar with improved design-in services : In the low-margin manufacturing business, companies that can better manage product revisions, launch a product generation, or add embedded services could win competitive advantages. Cloud integration may be a more cost-effective way to ramp up those value-added design-in services.
  • Accelerated product development and introduction strategies : Manufacturers are under constant time-to-market pressure, and they may find that cloud-based platforms encourage more cross-partner collaboration earlier in the design cycle.

The cloud's promise may be real, but it's hard to imagine that it's delivering on that promise right now on a broad scale — especially in the manufacturing sector. Manufacturers often use sophisticated technologies to build chips, parts, and devices, and this part of the supply chain requires constant data exchange with customers waiting on shipments. However, it's always struck me as the supply chain segment where management thinking and practices have lagged behind.

Undoubtedly, there are companies that have rushed to adopt these technologies, and they will be viewed as better supply chain partners as a result. But I'm reticent to believe adoption will come quickly throughout the industry.

As much as the cloud can facilitate communication between manufacturing partners (specifically EMS partners) and OEMs, there are many hurdles to overcome. A key issue is the fine line of visibility — figuring out how external partners can access critical internal manufacturing operational data. Manufacturers will want to ensure that cloud-based privacy and security firewalls are top-notch and bulletproof before they invest heavily in this kind of swap-and-share information channel.

Harder than pie
Also, this stuff is still pretty confusing. As with ERP, various IT architectures have to be in place to make all these systems talk to one another. And those IT components have to work like a well-oiled machine for the data connections (and analysis) to happen.

Of course, the underlying processes have to be in tip-top shape, as well. If the data going in is junk, then the data coming out will be junk, regardless of whether the data pipeline is a proprietary system, the web, email, Excel, or the cloud.

Don't get me wrong. The cloud is where most of us now work on a personal and professional basis. Our comfort level with the technology is steadily growing. It follows that we would want to migrate the rest of our workflow there. However, the cloud-based supply chain revolution is only getting started, and it may be wise to look before you leap. It's one thing to be revolutionary. It's another thing to be rash. The trick is determining which one is which.

11 comments on “A Manufacturing Revolution Starts in the Cloud

  1. SP
    June 4, 2013

    Cloud technology is very useful in any industry. In Manufacturing it can be used to avoid many mistakes that can cost fortunes. But are our manufacturing giants ready to use cloud to utmost capacity. The privacy and security is a big concern.

  2. Tom Murphy
    June 4, 2013

    With all due respect to Jennifer's fine work, I disagree on this story.  The cloud and related SaaS applications are already tightening communication and collaboration among manufacturers with other participants in the supply chain. Let's look at a hypothetical example (which may sound familiar, but I'm fictionalizing here):

    A smartphone maker brings a much-anticipated phone to market. Within a few days, there are mounting complaints in customer service about losing calls after touching an external antenna. The company's engineers investigate and, yup, the customers are right. There's a problem. Today, thanks largely to the cloud, that manufacturers has the capability of almost instantly redesigning the phone to eliminate the problem with a substitute part, ordering the parts, shipping the parts, and, in the meantime, adjusting both the flow of manufacturing and the phones in the pipeline to minimize further complaints form customers.  Manufacturing can ramp up to an even higher level to play catch-up once the new component is integrated, feeding the then-hungry chain with new and improved phones.   This is do-able today, thanks largely to integrated systems in the cloud. Can this happen without the cloud? Not nearly as well or as fast.

  3. t.alex
    June 4, 2013

    I think cost is another important factor to consider. I have seen a few startups offering inventory management tool based purely on cloud and it is charged at relatively reasonable price (per month). This is a good trend in fact. If the whole supply chain management is offered at low pricing, small companies will adopt as well. 

  4. Tom Murphy
    June 5, 2013

    T.Alex: You're right. And if you stand back a bit and look at the forest instead of individual trees, you can see that there is a trend forming — the cost of processes like inventory management are falling and getting better at the same time.  And a lot of it stems from what's going on in the cloud.

  5. FreeBird
    June 5, 2013

    The cloud enables faster communication, but there are things in manufacturing the cloud can't do. Making a semicondcutor still takes 8 to  16 weeks. Ramping a manufacturing line up (or down) can take three months minimum–estimates are closer to six. OEMs are often limited to the suppliers on their AVL, so swapping a part out isn't instantaneous. It's a great platofrm to build a supply chain on: Lenovo is a good example — its partners don't have to spend months and millions to join Lenovo's network. But until materials, components and subassemblies can be “beamed” from one place to another, manufacturers still face some very real limitations if their product has a hardware-related problem. 

  6. Ariella
    June 5, 2013

    @freebird That's a valid point. Logistics are an issue, but I do wonder if 3D technology will get advanced enough to not beam the objects themselves but the plans for them to be printed in another location on demand. 

    June 6, 2013

    Another important benefit of the cloud is its ability to help develop product much faster.  When a design hits a quality or qualification snag the cloud represents a great way to get the combined brain power of everyone involved in the chain.

  8. Andrew Bergin
    June 7, 2013

    There's an expanding library of case studies that demonstrate how cloud applications are revolutionising trading partner relationships. A common theme is to start with a detailed vision of the 'to be' scenario, which can be tested. The improved configurability of cloud apps allows manufacturers to innovate in areas where they previously could not.

  9. AdityaJayaram
    June 7, 2013

    Interesting article.. rightly said.. are manufacturers ready to move to the cloud .?

    I came across another interesting piece on cloud computing and cloud security in particular that readers might find interesting @ 'Cloud risks Striking a balance between savings and security ' it talks a great deal about securing the cloud and importance of cloud security 

  10. Mr. Roques
    June 7, 2013

    It would also help reduce risk. Data is now more secure than ever before. A company that had its storage in a small server a database in the company HQ can now leave that to huge companies like Amazon , etc.

  11. t.alex
    June 10, 2013

    Tom, very interesting analogy to compare the trends with 'trees' and 'forest'. Yes, and in fact, some of these startups do make a difference by spending more effort to integrate at the back end with other systems/products as well. Cloud makes M2M integration easier. 

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