Cloud in Manufacturing is the catalyst for reinvention??

By Jose R Favilla Jr , Director Industry Use Cases, Global Manufacturing & Energy Industries, IBM Technology?

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As the dust settles on the Amazon Web Services (AWS) re:Invent 2023 conference last week, I wanted to highlight a joint study into cloud computing in manufacturing that IBM Institute for Business Value and AWS has just published and has some interesting findings.??

Earlier this year, IBM and AWS surveyed 1,171 manufacturing companies in 21 countries from June to July 2023. Two surveys were conducted with each company as part of this effort, IT leadership and Manufacturing leadership so that we could make sure we got the best insights.??

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Three Key Takeaways stand out from the study:?

1. Half of surveyed manufacturers indicate they can harness more value from cloud. It’s essential that the industry needs to pivot from a focus on cost savings for isolated cloud use cases to an end-to-end, outcome-driven cloud strategy.?
2. Innovative manufacturers are leveraging cloud to build a foundation for digital dexterity. A subgroup of top performers has implemented a data-driven culture 1.7 times more than their closest peer group, positioning them to embrace emerging technologies that drive operational transformation.?
3. Leading manufacturers are modernizing both how they work and the tech tools they use while investing in the digital skills of their workforce to elevate performance and production. Cloud-enabled digital technologies such as AI and IoT are the catalyst for reinvention.?

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With 50% of manufacturers indicating they can harness more value from cloud, there are three reasons that stand out in our research as to what is holding them back. Firstly, a surprisingly low number of manufacturing workloads have been migrated to the cloud, hindering advanced operational initiatives where cloud can be a key enabler. Secondly, some manufacturers lack integrated technology strategies that include cloud, AI, IoT, and application modernization for manufacturing activities. Lastly, some respondents have focused strictly on cost savings versus additional business outcomes, such as improving performance and increasing value across core manufacturing operations.?

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The key lesson we can draw out for manufacturers here is that merely adopting cloud for simple lift-and-shift workloads or standalone use cases is not enough.? A more outcome-driven approach can help them realize benefits such as boosting productivity, quality, machine availability, and sustainability, as well as accelerating engineering efforts and product lifecycle management. Organizations are tackling the next phase of complex technology-powered initiatives— including supply chain orchestration, quality analysis and resolution, materials and production optimization, and predictive monitoring of assets.? And they are learning that these require integration of data, security, and exponential technologies, with the cloud as the foundation to make innovation possible—and powerful.? Our research has shown that combining cloud computing with these other levers of business transformation can generate 13 times greater benefits than cloud alone.?

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Within the study, we’ve analyzed the data and created four archetypes, I’ll let you read the study in depth to discover all the types, but what’s interesting here is the group that we have labelled ‘Transformational Optimizers’ have made the most progress in implementing cloud technologies to support advanced operational initiatives. Take supply orchestration for example—a critical area given that a National Association of Manufacturers survey found nearly 80% of manufacturers cited supply chain disruptions as their number-one business challenge. Transformational Optimizers report their cloud architecture supports supply orchestration 1.5 times more often than peers.? They are gaining real-time tracking to monitor and manage the flow of materials and track work in progress and finished goods. With this insight, they can prevent inventory issues by intervening when an issue occurs.?

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Manufacturing executives also estimate that optimized supply orchestration can yield 37% lower supply chain costs. Likewise, Transformational Optimizers report their cloud architecture supports manufacturing quality root cause initiatives 1.4 times more often than peers. The ability to identify problems or defects in manufacturing processes and automate rectification translates to determining the cause of a problem faster and mitigating recurring issues. Executives estimate this focus can reduce the cost impact of poor quality by 57%.?

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Lastly, I’ll highlight one further section that stands out for me in the study and that’s how leading manufacturers are modernizing both how they work and the tech tools they use.? Our study reveals that manufacturing executives expect generative AI to improve manufacturing processes across a range of areas. Four areas of impact include:?

• Production quality and optimization. Generative AI systems can ingest a large amount of production data and proactively detect quality issues in production. The combination of IoT and generative AI can identify real-time anomalies and optimize production accordingly, ultimately improving overall equipment effectiveness.?

• Sourcing and procurement. Off the factory floor, generative AI can assist with vendor discovery and evaluation, pricing, supply chain risk assessment, and contracts.?
• Predictive maintenance. With asset sensors continuously monitoring variables such as temperature, flow, and pressure, generative AI models can leverage the data to recognize the normal operational behavior of equipment and then identify deviations to predict and rectify equipment issues.?
• Product design and development. An array of alternatives for products, parts, components, and/or materials can be created by generative AI models. Using variables specified by engineers such as cost and operational criteria, generative AI algorithms can help create entirely new, innovative designs.?

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Now I’ve given you a taster of the insights from the research, please download the full study here and let’s work together to put in play Cloud-enabled digital technologies such as AI and IoT into manufacturing to drive the digital reinvention.?