Five cloud trends in UK manufacturing
The UK is the ninth largest manufacturing nation in the world, with an annual output of £183billion, according to analysis from Make UK – and employs around 2.5 million people. The vast majority of manufacturing firms (264,647 out of 270,000) are small or medium-sized, and continued innovation of products and processes is what drives the most successful ones forward.
Much has been said about the digital transformation of manufacturing (or Industry 4.0) but it seems that the recent supply chain crises have left firms more determined than ever to increase resilience using data-driven technologies. According to one survey, investment in the cloud is now a top priority for 67% of respondents in 2022, followed by Internet of Things (IoT) and predictive analytics (both 61%).
For manufacturers at the start of their digital journey, a cloud-based ERP for small businesses is a powerful way to unlock the benefits of digital technology, yet it’s also low-cost and low-risk.
Although ERP (Enterprise Resource Planning) software has been around for decades, today’s systems have evolved to meet the needs of modern manufacturers. SaaS ERP (software as a service) is available via a subscription plan, removing the need for expensive servers on-site and making it accessible from anywhere. It links customers, suppliers and manufacturers together via open APIs and web portals. Looking ahead, it could also support advanced technologies, like artificial intelligence (AI) and IoT.
As the appetite to move to the cloud grows, what are the key trends to be aware of?
1. Cloud computing is growing for the sector
Almost one third of all UK businesses in the manufacturing sector, who employ more than 10 people, had invested in cloud-based business software by 2020 – compared to 18% who purchased it in 2018.
Cloud software may not be new in itself but, until recently, it was only being used by a relatively small portion of manufacturers. Some were still encumbered by legacy systems, or they might be yet to implement their first ERP. However, all signs suggest that the move to the cloud will continue to gain momentum, as firms realise that failing to do so means they can no longer compete.
The subscription-based model of cloud systems makes it pain-free for small businesses to try – opening it up to those who’d previously been nervous about investing in an on-premise system with long implementation times and high upfront costs. A SaaS ERP is not just cheaper and quicker to implement but the provider is also responsible for storing all the data securely and maintaining the system. This means far lower ongoing costs over legacy systems.
Of course, people’s need to work and access data remotely during the Covid-19 pandemic helped drive growth of the cloud computing market. Now businesses have discovered its advantages and don’t want to go back, especially given the recent supply chain disruption. The technology is enabling them to increase agility and resilience, and future-proof their operations. Those who have moved to the cloud, or in the process of doing so, should therefore be in a stronger position to grow and retain their market share.
2. Ecommerce is the golden key to higher profit
Covid-related lockdowns have led to a fundamental shift in the way we all buy goods, leading to a boom in ecommerce.
As many businesses that otherwise wouldn’t have ventured into ecommerce turned to it to support their sales and income during the lockdowns, when normal trading was either severely restricted or impossible, they now have that function permanently. This applies just as much to B2B businesses as B2C – to such an extent that 80% of B2B transactions are predicted to take place online by 2025, according to Gartner.
This is not the only reason for ecommerce’s growth, and nor is the lower overheads and improved profit margins over traditional retailing. Buyer behaviour and preferences play a considerable role, as purchasing components and materials online gives them more opportunity to browse product lines, save time and compare prices.
3. Cloud security has evolved
Some manufacturers have been concerned that moving their production, financial and HR data online ‘to the cloud’ increases their risk of a cyber-security incident, compared to storing it locally. However, the irony now is that security is one of the top benefits of cloud-based ERP for small businesses.
Good providers uphold the highest security standards, both from remote access by encryption and in the physical security of their data centres. A large provider will even be able to duplicate data in different locations, thanks to its ability to store data in several locations, minimising the chances that companies will lose it in the event of a cyber-attack. Users of cloud-based software also benefit from cyber-security experts who are always monitoring and responding to new threats, so the in-house IT team doesn’t have to.
All this means that cloud systems can now be far more secure than an on-site server rack in the corner of an office building.
4. Smart manufacturing
The concept of the smart factory is gathering momentum and some larger manufacturers, particularly in the automotive industry, have undertaken ambitious projects to make it a reality.
While few (if any) businesses operate true smart factories yet, many are laying the foundations for connected systems and machinery through their cloud manufacturing ERP systems. They’re speeding up their decision-making by using data-driven insights, and automating their processes to save time and money, reduce errors and improve customer and supplier relationships.
Software that supports data analytics can be integrated into manufacturers’ operations to work with fully automated robotic systems. By doing so, they can blend together a human workforce and technology, with the former concentrating on value-added work and the latter doing the heavy lifting.
Linking together automated data analytics from all over the business together in one cloud-based manufacturing ERP enables managers to view key information in real time, so they can quickly see where bottlenecks are occurring and where processes could be more efficient and productive.
5. New tech drives growth
As already mentioned, adoption of cloud technology by manufacturers is growing. Many see it as a way to tackle long-standing challenges that have worsened in the past couple of years, such as labour shortages and rising costs.
ERP software can help small businesses in the UK have an advantage over their (sometimes larger) competitors, and even those from overseas. Manufacturing ERP software enables them to identify and address inefficiencies they might not have known previously, such as paying over the odds for materials. With the time their ERP saves them, small manufacturers in the UK have more time, resources, and money to focus on new ways to grow, and identify new opportunities to grow their customer base through cross or upselling, or diversification.
While some manufacturers are concerned about the time it takes to implement a new system, and the upheaval it could cause, it’s important to remember that rapid implementation is the hallmark of a good ERP. Fortee, for example, can go live in just 40 days, with staff being trained on and using the system from the start so that it delivers value.
Compared to some other new technologies, cloud-based SaaS ERP systems have been refined, are well-proven and ready for use by small businesses. This should provide the reassurances that manufacturers need to propel their business to the next level, with minimal risk and maximum rewards.
Fortee is a brand new ERP solution from Forterro, developed for small-scale manufacturers in key industries such as metal, electronics, furniture-making, medical devices and others. Cloud-based, it is low-cost and zero-risk, with an implementation and training time of just 40 days.