Driving value in Manufacturing with Cloud services

Manufacturing enterprises have been pioneers in technology adoption such as ERPs, intelligent machines, the Internet of Things (IoT), collaborative robots, and artificial intelligence. However, the manufacturing industry has been lagging behind other industries such as Banking, Insurance, Media, Telecom when it comes to Cloud adoption. Over the last decade or so, enterprises in other industries have been leveraging Compute, Storage, Analytics, artificial intelligence, and networking services on the Cloud to deploy disparate use cases for creating business value that was either difficult to get to or have net new impact delivering better efficiency, cost savings, improved customer service, and scalability. Below chart shows how global manufacturing value add has risen in absolute terms over last two decades and India’s share has risen too !

Medium High & High tech industries have not only shown sharper recovery but also grown rapidly as compared to low tech industries. Cloud-based systems continue to be the catalyst in accelerating and scaling-up manufacturing automation, allowing factories to outsource certain factory tasks, such as data entry and machine maintenance, making it easier for companies to focus on their core product innovation. Manufacturing companies could do well to take a leaf out of Warren Buffet’s investment philosophy - Reinvesting is the best way to build value. Manufacturing value creation is on an uptick, this is the time to invest in right cloud technologies, which can drive scalability, supercharge productivity as employees work hand-in-hand with automation and help create a better overall product.

The three key trends that are determining the strategies of manufacturers globally:

I.?Design and Build Resilience in Supply Chain

COVID-19 and Russian invasion of Ukraine – two major events which disrupted global supply chains in last few years. The pandemic was slowing growth before Russia’s invasion, with disruptions costing major economies. In 2021, there is an estimated €112.75 billion in lost gross domestic product (GDP). A protracted war could lead to an additional GDP loss of up to €318 billion in 2022 and up to €602 billion in 2023, according to Oxford Economics.?

A pro-longed Russia – Ukraine war will impact world trade by 1%. There are three likely sources of impact – i) higher prices for commodities like food and energy pushing ?up inflation further ii) disrupted trade, supply chains, and remittances and iii) reduced business confidence and higher investor uncertainty leading to capital outflows from emerging markets.

Improving resilience in supply chain of global manufacturing enterprises will require planning for uncertainty in short-term and long term. Supply chain leaders have always been keen to reduce inventory holding and freight costs and penalties. In today’s world, they must be more resilient and agile to respond to increasing supply uncertainties, ?and be able to earn customer trust and avoid revenue slippages while also becoming a key competitive advantage to enable future growth.

Resilience requires real-time end-to-end visibility, aided by control towers, across the extended supply chain, including tier 2 and tier 3 suppliers. Data and analytics can accelerate decision-making, boosting competitiveness, with frontrunners creating digital twins of supply chains to test responses. Enterprises must move from a just-in-time to a just-in-case approach, diversifying supply bases, planning alternative freight routes, making distribution centres flexible and building inventory. Global enterprises are putting in place intelligent response system to be able to thwart a cyber attack or risk of data losses in case of unforeseen events.? With the flexibility, resilience and agility that cloud technologies offer, manufacturing companies could accelerate on this journey

?II. ?Sustainability: Drive innovation and business growth

Sustainability has become a competitive differentiator for companies to achieve Net Zero target by 2050 or much earlier. It is one of the top 3 priorities for most CEOs. And lot of it is driven from regulatory compliance, consumer, and investor pressure in response to climate risks. Based on customer experiences, there may be a number of highly impactful sustainability use cases that manufacturing companies are focused on in their smart factory journey.

a)???Total carbon footprint tracking

Also known as greenhouse gas emissions tracking across the value chain. For example, it is not only the carbon footprint for the car for an Automotive OEM but also the tier 1 part suppliers down to products, parts and assets level. Enterprises can identify hotspots and prioritize decarbonization actions to get to Net Zero faster. But before you optimize, you need to measure and monitor against your emissions benchmarks and targets.?

?????b) ??Energy optimization

Energy saving is at the top of mind for everyone globally, especially in the world we live in right now. Most manufacturers spend a significant amount of operations cost for energy. But how do we save energy if you are unable to measure and monitor first at the granularity you want to get to identify the hotspots to optimize. This also applies to any critical resources such as water, compressed air, steam, argon gas to name a few. What customers are looking for are quick wins to get started. Work backwards to ideate, design, pilot, and scale with cloud is the approach to look for.

?????c)?Better waste management

Wastes are created from either over production if your production is on schedule but facing supply chain disruption, or under use of raw materials before expiration. You need better resource planning by having near real time visibility to operations and supply chain, and hence, need to connect different data sources that smart factory enables.

?????d) Circular economy implies, reducing waste to a minimum.

