By Conrad Leiva, MESA International Board Member and chair of MESA's Smart Manufacturing Working Group
Download the supplemental White Paper: Smart Manufacturing and Cloud Computing
Smart Manufacturing is not solely about optimizing production of goods, it is about creating positive value streams for everyone involved in the production process and creating valuable experiences and services for the end customer. Smart Manufacturing includes visibility and interoperability among systems, departments and partner companies, as well as a decentralized decision-making framework for the value chain. The endeavor encompasses suppliers and suppliers’ suppliers, as well as customers and customers’ customers.
Cloud Computing is one of the information technology (IT) stacks that are helping achieve the Smart Manufacturing goals. Organizations have access today to many combinations of technologies and software as-a-service whether they want to embrace a full or hybrid cloud infrastructure model. The availability of quality cloud component services that are easy to assemble into a custom application is even changing the shape of the IT department as it becomes easier for non-IT experts to assemble cloud services into custom apps. In many organizations, the IT department’s focus has shifted from developing, installing, and supporting software applications, to providing guidelines and a framework for assembling integrated enterprise applications.
The question should not be whether a manufacturing system will be on the cloud, but instead figuring out how much of the manufacturing system will be on the cloud to maximize the benefits to each organization and its customers.
Smart Manufacturing efforts to proliferate connected machines, devices, and sensors are leading to an explosion of data volume. A distributed layered system is a way to contend with this explosion and organize people-to-people connections, people-to-machine, and machine-to-machine communications. A Gartner report titled “The Edge Will Eat the Cloud” , describes why edge computing will grow as a significant part of the cloud computing strategy. Organizations can embrace this opportunity to organize communications and leverage all the resulting data at different layers, the visibility and analysis enabled will lead to new levels of visibility, capabilities, accuracy, and control.
However, Smart Manufacturing is more than just optimizing within each plant in the enterprise. It is a good start, but to realize the vision, we need to connect and optimize processes across the entire multi-tier value chain. There is a need to look at plant systems in each node of the chain and how they connect and interact across different companies and systems including customer and supply chain management to ultimately deliver the final products and services to the end-user. However, a 2017 Gartner survey  discovered that 70% of manufacturers are working their smart manufacturing efforts in parallel and not integrated with their digital supply chain endeavors. This needs to change to achieve the revolutionary productivity gains required for a fourth industrial revolution.
Following are a few more examples of leveraging cloud services as part of the Smart Manufacturing systems infrastructure.
- Embedding cloud service components. A manufacturer might start its cloud exploration small by leveraging some cloud services like credit card payment processing and traffic maps into a delivery scheduling application. For example, the IT department develops an application (app) that can be used by customers over the web to order goods and schedule pickup. Credit card payment can be offered to customers by embedding a cloud service into the internally developed app. Additionally, it can enable the customer to select different pickup locations sorted by drive time calculated based on current and planned driving conditions.
- Specialized analytics cloud service. Institutes like CESMII (Clean Energy Smart Manufacturing Innovation Institute) are making analytical algorithms via their cloud platform available to small manufacturers that could not traditionally afford to develop their own algorithms internally. These algorithms and programs might be developed under research grants by students at participating universities to optimize parameters for specific high energy consuming processes. Manufacturers can integrate their machines and systems to this cloud platform to pass data and get analysis results back via APIs. Manufacturers can either leverage this capability and manually adjust machines or embed these APIs into integrated processes that automatically adjust machine parameters.
- Cloud service as a supplier connector. A progressive manufacturer was integrating suppliers of raw materials by asking them to connect directly to their supplier management system to send and receive EDI and other B2B standard messages as part of managing procurement processes. The manufacturer is now contemplating moving this data exchange with suppliers to the cloud in a new supplier data exchange hub eliminating the need for suppliers connecting directly to its internal supplier management system. With this PaaS model, part of their own custom IT solution could be transferred to cloud infrastructure and making the APIs available to their suppliers via the cloud.
- Distributed data collection validated using blockchain. Blockchain is a technology that can be weaved into a cloud computing architecture. Blockchain creates a distributed shared ledger for recording the history of transactions. It feels like one shared ledger, but it is stored in a distributed network of ledger holders in a system that is resistant to tampering. Blockchain can help create authenticated and verified transactions in the supply chain and data tied to a product unit that will be maintained by multiple parties and cannot be edited once recorded.
The above are only a few examples of how organizations can leverage cloud services. The cloud is not an all or nothing proposition. These examples demonstrate that an organization can leverage the cloud in both hybrid and pure architectures. Each organization is different and has different value chains. Organizations can learn and take tips from others at associations like MESA International but eventually they need to develop their own Smart Manufacturing blueprint to be successful.
For more information on Cloud Computing and Smart Manufacturing, see the recently released white paper from MESA:
 Maverick Research: The Edge Will Eat the Cloud, Bittman, Gartner, 2017
 Harvest the Value of Smart Manufacturing in the Supply Chain, Not the Factory, Jacobson, Gartner, 2018
About the Author
Conrad Leiva is VP Product Strategy and Alliances at iBASEt. Conrad consults many Aerospace & Defense companies on how to streamline the paperwork and information flow among Planning, Inventory, Quality, Production and Supply Chain disciplines. Recently, his work has focused on manufacturing intelligence and the digital thread between engineering, business, and manufacturing systems working with PLM and ERP partners. Conrad is on the International Board of Directors at MESA International and is Chairman of the MESA Smart Manufacturing Working Group.