Manufacturing Operations Finally Turns to the Cloud

By Rick Franzosa | August 24, 2020 | 0 Comments

Supply ChainPower of the Profession

One of the impacts of the COVID-19 pandemic on global manufacturing is a significant uptick in the interest in cloud-native/cloud-enabled solutions for manufacturing operations. What took so long?

Gartner, in partnership with the Manufacturing Enterprise Solutions Association (MESA) International, has surveyed the manufacturing community on the “Business Value of MES” annually since 2012. Starting in 2014, we added a question on the primary deployment model for MES. Over the next five years, we saw similar numbers. The deployment levels for cloud were between 8% and 13% during these years.

However, when asked where these manufacturers expected to host their MES in three years, the numbers were between 30% and 50%. So, in other words, manufacturers have been planning to move to the cloud in three years for at least five years.

The benefits of cloud-enabled solutions are well known and proven. The initial concerns that were raised have nearly vanished. Latency is low, availability is high and security provided by cloud hosting services is often better than what is available from the manufacturer’s own IT department. The fear factor has also been diminished, as manufacturing professionals are using cloud-based applications and streaming services in their daily lives without disruption.

So, what is the issue? There are two main reasons that cloud adoption has lagged in manufacturing operations:

  • Contrary to popular belief, the lack of adoption is not rooted in fear, it’s rooted in cost-to-value and the desire to minimize disruption. If a manufacturer has invested millions of dollars in IT and OT infrastructure and applications, there has to be a rapid ROI to justify rip and replace. Vendors and manufacturers alike struggle to find new savings in replacement of MES, when the initial savings that justified the original purchase are off the table.
  • Even if the cost could be justified and the disruption minimized, until recently, the cloud-enabled solutions for manufacturing consisted of rehosted (or “virtualized”) monolithic MES systems or cloud-native solutions. These were technologically advanced, but not as feature rich as the solutions they were replacing.

What was required to move manufacturers into seriously moving to cloud-native/cloud-enabled solutions was some sort of outside stimulus. Enter COVID-19. Overnight, manufacturers were faced with shutting down their facilities or finding a way to move personnel to a “work from anywhere” model.

Case #1. A global automotive supplier moved to “work from anywhere” overnight for the divisions that were using cloud-native business and manufacturing systems while one of its recent acquisitions struggled to set up infrastructure to allow employees to access its on-premise systems.

Case #2: A global supplier of parts to multiple industries was able to convert its automotive division to produce face shields and masks for its medical device division. The supplier was able to accomplish this in less than five days, as everyone was using the same cloud-enabled environment.

The keys to success for these manufacturers was that not only were these solutions cloud-based, but the implementation, training and support were provided remotely. Since the lockdown in March, a number of vendors in manufacturing operations, both cloud and on-premise solution providers, have taken the opportunity to beef up their remote training and support capability.

In the same Gartner/MESA survey, we ask manufacturers to rank the main criteria used to justify a new system. In our most recent survey, the second most important criteria — behind only “improving quality” — was “improving employee decision making and competency.” We envision scenarios where supervisors working remotely can assist line workers via augmented reality headsets, diagnosing problems as if they are standing side-by-side. By moving more non-essential workers out of the facility, more effectively protecting those who remain and providing information they need to make better decisions, manufacturing operations becomes a key strategy for health, safety and employee competency. As these systems take hold, this may very well be the new normal for manufacturing.

Rick Franzosa,
Senior Director,
Gartner Supply Chain


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