Utilizing Cloud for Saving Cost in Manufacturing Industry

June 29, 2020

Since cloud computing has been introduced to the world, manufacturers are migrating to the cloud to increase cost-saving efforts and productivity along with bringing efficiency to their working.

These are increasingly optimistic times for decision-makers and managers in manufacturing companies. With demand growing again as the markets are opening and demand has stepped up, and profitability returning, managers in many plants are cautiously focusing on ways to scale up operations, rather than cut back. As the world increasingly turns to technology to help them continue to run organizations, many businesses and IT decision-makers are reaching to the cloud to streamline various processes to efficiently manage products as well as keep costs low since the past few months have not been too productive.
According to a new Microsoft commissioned a survey of 437 information technology decision-makers (ITDMs) in manufacturing organizations across the United States.  The results show that the cloud is helping innumerable institutes, companies and industrial organizations as well as large manufacturing units operate in leaner fashion and build the next generation of manufacturing companies over a strong database of seamless working and data-driven policies.

New lines of business from the cloud

Apart from cost savings and safety as well as increased consumer usage and spikes in traffic, cloud services are enabling many innovators to create a new business, a new line of business or leverage to level the playing field with larger competitors through diversification. With its pay-as-you-go model, the cloud reduces the need for large up-front capital outlays, so start-ups do not seem to need as much capital to launch new businesses. Nearly a quarter of the manufacturing ITDMs in the survey said that they used cloud services to help start a new business, discovering and innovating new ways to grow to work on additional sources to generate extra profit into the organization Just under half of them indicated in the survey that investing in IT increased their company’s profitability.

The cloud also is shedding new light on the competitive environment for industrial companies. These companies realize that often their best strategy against competitors is their IT department. With Cloud Computing, IT can strengthen the manufacturing area by enabling the quick movement of products, better marketing,  and customer interaction. IT departments are adapting more strategically at cloud computing for ways to address business process issues and quality control.

These plus points often derive from the ease with which colleagues, customers, and suppliers can collaborate and communicate in the cloud.

While the cloud offers businesses many benefits, one key opportunity for today’s business leaders using these technologies is having the power of choice across in-house and online tools, which allows companies to move at their own pace and integrate cloud computing as appropriate to their business needs.

1. Increasing Operational Efficiency

A manufacturing organization, of large tonnage injection molding for the automotive industry was looking to automate their manual processes. After implementing the Cloud system in 120 days, the company noticed a 30 percent increase in efficiency, resulting in reduced overall costs and an increase in customer satisfaction. Management attributes this to the fact that the company now has a single point of data entry and a user interface that demands correct input.

2. Improving Product Cost

Another manufacturing organization of precision-machined components and subassemblies manufacturers for heavy industrial equipment was searching for an ERP system that integrated information across its entire business. The company went with a manufacturing cloud ERP to track and record production activities, inventory status changes, receiving, shipping, and other data from its plant floor. Now the company can generate in-depth information for more accurate costing analysis—as a result, Avon Gear has improved inventory accuracy and sustained an average 20 percent growth annually.

3. Reducing Scrap and Inventory on Hand

Another used case is of an automotive manufacturer organization that turned to cloud ERP to address their business problems—and along the way, they saved some money. Their inventory inaccuracy and the use of multiple disconnected systems led to inefficient planning, quality problems, high expediting costs, and wasted time. Moving to a single, connected cloud ERP software solution enabled them to reduce inventory on hand by 15 percent, drive scrap down by more than 60 percent, reduce premium freight costs by more than 20 percent, and save nearly $100 per purchase order processed.

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