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Community Blog Journey to the Cloud - MNC Manufacturing Series - Part 2

Journey to the Cloud - MNC Manufacturing Series - Part 2

In the second article of this series, we explore the challenges and goals of manufacturers on their journey to digital transformation.

In this series, we explore the challenges and goals, core solutions and core products facing manufacturers on their journey to digital transformation.

Though cloud computing is one of the critical pivot points of Industry 4.0 and the Industrial Internet of Things (IIoT), a significant portion of manufacturers have yet to adopt it. Delays in adoption are caused by several issues, such as integration challenges, lack of congruence on value derived versus capital investment, data privacy and/or security concerns and change management anxiety.

However, the imperative to embrace cloud and begin the transformational journey is as strong as ever. In this post, we examine the motivations behind digital transformation, why manufacturers should embrace the cloud and what considerations manufacturers should keep in mind when selecting the right provider.

Strategic Importance

The manufacturing industry is undergoing a transition towards smart manufacturing, where operational processes are digitized. Smart deployment of industrial applications and systems is essential to a company's plans to win, service, and sustain customers. As manufacturers turn to IIoT, the cloud is a critical part of the industry's IT and OT infrastructure, as it directly contributes to three key factors that successfully lead to a profitable future offering:

  • Fast time to market – This requires manufacturers to identify their core competencies and choose their battles wisely. Capital expenditures can be saved by transferring them to operational expenditures by outsourcing to cloud providers.
  • Pursue a blue ocean strategy – Aim for differentiation and low costs. This opens up new markets and stimulates new demand. For example, cloud providers such as Alibaba Cloud supports business, compliance, and technical aspects of global market expansion.
  • Leverage manufacturers' own customers – Get them involved, shorten feedback cycles and allow product development to guide them. This requires an agile methodology, which eliminates capacity guesswork and allows for a strict demand-based and scaled IT operation to increase efficiency.

Benefits of Cloud Adoption

Finding a partner who is at the forefront of change is challenging for many manufacturing companies, as is keeping up with the pace of innovation. Cloud providers play an important role in bridging these divides.

The overarching benefits of cloud can be boiled down to four key outcomes:

  • It allows improved overall equipment effectiveness. From asset and process efficiency to product flow.
  • The cloud creates organizational agility by cultivating resource efficiency, data flow, and the ability to scale up or down quickly.
  • Cloud services help organizations develop new revenue streams and cost savings by optimizing capital efficiency, mitigating efficiency restraints, and discovering new ways to monetize their services.
  • Cloud computing enables manufacturers to securely store, transfer, and analyse their valuable data by helping them to comply with local law and regulations.

Obstacles of Adopting Cloud

Many manufacturing companies struggle to fully embrace cloud services due to three main obstacles:

Organizational Obstacles

Running and operating a software-defined data center, whilst building and running cloud-native applications, demand different competencies compared to traditional IT departments, as well as adequate talents with cloud technology skillset to implement.

Technical Obstacles

Some legacy systems and applications were never designed to migrate to the cloud, so need be redesigned and rebuilt, which is a huge investment in time and cost.

Cultural Obstacles

Digital transformation provides tremendous opportunities, but only for companies who are not only willing to react fast to customer and market requirements, but fail fast too. This is sometimes in contrast to philosophy of many manufacturing companies, who have established themselves and being successful before the digital age.

How to Pick the Right Cloud Provider

The market is vast, with a myriad of providers offering a large number of services. Before manufacturers can select a suitable provider, they need to understand their specific business needs. They should also take into account existing partnerships, contracts, and procurement processes. Here are six common areas of focus that manufacturers can pay attention to when evaluating a service provider:

1 – Ecosystem

What kind of ecosystem is offered by the cloud vendor? How large is the addressable market the provider supports? This is important especially for manufacturing companies since supply chains are complex and span different regions.

2 – Certifications and Standards

Providers that comply with recognized standards and quality frameworks demonstrate an adherence to industry best practices. This can be very helpful when shortlisting potential suppliers.

3 – Low Turnaround Time

Cloud providers need to be able to react quickly to critical feature requests by their end-customers. This enables a fast time to market, which is key in today's competitive manufacturing landscape.

4 – Data Governance and Security

The possible locations manufacturers' data resides in, and the subsequent local laws, is a key part of the selection process. The provider's information security controls should be demonstrably risk-based and clearly support manufacturers' own security policies and processes.

5 – Service Dependencies & Partnerships

The provider's relationship with key vendors, their accreditation levels, technical capabilities, and staff certifications is an important criterion, especially in complex delivery projects.

6 – Service Level Agreements (SLAs)

SLAs demonstrate availability, reliability, and robustness of the platform. This is a make-or-break criterion for every cloud selection process. For companies who run their mission-critical workload on a cloud platform, it is mandatory from a legal and contractual point to have ensured SLAs.

Manufacturers have many aspects to consider when transitioning to the digital space. But by following the steps outlined, and employing a smart strategy in selecting the right provider, the transformation can reap rewards.

Alibaba Cloud is a world-class cloud provider and the No.1 public cloud service provider in China and Asia. To find out more about how your manufacturing business can succeed in the digital era, download Multinational Corporation (MNC) Manufacturing Industry whitepaper today.

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