International political developments and a growing need for innovation are big challenges for manufacturers today. New research and the experience of a traditional manufacturer demonstrate the role cloud can play in providing a flexible, agile and secure foundation for growth.
Like many manufacturers, Sheffield-based manufacturer OSL Cutting Technologies had a number of areas it wanted to improve within its business operations, covering the purchase of raw materials, product manufacturing, international distribution and acquisitions.
In fact, recent research suggests that many UK manufacturers are facing these same challenges.
The UK's exit from the EU is obviously among them. According to the UK manufacturing monitor report, conducted by audit, tax and consulting services provider RSM, 45 per cent of respondents said it is too early to predict the impact of the UK leaving the EU. However, the referendum vote has resulted in general market uncertainty and an increase in raw material costs due to exchange rate fluctuations.
But there is a positive mood: 90 per cent of respondents in the RSM research expect growth in the next 12 months, while 80 per cent are confident about accessing finance. As a result, just over three-quarters are planning overseas expansion and around a quarter are looking at M&A opportunities.
Another major area impacting manufacturers is the need to innovate, particularly in how they interact with customers and how they develop services that are complementary to their products. The latter area, known as servitisation, can help improve customer retention and increase sales.
Despite this innovation requirement, which also includes the move towards smart factories enabled by Internet of Things (IoT) technology, just 11 per cent of respondents said they have formal innovation processes in place.
Other issues that manufacturers are contending with include the EU's General Data Protection Regulation—which is due to come into force in May 2018—and cybersecurity.
A need for flexible and agile technology
With so many challenges to address, manufacturers increasingly need an IT infrastructure that is able to support the organisation in an agile, flexible and secure way. Indeed, 52 per cent of respondents in the RSM research said they plan to upgrade key business systems.
Cloud is a key pillar of this more agile IT infrastructure. It enables business transformation through its inherent scalability and flexibility. That means capabilities can be quickly obtained and capacity can be quickly adjusted depending on need. It is also cost effective due to the lack of capital investment and ability to pay only for the computing resources that are used.
Cloud also supports international expansion, due to the reduced reliance on physical infrastructure. Essentially, cloud-based IT resources can be accessed from anywhere with an Internet connection.
Cloud for manufacturing in practice
For OSL, the opportunities provided by the cloud combined with the company’s business plan necessitated a shift to a new ERP platform.
Graeme Swift, operations manager at OSL Cutting Technologies, said: “It was apparent from the get-go that what we needed was one system which controlled our business processes from the start to the end of the process, which is why we ended up with NetSuite. What we’ve done is change a lot of our core competencies, a lot of our processes in-house from paper-based systems, old Excel spreadsheets etc., and now taken that into one platform. Now, we can see live up-to-date information across all our businesses. Going forward, as we continue to acquire other businesses, having them adopt the NetSuite platform straight away from day one will allow us to grow more efficiently and effectively.”
Using cloud-based manufacturing software from NetSuite has enabled OSL Cutting Technologies to expand its capabilities and improve its international operations. With acquisitions a major part of the business, cloud technology has given OSL Group the ability to buy businesses and drop them into its operations as easily and seamlessly as possible. It has also enabled the company to build simple reporting to drive strategic decisions, automate processes, reduce costs, and get closer to its customer base through its online platforms.
Adopting cloud technology has required a cultural shift within the organisation, as well as extensive work to improve data capture and analysis, redesign processes and create a new governance structure.
Processes have become much more efficient and effective. In OSL's Sheffield warehouse, for example, the ability to access stock and distribution information via a tablet has led to 97-98 per cent of scheduled deliveries going out each day, a significant improvement that just wasn't possible without cloud. Learn more about NetSuite for the manufacturing industry.