If you’re facing major manufacturing challenges at the moment, you’re far from alone.
With the right approach, however, cloud adoption can be a major advantage in overcoming them.
Cloud migration isn’t exactly a new concept for manufacturers.
In a recent study by McKinsey, just under two thirds of manufacturers surveyed stated that they were already using the cloud, with 20% actively scaling or rolling out cloud technology.
Equally, manufacturers who have already migrated to the cloud are often failing to realise many of the strategic benefits it offers.
That same report also found that 74% of those surveyed were failing to harness the full value of cloud adoption.
A large part of this was due to an overemphasis on the IT benefits of cloud adoption, rather than how cloud tech can solve many of today’s manufacturing challenges and strategic roadblocks.
While cloud technology is great for enhancing data security and keeping IT costs down (you won’t miss that hardware expenditure, for a start), it also has a transformational impact on key strategic areas of your business.
Cloud tech helps you overcome challenges manufacturers has been facing for years – the inability to unlock insight from data and lack of real-time visibility into major processes, for example – and offers major strategic advantages in their place.
If you take the right approach, you’ll likely see gains on a competition still largely stuck in a cost reduction-focused mindset.
Below, we’ve outlined five major manufacturing challenges and how cloud adoption can overcome them.
Here’s what we cover in this article:
1. No real-time view of your financial position
It goes without saying that you want the most up-to-date information possible when forecasting or making important financial decisions.
If you’re making decisions based on last month’s figures, there’s a huge chance you’ll miss both major opportunities that could have been grasped and potential pitfalls that could have been avoided.
Unfortunately, this is how many legacy systems force manufacturing financial teams to operate.
On-premise IT infrastructures usually lack the capability to process financial data in real time. As a result, your financial teams rely on regular (often monthly) reports for decision making, which offer an incomplete picture of your current situation.
Cloud tech doesn’t just allow real-time financial insights. It makes them easier to access than ever before. And these features will only get easier to use, faster and more advanced as time progresses.
This means you can automate manual, error-prone financial tasks such as expense filing while processing data as soon as it becomes available for real-time insights.
Here are just a few of the real-time financial reports cloud-based financial software offers:
- Profit and loss statement
- Balance sheet
- Cash flow statement
- Accounts receivable aging report
- Budget vs actual
2. Siloed data reduces adaptability
Manufacturing businesses collect, generate and store more data than ever before.
To unlock insights from this data and compete effectively in today’s markets, the ability to combine different datasets for analytics purposes is essential.
For example, your basic customer data can be enhanced by sales data that helps to identify patterns in purchasing habits.
This is useful on an individual level because your sales teams can reach out with personalised offers at the right time.
It’s also on a broader scale, because when amalgamated with other sources of data, you can trace and act on large-scale trends in customer behaviour that you might otherwise miss.
Legacy systems, whether you’re using one umbrella platform such as an ERP or several different types of software, make this difficult. Data is stored in different locations, making it difficult to combine – and most on-premise IT infrastructure can’t handle the server requirements for Big Data analysis at scale.
Moving to the cloud makes it significantly easier to:
- Combine data sets for enhanced business insights
- Access the processing power Big Data requires without an impossibly high infrastructure spend.
This means you have significantly more scope to make decisions based on hard data, rather than intuition.
This switch to a ‘data-first’ model opens significant opportunities to adapt to the buying habits of your customers while identifying overarching trends for long-term strategic development.
3. Poor visibility into the supply chain
Knowing where orders and deliveries are in the supply chain is vital for maximising revenue, reducing slowdowns and improving customer experience.
For discrete manufacturers, it’s an issue of warehouse space.
If you have half the parts you need for a specific product but not the other half, you’re holding space in your warehouse that could be used more profitably.
In addition, if you work with perishable goods and don’t have all your ingredients ready to go, you could end up throwing away materials (and the money you spent on them) for food safety and regulatory reasons.
As supply chains globalise, legacy systems that run on on-premise servers increasingly fall short in offering any sort of visibility into the supply chain at all.
Your on-premise system can tell you what’s happening in your warehouse. It can’t connect to multiple platforms across the world to provide real-time updates on shipments, potential delays and other issues that might affect your manufacturing operations.
