The COVID-19 pandemic emphasized the need for manufacturers to have real-time visibility into everything from their processes and business operations to supply chains. Manufacturers have started to realize the need to embrace cloud manufacturing, especially cloud-based ERPs, to weave resilience into their business operations. The need for cloud-based ERP is evident from the size of the cloud ERP market — currently estimated at USD 45.3 billion and projected to reach USD 101.1 billion by 2025. A demand for greater visibility of the manufacturing value chain, shorter product cycles, and an ever-mounting pressure to optimize costs and efficiency are fueling the need for cloud ERP for manufacturing.
The Meteoric Rise of Cloud Adoption in the Manufacturing Industry
According to Gartner, “Cloud underpins the push to digital business, which remains at the top of CIOs’ agendas.” For manufacturers, real-time traceability and monitoring of business processes can translate into more accurate production and delivery timelines. It helps identify bottlenecks that affect production efficiency and manage resources to meet consumer demand.
Even before the pandemic, manufacturers sought ways to manage costs by tackling inefficiencies in resource utilization, scale production as per the demand, and to merge siloed data from various business units for better decision-making.
The pandemic has underlined the importance of real-time monitoring of business processes for continuous growth while improving business performance. That’s where the cloud can help manufacturers by building flexibility, agility, and resilience into business operations.
“There will be a continued push of cloud spending as an outcome of the pandemic. In the recovery and rebound phase, CIOs are recognizing that they don’t need to bring workloads back on premises, which will further increase cloud spending and drive new applications around cloud-hosted collaboration,” says a leading analyst at Gartner.
The Future of Cloud-Based Manufacturing
Cloud-based manufacturing modernizes business operations, enabling cost savings, faster time-to-market, greater productivity, better business agility, and scalability.
Global technology research and advisory firm ISG predicts that the demand for smart manufacturing on the cloud will continue to rise even after the pandemic ends. IDC, a premier market intelligence corporation, states that the new normal for manufacturing would involve significant investments in remote operations and centralized monitoring and diagnostics of all processes. Both recommendations suggest the need for cloud-based technologies that help manufacturers stay resilient and future-proof their operations.
It all starts by integrating business processes from product lifecycle management to procurement and project management to finance and accounting on a system that streamlines these processes and consolidates all information across the organization, i.e., a cloud ERP.
Cloud Based ERP Systems for Manufacturing
According to Markets and Markets, the global cloud ERP market size will grow at a CAGR of 17.4% — from USD 45.3 billion in 2020 to USD 101.1 billion in 2025. A key factor fueling this growth is the demand for better operational efficiency to grapple with the fallout from the pandemic, which in turn, warrants accurate, granular, real-time data. Centralizing all data on business and operations while streamlining business processes is a key mandate for enterprises to thrive in the face of uncertainties in the business environment, market demand, and consumer behavior.
Traditionally, manufacturers were wary about moving their ERPs to the cloud, citing complicated legacy systems, integration issues, technical debt, cybersecurity, and compliance risks as key roadblocks on the path to digitization. While the concerns about digitizing legacy software and siloed data (spread across thousands of spreadsheets) are valid, it’s possible to overcome them with a robust cloud strategy and the right ERP solution provider in place.
What are the Benefits of Cloud ERP for the Manufacturing Industry
The pandemic has highlighted a need for timely and controlled access to data on business and operations from suppliers, customers, and internal cross-functional teams for faster decision-making. It’s also crucial to democratize data (on operations and planning) on a real-time basis to offer greater visibility and tracking and reduce delays and inaccuracies. A cloud ERP makes it easier to drive process standardization at manufacturing plants and business units.
The case for cloud-based ERPs, as opposed to their on-premise counterparts, is also airtight. Unlike on-premise ERPs that require massive infrastructure and workforce to build, configure, deploy, and maintain ERP software, cloud-based ERPs are simpler, cost-and-energy-efficient, scalable, and don’t require huge technical support staff to keep all systems and infrastructure running.
Cloud-based ERPs modernize the entire manufacturing value chain to streamline business operations, driving cost savings, productivity, business agility, and efficiency. Some other key benefits of cloud ERPs in manufacturing include-
Supporting greater predictability of technology costs
Driving agility to counter shortening product cycles and time-to-market schedules
Facilitating rapid flow of data that fosters hyper-collaboration between cross functions in the factory
Improving asset utilization
Supporting process standardization
Enabling modern manufacturing that’s quicker, flexible, and localized
Also, cloud-based ERPs are easy to scale as and when business requirements crop up, providing businesses with greater flexibility, and making it easier for those with seasonal activities to innovate faster without enormous resources.
Building Your Cloud Adoption Roadmap
Implementing cloud-based systems of engagement such as cloud ERPs is core to impactful and scalable modernization of the manufacturing industry. And the very first step to that journey is to build and execute a process and systems modernization plan that’s built on three major pillars – cloud migration strategy, cloud adoption roadmap, and executive sponsorship that binds the business and technology functions towards this transformation.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house