In Manufacturing, Momentum Swings Toward the Cloud

What a difference a couple of years makes in the manufacturing industry.

It wasn’t that long ago that cloud computing was considered to be some faraway future vision for manufacturing. Meanwhile, many manufacturers were offshoring production to reduce costs, and the sector seemed to be in decline.

Fast forward to today. Now experts are debating the finer points of cloud-based manufacturing as more small and mid-sized manufacturers abandon on-premise software in favor of an integrated Software-as-a-Service (SaaS) manufacturing solution. A recent post called "The Cloud ERP Shortlist for Manufacturers" at Software Advice summed up the trend.

“The buzz around the cloud has manufacturers asking if a cloud solution is right for them,” wrote Derek Singleton, Software Advice ERP market analyst. “The market for SaaS manufacturing software solutions will expand considerably in the coming years.”

And for the first time since 1997, U.S. manufacturers added domestic jobs in 2010—a net increase of 136,000 positions. NetSuite has been observing some of these trends in our business, and a recent review of news headlines corroborated what we’re seeing: Manufacturing is in a rebound, and momentum is swinging towards the cloud.

A recent NPR report called "As Manufacturing Demand Grows, So Do Jobs" noted that U.S. manufacturing added 33,000 jobs in February 2011 alone, contributing to a recent improvement in the unemployment rate. Those jobs are on top of the 136,000 manufacturing positions added in 2010, as reported by Wired magazine.

In its story, Wired focused on a trend of U.S.-based manufacturers re-evaluating their offshoring and onshoring strategies, with some returning production to the states from China and elsewhere. Meanwhile, BusinessWeek profiled SeaMicro, a Silicon Valley computer manufacturer that has bucked industry trends by manufacturing its products in Santa Clara. For SeaMicro, shrinking the supply chain between design and manufacturing allows the company to be faster, more dynamic and more responsive. 

These headlines underscore the ceaseless quest for efficiency and price/performance in mid-market manufacturing. They illustrate that manufacturers are looking to streamline their overall supply chain, optimize information flows to speed business processes, and eliminate points of friction.

Given these objectives, it’s no wonder manufacturing is turning to cloud computing, which gives them data that’s immediately available, consistent and complete without the cost and inefficiencies of on-premise software. Would love to hear your thoughts.

-Roman Bukary, Industries Solution Marketing

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