Cutting costs. Wastage reduction. Quick turn-around time. Quality products. This is the new talk of the companies today.
Competition between industries has tightened. Therefore, in order to remain relevant, companies have adopted lean production.
What is Cloud Manufacturing?
Before we answer that question we need to first understand what a cloud in technical lingo is.
A cloud is a network that allows you to store, manage, update and retrieve data on the internet. Cloud services are operated by cloud- providers who charge services as per consumption.
Cloud-manufacturing is the use of cloud-based software known as Enterprise Resource Planning (ERP) to track information throughout out the supply chain.
How Cloud Manufacturing / ERP Help Companies to Succeed
ERP is incorporated in lean production to help achieve company goal of maximizing profit in the following ways:
1. Wastage reduction
Cloud-manufacturing interconnects all the manufacturing processes.
This makes it easy to see which areas need to be corrected to reduce wastage.
There are seven wastes in lean manufacturing, known as the TIMWOOD wastes, or Transportation, Inventory, Motion, Waiting, Overproduction, Over-processing and the waste of Defects.
ERP also cuts down the cost of setting up an IT department, which is capital intensive. With cloud manufacturing, the cost is reduced to monthly subscriptions that are paid to the cloud providers.
2. Easy collaboration
Real-time data processing and retrieval of information are easily achieved by ERPs.
If a procurement officer needs to know the current stock level of raw materials, he will check in the system and place an order to arrive – Just-In-Time (JIT).
3. Demand-pull production
Traditionally, companies used demand push production.
This meant that production was made before customers were identified.
A need to save on the storage costs and avoid obsolete costs has led to demand-pull production, whereby a customer is first identified before production commences.
How does cloud-based manufacturing help achieve this?
The sales department sources for orders which are customized to allow for production days and feeds them to the ERP as awaiting orders.
This triggers the production department, who in turn tabulates material requirement and feeds them against the order. Production commences immediately.
To avoid the shortage of materials, procurement department always gets a notification to buy whenever materials reach the restock level.
4. Enhanced communication
Traditionally, communication was through papers that needed to be photocopied to the various users. Even with the Email era, there is always a chance that information will be sent to the wrong person. ERPs are tailored to allow for user rights and view only options. This means that your work is restricted to your function and you can only view information that is relevant to your work.
5. Continuous improvement
Lean production advocates for continuous improvement of processes to achieve high-quality production with minimum cost.
Integration of ERP helps the management to continuously review the processes and integrate changes. Whenever a problem arises, the 5 whys are used which help to correct the problem from its source.
The goal of every manufacturer is customer satisfaction. This revolves around availing the right product just-in-time.
Therefore, need for cloud-manufacturing in lean production cannot be overemphasized. This is because quality production revolves around having quality, on-time information and being able to act on the same.
Not only does ERP achieve that, it also helps in maximizing the use of available resources and keeping credit terms. This attracts not only customers but also production partners such as employees and suppliers.