Cloud tech, on the other hand, offers useful insights across global supplier networks.
This offers numerous benefits for manufacturers who want to maximise the efficiency of key processes, increase revenue and maintain high levels of customer satisfaction:
- Supplier quality management features offer real-time updates on the latest shipments, reduce costs, guarantee quality and increase customer satisfaction.
- Cloud-based business analytics reduce cycle times via process optimisation.
- Compliance requirements (especially around importing) can be automated to save time and reduce probability of costly human error.
- Real-time track and trace functionality reduces losses in the event of a product recall by identifying any issues early.
- Cloud-based warehouse management optimises order management and production planning across all warehouse locations.
4. Lack of clarity on inventory levels
It’s now easier than ever to switch to competitor companies if they feel unhappy with the service they receive. This has led to manufacturers increasingly competing on the customer experience they offer as well as simply price point.
According to PwC’s Future of CX Report:
- One in three customers would leave a brand they love after just one poor experience.
- 92% would leave after two or three poor experiences.
A major challenge for many manufacturing businesses is the lack of visibility into inventory levels, caused by data silos and real-time updates – and the poor customer experience this causes.
Without a system that can update in real time, it’s not uncommon to end up agreeing on orders that appear to be in stock, only to find out later that it isn’t the case.
It’s not ideal, as a customer, to find out that the order you thought would arrive in two days will actually take two weeks.
If this keeps happening, the chances are that customers will take their business elsewhere.
Cloud tech offers the reporting capability you need to keep on top of what inventory you have and what you’re expecting. Using one system for all warehouse locations avoids data silos, so you know what you truly have in stock at all times (and don’t miss out on opportunities to sell because inventory isn’t universally accessible).
It also goes one step further than this by helping you automate previously mistake-prone manual processes to reduce losses through inefficiency or error.
Warehouse operations such as picking, packing and stock taking can now be performed using a variety of automated processes, from RFID (radio frequency identification) scanners to warehouse robotics.
5. Slow time to market for new products
As the limits of the technology we use evolve, consumers get used to ever faster, more efficient product releases. If you can stay on top of existing trends, forecast new ones and get new products to market when demand is highest, your revenues will increase.
Unfortunately, many manufacturers are held back from doing this by legacy systems that silo data, reduce collaboration and can’t provide real-time visibility into key design and production processes.
Fortunately, this is changing.
There are many ways cloud tech helps you decrease time to market for new products. We’ve covered a few of them above – to recap:
- Cloud supply chain tech helps you guarantee your products get to market when you need them to.
- Real-time analytics help you identify customer trends and behaviour to inform new product releases.
- Automation makes internal processes more efficient, allowing you to conceptualise, create and sell faster.
However, it’s worth mentioning a couple of further applications of cloud technology that help your teams collaborate, create and ship your products more quickly.
Cloud-based predictive maintenance uses Internet of Things (IoT) sensors to collect data on your equipment. By doing so, it can alert you in advance of potential breakdowns so you can fix issues quickly. This can save hours or days of unexpected downtime and keep the production of new products efficient.
Remote working tools expand your pool of design talent from local to international, and make it much easier for teams across the world to share ideas and collaborate.
Indirectly, it could also affect your ability to draw top design talent in the long term, as employees increasingly look for hybrid working in their professional lives.
A few final thoughts
Ultimately, many of the strategic issues manufacturers face today come from:
- Unusable, siloed or out-of-date data
- Lack of visibility into key areas, such as financials, inventory and the supply chain
- Inefficient manual processes.
Cloud tech is uniquely placed to deal with all of these issues.
Not being tied to on-site IT infrastructure opens up a whole world of possibilities for data analytics, for example. Real-time global reporting makes it significantly easier to gain visibility into your supply chain performance and inventory levels.
Elimination of data silos makes for significantly more accurate financial forecasting.
In other words, cloud tech completely transforms how a manufacturing business uses data, and hence how it operates.
While plenty of manufacturers have benefited the cost benefits of cloud computing, few have realised the complete business transformation it offers.
This is your chance to get ahead of the competition.
If you’re overcoming the obstacles above while others are solely focused on reducing IT costs, you’re setting your manufacturing firm up favourably for years to come.
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