The Future of Smart Manufacturing:

Why Businesses are Moving to the Cloud

The manufacturing sector has entered a new era, sometimes called the Fourth Industrial Revolution, which will fundamentally change the way businesses operate, and cloud computing is a key pillar. This white paper explores what manufacturers stand to gain and why they've begun to move operations to the cloud.

©2018 LiquidPlannerWHY BUSINESSES ARE MOVING TO THE CLOUD

‘Why Manufacturers are Switching to the Cloud’, can be unpacked into two questions:

The answer to the first question is clearly, absolutely, and definitely yes—the 2017 State of Manufacturing Technology, an annual report, says that, “90% of respondents are using cloud-based productivity applications, double the number in 2016.” In fact, manufacturers are moving to the cloud so quickly that some are referring to the change as the Fourth Industrial Revolution.

Are manufacturers switching to the cloud?

And if so... why?

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Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres… When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace.

But this very rapidity of adoption points to something a bit unusual about cloud use by manufacturers; in this arena, manufacturing (like AEC) has lagged behind other sectors, and is now playing ‘catch up’.

Until recently, the industry has struggled to adopt cloud computing technologies outside of the relative simple Infrastructure-as-a-Service (IaaS) platforms that are available, because the cost of “moving to the cloud” has often been regarded as too high, or because of perceived security threats. (Scale or fail: Manufacturing companies must leverage cloud and interconnection, Data Centre News, Nov. 9, 2017)

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Of course, the reluctance of manufacturers to move to the cloud is not due to a general suspicion of technology—of all sectors, manufacturing has made the most efficiency gains in recent decades by adopting digital technology. Rather, cloud-based services specifically are perceived as a challenge, for a variety of reasons that fall under two main headings.

Security As mentioned above, “perceived security threats” of the cloud are a major reason for lagging adoption by manufacturers. A report by Jon Peddie Research (CAD in the Cloud) provides interesting insight on this issue. “This should not come as a surprise,” says Jon Peddie Analyst Kathleen Maher in an article on the report. “CAD customers are very protective of their data, and they are security conscious, but most of all, they are not a monolithic group.” She adds, “We also think that the past few years, which have been punctuated every few months with major security breaches, have confirmed many people’s misgivings about the security of cloud-based applications.”

Still, this perception is being overcome. Maher says:

“The study also found that workers in manufacturing fields were more likely to be adding CiC (CAD in Cloud) capabilities to their workflow than those in AEC. We have some thoughts about why this might be. The manufacturing industry is more advanced in its CAD use, having moved to extensive data management (including PLM) for more than a decade before the AEC industry, and PLM almost necessarily requires centralized data access, for which the cloud is ideal.”

And in connection with the security breaches discussed above, Maher says, “We won’t go into the arguments that say cloud-based workflows might be safer than traditional methods, other than to point out that most of the breaches have not happened in applications using cloud resources such as SaaS or servers-as-a-service, but rather in companies relying on traditional—and often out-of-date—systems.”

In other words, concerns about cloud security are fading as manufacturers begin to leverage their already extensive knowledge of digital data management, and as services specifically designed for the cloud—as opposed to ad hoc extensions of existing solutions—begin to emerge.

Most of the breaches have not happened in applications using cloud resources such as SaaS or servers-as-a-service, but rather in companies relying on traditional—and often out-of-date—systems

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ProductivityManufacturers also worry that productivity will take a hit if some—not all—processes move to the cloud. Maher says, “We’re not particularly surprised that so many respondents were not interested in CiC. The cloud has yet to prove itself as a hospitable environment for design. At this point, it is more useful for collaboration, design validation, and document management than design itself, and the report bears this out.”

Much of this productivity hit comes down to latency (or lag), that is, the tendency of Internet speeds and bandwidth to drop unpredictably and slow down cloud-based applications. Latency remains a challenge for CAD work and, by extension, CAM, SCADA, and other traditional ‘shop floor’ processes. But it’s not necessarily a problem for other manufacturing processes. “A certain amount of latency can be tolerated and maybe not even noticed in data management,” says Maher. “People send off data for processing and their machine is freed up for other work.” Plus, cloud-based solutions for project management, EPM, PLM, and other data management/processing tasks can take advantage of connectivity, realtime updating, automated monitoring, and all the other major selling points of the cloud.