Sustainable building infrastructure to minimize impact to external environment by minimal consumption of energy, water, and materials. Here again data collection can be enabled with IoT on cloud, to ensure buildings work at optimal efficiency with reduced carbon footprint and critical resource consumption. For example, Amazon Web Services (AWS) is partnering with American Rock Products (ARP), a CRH Company, to develop a more sustainable concrete mix that will lower the carbon footprint of new data centres as well as drive broader innovation to help make construction materials more sustainable.

Globally, there is a growing need to conserve and re-use water which is the greatest asset for communities. In this city of Umatilla in USA, when the waste water treatment facility requirement exceeded capacity, AWS stepped in to help find a solution that benefited local farmers. This is a great example how enterprises are making a difference to city to develop sustainable water practices.?

??????e) Safety of the plant and its workers

Take the example of a chemical plant that processes and transports highly flammable or toxic material. If the Operational Technology (OT) system fails or a particular asset leaks, it can have huge environmental consequences. In such potentially hazardous environments, real-time tracking of asset health using smart factory is critical, not just for production but also for the safety of the plant and its worker. With all these smart factory use-cases it helps to i) break the data silos, ii) automate the end-to-end data pipelines that are scalable, iii) ingest all relevant data in a unified data backbone to maximize insights, iv) maximize automation to help the OT Personas, and finally, v) drive self-service and auditability that overall helps you reach your Net Zero faster. In the long run, with these sustainability initiatives , it will either save money for the enterprise or help make more money.

?III. Connected assets: Leveraging AI / ML

?a)??Connected factories

Manufacturing enterprises have been living in constraints for several decades with their operations technology (OT) data locked into legacy systems that creates silos making it hard to access the data. Existing plant floor systems, while feature-rich, they are not scalable or cloud-native (pay-per-use, fully managed) or provide a single source of truth for better and faster insights. New revenue streams are possible with new insights while smart/connected products enable better customer satisfaction, new features, and enhanced next generation product design. In Manufacturing, OEE (Overall Equipment Effectiveness) is a key KPI that is measured by Machine / Line / Plant Availability, Performance, and Quality. Increasing any of these three variables increases OEE. World class of OEE is somewhere north of 85%.?

Cloud provides the flexibility of enveloping and consolidating legacy systems and technologies and help build a unified data and analytics platform to drive?manufacturing use cases for single to multi-locational factory set-ups. End-to-end production platform which connects industrial assets to cloud securely and ingests data (IT / OT, logistics system, machine telemetry etc.) to monitor key performance metrics, and perform analytics for actionable insights to drive business benefits such as improved product quality, new revenue from smart product, optimised production.

This is an example of a global automaker using AWS Internet of Things (IoT) services to connect data from all machines, plants, and systems with an objective to drive productivity, reduce factory costs and savings in supply chain spend. Manufacturers are optimizing its production processes, reducing costs, and providing a better experience to its customers by leveraging cloud.?

b)??Connected products?

With Cloud technologies enterprises are able to design and deploy connected mobility, connected farm products in significant less time than what was needed earlier. ?In the connected mobility use-case, the intent is to securely ingest, store and analyze connected vehicle data faster at scale and build intelligent, personalized connected mobility products and services. Recently, leading auto-maker BMW and AWS have collaborated to develop customizable cloud software to help build the next generation cloud-based vehicle data platform. This development will help enable them to easily integrate vehicle data sources, accelerate vehicle and fleet application feature development, and improve life cycle management, while delivering advanced vehicle features and more personalized driver experiences at lower costs.

In the Agriculture industry, customers are using AWS IoT services to get data from remote operations to the AWS cloud for monitoring and control of agricultural activities. This allows customers to focus on building machine learning models and develop insights, rather than collating and managing data streams. This firm built a smart agricultural solution on AWS which provides growers with real-time remote crop monitoring solutions to help them optimize irrigation and ventilation, prevent disease or sunscald, improve pest management or predict shelf life.

However, Change management is an imperative

With business transformation, change is inevitable. The ability to address and adapting to change within an organization is becoming a critical element of survival for enterprises in the current digital transformation landscape. To help achieve outcomes in desired time and quantum, a blend of right leadership, strategy & execution, governance is essential to drive the change.

Looking ahead: By 2030, the value of cloud is estimated to cross $1 trillion globally (Visit Source: McKinsey) This cloud opportunity will unlock substantial value in technology use cases in Manufacturing. India is expected to be third largest economy by 2028 according to IMF’s World Economic Outlook and will be a significant cloud market of the world. To reach its full potential, the manufacturing industry will need to continue to embrace new technology to stay ahead of competition !

(Views expressed in this article are author’s personal opinion and not necessarily of author’s employer. Welcome readers to share their point of view, comments, counter views)