The manufacturing sector has seen rapid change over the past decade, and the pandemic has only accelerated this change. In the mid-2010s, it became known as Fourth industrial revolution because the fusion of emerging technologies has been the most disruptive industrial force since the invention of the computer sparked the digital revolution.
Today, advanced technologies such as cloud computing, artificial intelligence (AI), and the Internet of Things (IoT) are optimizing the supply chain. And we’re lucky that’s the case – manufacturing crippled by the pandemic, like 78.3% of these companies anticipated a major financial impact and more than a third admitted to facing supply chain issues early in the crisis. Since then, major ports in the United States and China have been heavily congested (although recent reports estimate that ship backlogs were reduced by almost 90% and aging freight fell 46% in Los Angeles).
How much worse could the situation have been without the help of cloud technologies? It is unfathomable. Fortunately, manufacturing leaders continue to invest heavily in the cloud to stay ahead of the competition and improve the global supply chain.
Cloud computing has specifically helped manufacturers survive and even grow during global lockdowns. Supply chains have been stretched beyond their limits in what is now known as Global supply chain crisis. This includes a global chip shortage which delayed the 2021 holiday season, food safety concerns and increased consumer spending (especially in the US).
Research shows that manufacturers with the highest levels of cloud adoption are most likely to optimize core workflows and find cost-effective solutions. As they spend more on cloud resources, Wipro FullStride Cloud Services research reveals that the 42% ROI experienced by companies adopting cloud technology far exceeds competitors who do not leverage the technology beyond the beginner level (24%).
Indeed, supply chain issues, while improving, have still not abated since the pandemic began nearly three years ago. And they won’t be leaving anytime soon either. There are several factors keeping it in play, including a global labor shortage.
There have always been more than 800,000 unfilled manufacturing job offers over the past year in the United States alone, with 2.1 million vacancies expected by 2030, according to Deloitte. This is due to two factors: a skills gap and the push for remote working. less than half (46%) manufacturers have now set up remote monitoring processes.
Although manufacturing has very thin margins, companies are still managing to increase their cloud spending budgets. Take the results of a recent survey by Wipro FullStride Cloud Services of 130 manufacturers with average revenues of $23 billion and profit margins close to 10% (a hair above the industry average of 9 .6%) as an example: These manufacturers have implemented an average of 39.5 cloud initiatives, and they are expected to run 79% of their applications in the cloud.
How do they do ?
A cloudy future
Manufacturing leaders need to establish themselves as innovative leaders, which involves a lot of brand change. The old idea of manufacturing is a throwback to a century ago; today’s manufacturing jobs are high-tech positions involving higher-level analysis than manual labor. Automation and predictive maintenance allow machines to do assembly line work while humans spend their time working on more important things like innovation and customer relationships.
Running these technologies from the cloud makes factories more responsive to real-time customer needs and market trends. Consider how Amazon built arguably the most efficient global distribution network that provides real-time inventory and supply tracking for customers and management. The use of cloud technology has reduced costs and brought products to market faster.
Yet it is not uncommon for manufacturers to maintain physical infrastructure for a 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 makers, although only 29% of cloud leaders say they have made significant progress in managing risk, according to Wipro FullStride Cloud Services. This is changing, as the increase in cybercrime caused by the pandemic has caused a surge in global governments (of which CISA in the United States) to build cybersecurity awareness and implement a zero-trust architecture.
Cloudy with a chance for profits
To get the most out of cloud investments, manufacturers need a partner. The cloud is an emerging technology, and manufacturing managers may not understand how to implement it to get the highest possible return on investment. But cloud-based companies that specialize in manufacturing can guide you on how to save money by taking advantage of the cloud.
Cloud-based digital twins are also helpful in reducing costs associated with equipment repairs. A machine breakdown stops the entire assembly line and costs the company dearly – in fact, 91% of companies lose at least $300,000 per hour in downtime. Predictive maintenance allows you to closely monitor equipment and predict failures before they occur, dramatically reducing unplanned downtime and optimizing costs.
These cloud-based economies free up cash to invest in other emerging technologies, such as AI, edge computing and 5G. The combination of these investments can help scale the business and enable greater agility. As a result, you’ll be able to create a wider range of SKUs with higher quality and pivot as needed to meet ever-changing consumer and market demands.
Ready to succeed with cloud technology
We are still in the early stages of a revolutionary change in modern industry, fueled by innovative new technologies. The cloud, IoT, and AI are among the advanced technologies that manufacturing leaders are using to gain deeper insights, optimize processes, and become more efficient and profitable. These upfront investments from technology leaders provide a long-term return on investment that has already paid off.
Moving key functions to the cloud enables more powerful capabilities for existing equipment while accommodating a changing workforce. And this is how the industry will finally overcome the adverse effects of the pandemic and subsequent global lockdowns. We are not out of the woods yet, but we will be soon enough thanks to modern technology.
As SVP of Wipro FullStride Cloud Services, Sudhir Kesavan oversees the business transformation of Wipro’s largest customers through the cloud. He is also responsible for the development of consulting and advisory services, engineering capabilities and technology innovation for horizontal and industry-specific accelerators at the heart of digital business transformation.
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