It’s not really accurate to say that manufacturers have been slow to adopt cloud-based solutions. Rather, their move to the cloud has been nuanced, recognizing that cloud-based applications are not (yet) appropriate in some areas, like design, and that more secure solutions were being developed for processes like project management. Many manufacturers are finding ways to make use of mature cloud capabilities now by using a hybrid approach. “While businesses of all types make a steady march to the cloud, manufacturers are pursuing a hybrid strategy, opting to retain some foundational plant-floor systems on premise while earmarking analytics and production applications for migration to the new environment.” (Manufacturers’ Slow, but Steady Migration to the Cloud, Automation World, May 10, 2017)

Manufacturers are pursuing a hybrid strategy, opting to retain some foundational plant-floor systems on premise while earmarking analytics and production applications for migration to the new environment

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Manufacturing in the Cloud—Why Now?Manufacturers are moving to the cloud… finally. But that leaves the question of why they’re moving to the cloud, or rather, why now?

“It’s a bit like kicking a mule from behind,” Maher says. “Individuals and companies are slow to change and need a real push to get started—we saw that with PLM, BIM, and other new solutions. But as networks and tools are created and connections are made, it all starts moving quickly and new doors start to open.”

For many manufacturers, the ‘kicks’ come from government agencies. “Project lifecycle management is a good example,” Maher explains. “It really required a push from the government side to get started, but once it did all sorts of companies started to see advantages in all their operations—think about Tesla remotely collecting data from in-service vehicles, and even updating their product remotely. It’s been revolutionary.”

In manufacturing, a big push to the cloud is in response to a mundane challenge—paperwork. As manufacturing has become more distributed, involving global teams, simply tracking forms well is a major source of efficiency gains. “For many reasons—safety, performance, standards, regulatory requirements you name it—governments and agencies are insisting on greater accountability,” says Maher. “That means a lot of paperwork, and anything that makes tracking and finding the right form or record more easily can be a huge advantage.”

She has a point; improved document control is often cited as a major reason for adopting cloud solutions. Not only are forms and reports tracked, all project-based communications—emails, texts, plans, photographs, etc.—can be collected in a single online space that is searchable and accessible to all stakeholders. Moreover, these documents can be maintained in formats that update automatically and avoid the version control issues that plague local software solutions. Security is also improved, as security protocols can be applied at a single source, and document access is easily tracked. Especially with regards to project management, it’s easier to see what was done, what was not, who did it, and what’s left to do.

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Deliberate, even reluctant, cloud adoption was a logical path for manufacturers, given the government and societal forces at work. But the bottom line is, it’s happened; early adopters in manufacturing and digital solution providers have worked together to create truly secure and powerful cloud platforms and services that are optimized for manufacturing. Put another way, “new doors are open” and the road ahead is smooth. Moving to the cloud now is much easier for all manufacturers, even small and mid-sized firms. The 4th Industrial Revolution (integrated, cloud-enabled manufacturing processes) is essentially complete.

So it’s no longer the case that manufacturers are feeling forced (or kicked) into moving to the cloud. Instead, mature cloud networks and solutions are so powerful and useful that manufacturers are now racing to the cloud because they want to take advantage of amazing new opportunities… and not be left behind.

The Fourth Industrial RevolutionThe idea of the ‘Fourth Industrial Revolution’ sounds hyperbolic, but “it’s absolutely true,” says Maher. “For decades now leading thinkers in manufacturing have been working on and implementing a grand vision of factories and processes as digital—and cloud services are making that a reality.”

Maher suggests a couple of components of this “grand vision.”

Local, Custom Manufacturing: If a manufacturer is sufficiently invested in the cloud, actual fabrication can be moved closer to the customers. “It doesn’t have to be your factory,” says Maher. “It can be the factory that’s best positioned to fulfill a particular customer’s exact needs.” Even products like cars or refrigerators will eventually be realizable by distributed facilities, and customized for individuals. It’s a bit like the current state of print-on-demand books—assembled as needed, where needed, and customized.

