March 9, 2021
Digital Transformation in 2021 – The Year of the Cloud
We all hope that the “new normal” is just around the corner. 2020 was a trying year, to say the least. It was not something we saw coming in 2019. It’s been a difficult time for societies around the world, for parents, for seniors, for workers, and for manufacturers, too. But the sun is peaking out around the clouds. And 2021 holds promise for manufacturing.
I believe 2021 will be the year data becomes widely accepted as the single most critical feature of the journey to that hoped-for “new normal.”
Not just data in and of itself, but how data is captured, stored, accessed, analyzed, and utilized to ensure that manufacturers remain as agile, efficient, productive, and cost effective as possible. It will also be the year of the cloud
At the end of 2019, I suggested that manufacturers would continue to face numerous challenges:
- Changing consumer trends—continuing to drive demand for better, faster, and cheaper products
- Consumers being more sensitive to ethical business practices—such as waste, environmental impact, ethical manufacturing, re-use, recycling, and upcycling
- Increased competition as a result of social media and online marketplaces review and rating sites—creating a more promiscuous, fickle, and mobile consumer
- Advances in global logistics breaking down geo-competitive boundaries—making global markets for manufactured goods frictionless and more competitively intense
- Significant increases in demand volatility and uncertainty across multiple markets
This led to my prediction at that time that manufacturing optimization
would increasingly become a major focus for manufacturers in 2020—they would be prioritizing putting the technology and infrastructure in place to maximize agility, performance, productivity, and efficiency. This is because (as has been proven many times over the past year) digital transformation
is one of the most effective methods for mitigating the myriad risks of increasingly fluid, competitive, and volatile markets.
I stated that these projects and corporate strategies, widely known as “Industry 4.0” or “smart manufacturing” (depending on your preference for technical jargon), would be long-term initiatives taking many years to come to fruition. But there was no doubt the industry was firmly on a path to digital transformation and that the pace of that transformation would significantly pick up in 2020.
The Year of Crisis
Then came March of 2020 (ominous background music, please). No one could have predicted that the manufacturing sector—in fact, the whole world—would be turned upside down in so many ways. Practically overnight everything looked and felt different; the industry changed. In some sectors, demand skyrocketed as consumers stockpiled goods (masks, hand sanitizer, toilet paper, and more), only for demand to then drop off significantly as inventory shifted to people’s homes, marking the start of highly unpredictable demand cycles.
I remember, in the early stages of the pandemic, how everyone was at home and suddenly had the urge to bake. I couldn’t find yeast or flour when I went shopping. Some items I had to purchase online and hope the delivery wouldn’t take too long. It was an unpredictable year in manufacturing—and consumerism—to say the least.
The World Moved Online
Those manufacturers not plugged into efficient eCommerce channels were unprepared for the hordes of consumers switching from brick-and-mortar to online retailers. In other sectors, demand plummeted just as quickly as the virus appeared. Not just because national lockdowns led to the closure of “non-essential” retailers, but also due to the impacts on travel and the national shift to remote working
—which reduced demand across the supply chain.
Businesses had to simultaneously cope with increased absences from their workforce, caused by illness, self-isolation, or other related causes. Without warning, unprepared manufacturers were forced to switch to “non-essential” staff working from home—in an industry not really geared towards working remotely. For those that remained onsite, employee safety policies were enforced—social distancing and even reduction of unnecessary surface contact. This compounded the challenges further.
Although no one predicted this “black swan” event (an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight—thank you, Wikipedia
), it provided evidence that major events can have significant impact on manufacturing operations.
As the impact of COVID-19 progressed, it exposed all of the weak points in outdated systems and processes, and this had a significant impact on how manufacturers were able to respond. Since the crisis began, those in the sector have continued to fight fires on multiple fronts in order to protect their businesses, strengthen supply chains, and support consumers.
Bring on the Cloud
Over the last few years, cloud computing has slowly been gathering momentum in the manufacturing sector, especially for the collection of plant-floor data, and although concerns over data sovereignty, privacy, and security still linger, these are often misplaced given the robust nature and sophistication of today’s cloud-based solutions.
Access to data, information, intelligence, and analytics has been a major challenge for manufacturers in 2020, and many have been impeded by the fact that the data required to quickly make critical decisions have not been available when needed most. If available, that data was usually isolated on the plant floor, on an HMI/SCADA interface, or on a legacy system not easily accessible away from the plant floor. Therefore, the need to access critical production and quality data remotely has become a critical requirement.
“Working remote” in manufacturing does not always mean working off-site (such as at home); it can also include working from the back office, or in another part of a sprawling campus. The term may also be used to protect workers’ health and wellbeing—by limiting the amount of surface contact by multiple workers on the plant floor, and by reducing the number of employees using the same workstations or machine interfaces.
Secure cloud-based solutions solve many of these problems and can be adopted rapidly, scaled as needed, and operated remotely. Cloud pricing models also ensure that the subscription-based pricing can easily scale as adoption increases (or decreases) to support any manufacturer’s business needs. These proven benefits far outweigh the perceived negatives of cloud solutions and, as we continue into 2021, cloud adoption for plant-floor production data will gain significant momentum as manufacturers pivot away from a position of “would consider cloud” toward a “cloud-first” mentality and strategy.
…Which Brings Us to Tactical Digital Transformation
For the remainder of 2021, I believe the single most important challenge for manufacturers will be to re-engineer their systems, architectures, and operating models to ensure that they are better prepared to respond to any future risks.
We are seeing the pace of digital transformation projects dramatically increase. Many commentators have posited that 5-10 years’ worth of digital transformation progress (measured on 2019 scales) will be achieved in the next 12-18 months (measured on 2020 scales). Enterprise-wide, strategic goals of digital transformation will become a tactical
priority throughout 2021 as manufacturers attempt to solve very specific challenges and tackle areas of weakness on a case-by-case basis using digital transformation approaches.
I believe 2021 will be the year in which data becomes widely accepted as the single most critical feature of the journey to the “new normal.”
Not just data in and of itself, but how data is captured, stored, accessed, analyzed, and utilized to ensure that manufacturers remain as agile, efficient, productive, and cost effective as possible. It will also be the year of the cloud in manufacturing.
The Year of Sustainable Resilience
My ultimate prediction for 2021 in manufacturing is that this will be the year of data and the cloud being used to deliver rapid and tactical digital transformation projects in the areas where it is most needed.
This will enable manufacturers to truly transform themselves from the “rapid response” and “firefighting” modes of 2020 to sustainable resilience
in 2021 and beyond.
I’ve been part of the manufacturing community for many years, yet I continue to be amazed at how the industry has responded to the challenges of this crisis. From front line operators to senior executives and all those allied to the manufacturing sector in the products and services they provide, it is a community of which I am proud to be a part.
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