The Cloud for Manufacturers and Distributors

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As a decision-maker in a manufacturing or distribution-oriented company, you no doubt have seen or heard discussions about cloud computing. You may have been considering it but don’t have enough information to feel confident to move ahead with the idea. Your IT systems and infrastructure are working, although changes were made to accommodate remote work. And yet people are saying they need to be changed.

Part of your role as a decision-maker is to help your organization find IT solutions that save time, money, resources, and provide capabilities for growth.

I can cite some simple reasons why you should start moving into the cloud.

Payoff. The sooner you start, the sooner the value is realized.
Because your competitors are.
If you don’t start now, you can’t play quick catch-up in a matter of days, weeks, or months.

But here are some major reasons why ‘the cloud’ should be a part of your business strategy post-COVID:

Agility and resilience

You are no doubt aware of businesses in your industry that have not made it through the pandemic. Those companies were not able to adapt quickly enough and did not have the capacity to recover quickly. In consultant speak, there was a misalignment between the resources and capabilities of the organization and the demands of the new business environment.

Industries like manufacturing have, for almost two centuries, sought to concentrate their operations for reasons of scale. However, it has become clear that embracing distributed working practices makes businesses far more agile and resilient. In the new world, the cost efficiencies of scale have to be balanced against the advantages of agility and resilience.

A manufacturing environment that is agile comprises several characteristics:

Flexible product line and process: this might include modular production or assembly cells
Connected customer service, design, and production teams
Information and communication infrastructure that enables this

Innovation and changing business

Not only is it manufacturing scale and process that is changing, but also manufacturing technology. The emergence of Smart Manufacturing and the growth of the Fourth Industrial Revolution (4IR) are bringing new, innovative technologies and practices to several areas of the business – in production, scheduling, inventory management, fulfillment, and sales and operations planning.

These technologies enable fully integrated, collaborative manufacturing systems that respond in real-time to meet changing demands and conditions in the factory, in the supply network, and in the market.


Manufacturers are currently operating on thin margins as they adjust and reconfigure their operations to survive and grow. The management of costs is essential for survival. While the need for digitalizing the business may be recognized, it needs to be done carefully and cost-effectively.

One area of cost management that can be improved is in IT. Both the operating and capital costs of IT can be managed better if the way IT is used could be changed. Imagine not having to make a capital investment to acquire or upgrade a server; you just license it. Instead of those large annual software license fees, how about a fixed, predictable monthly subscription? When it comes to implementing new software, you don’t have to go through the time and expense of installing and testing it, you just select it as a new subscription.

Why the cloud

The items discussed above can be cost-effectively implemented using cloud solutions. A connected enterprise, integrated across all operations, which can support new technologies, can only be supported using the cloud. Several reports have indicated that the pandemic has created an impetus for business leaders to accelerate cloud computing as a key part of strategy discussions and cloud migration is becoming a necessity.

The Gartner analyst group discussed reasons why spending on cloud deployments is increasing:

Cloud computing strategies are driven by the need to digitalize operations because of disruptive changes being brought about by 4IR.
The rapid cycle of technical innovation, and the need to keep modernizing infrastructure, means companies must invest in business-critical resources and leave infrastructure issues to a cloud provider.
By moving to the cloud organizations can reduce deployment and upgrade times for applications.
Organizations can use the cloud to reduce the risk of infrastructure disaster and recovery management.

Other reasons for considering the cloud for manufacturing and distribution operations are:

to support remote and mobile users, and provide secure access to resources, no matter what the device is or where it is;
the technologies of 4IR, like IIoT, require edge computing capability, which is most effectively done via the cloud.

Objections to cloud

There are some common questions that business leaders raise when asked to consider cloud solutions. Typically they are around data and application security, and compliance.

It has been shown, in fact, proven, that the security controls and disaster recovery practices of cloud providers far exceed anything that an average manufacturing or distribution organization could possibly provide (Blog – Trust and Moving to the Cloud). For example, keeping old devices and controls on the plant floor makes them more susceptible to breaches through both malicious attacks and unintentional employee actions. By enabling access via a cloud service makes these problems far less likely.

In the case of compliance, most enterprise cloud services offer a facility called a sandbox or development environment. This is where new applications or configurations can be tested before being moved into production. Any compliance requirements can be validated in the sandbox, without affecting normal operations.

The focus of the new normal

For manufacturers and distributors, the focus of the next part of the 21st century will be integrating production and supply chains with suppliers and customers, as seamlessly as possible, using the Internet. Cloud enablement opens the door for the kind of connectivity you need to be a full and active participant in this new, digital economy.

A recent report from Salesforce (New Trends in Manufacturing) has noted that organizations that are ready for the new normal are more likely to have moved their business-critical systems to the cloud. The past 12 months of 2020 have created a burning platform for organizations to reconsider their business models and strategies. For a strategy to succeed it must be supported by technology. Without a cloud platform, strategies to address the business models for the 21st Century will be unlikely to succeed.

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