Improved Collaboration & Project Insights: Digital manufacturing more or less requires globally distributed teams of designers and specialized fabricators, which in turn requires collaboration tools that account for issues like time zone and language differences. Cloud solutions are well suited for global collaboration. "This is one reason larger firms have led the way in moving to the cloud," Maher points out. "When ideas are already being implemented by big teams, it's easier to include outside talent in projects with transparency and control. Individuals at smaller firms, by contrast, tend to be more nervous about losing control of their ideas."

For decades now leading thinkers in manufacturing have been working on and implementing a grand vision of factories and processes as digital—and cloud services are making that a reality.

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Mature cloud solutions tend to mitigate this nervousness by improving collaboration. As discussed above, documents—and ideas—don't get lost. And also, ideas are conserved from project to project in single pools of knowledge. One manufacturer, Lake Shore Cryotronics (makers of precise sensors and instruments for research applications) experienced this after moving to LiquidPlanner, a cloud-based project management solution. "Team members are using the commenting features in LiquidPlanner to communicate and provide task updates,” explains Development Process Manager Rob Welsh. “In the past, these project artifacts would have been buried in emails, with little in the way of organization or visibility. Now, comments are tied directly to the tasks and items they’re relevant to, in a way that provides visibility to everyone on the team.”

Continuous Design Lifecycle: By remotely gathering data from the emerging Internet of Things (IoT) manufacturers can extend the design phase through production and even into end use by customers. “We’re seeing this now with cars and industrial machines,” Maher points out. “By gathering data from machines in operation, manufacturers, operators, or service technicians can know, in realtime, if a car or machine is about to break down, and sometimes they can even fix it remotely. And of course they can use that data to improve quality of products being built.” The potential for greater quality of manufactured goods seems limitless.

But really, cloud platforms are changing manufacturing so quickly and profoundly that it’s hard to summarize the potential gains. As the 2017 report How Cloud Computing Enables Modern Manufacturing (Ezell & Swanson, June 2017, Information Technology & Innovation Foundation) says:

Cloud computing—the provision of infinitely scalable computing resources as a service over the Internet—is in the process of transforming virtually every facet of modern manufacturing. Whether it’s how manufacturing enterprises operate, how they integrate into supply chains, or how products are designed, fabricated, and used by customers, cloud computing is helping manufacturers innovate, reduce costs, and increase their competitiveness. Critically, cloud computing allows manufacturers to use many forms of new production systems, from 3D printing and high-performance computing (HPC) to the Internet of Things (IoT) and industrial robots. Moreover, cloud computing democratizes access to and use of these technologies by small manufacturers.

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That last bit is important; fully mature cloud infrastructure are now available to all manufacturers, in the same way that the fully paved national highway system is available to all drivers—the important thing is to get started.

But that doesn’t mean every manufacturer is going to take the same route onto the cloud. Ezell and Swanson say that, “Cloud computing is usually deployed in one of three different configurations: a private cloud, a public cloud, or a hybrid cloud.” And as Maher has analyzed cloud adoption by manufacturers, she’s learned that, “There are two different approaches. Some are centralizing all their data and their design and process tools. Others are moving their data to the cloud, but keeping tools local. Both approaches seem to work.”

It’s certainly the premise of this paper that any entry point works, so long as there is some movement to the cloud. In particular, starting with data-intensive processes, such as project management, is often the most efficient way to begin moving manufacturing processes to the cloud.

__Angus W. Stocking, L.S. is a licensed land surveyor who has been writing about

infrastructure since 2002.

There are two different approaches. Some are centralizing all their data and their design and process tools. Others are moving their data to the cloud, but keeping tools local. Both approaches seem to work.

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LiquidPlanner is predictive project management software that helps industry leaders accelerate time-to-market, stay ahead of the competition, and grow their businesses. Our patented scheduling and resource management technology enables engineering, IT, and operations teams to hit aggressive deadlines, keep pace with the evolving needs of customers, and maximize efficiency. Founded in 2007, LiquidPlanner is privately held and headquartered in Seattle, Washington.

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