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5 manufacturing trends driving the need for an industry cloud


2020 has been a year that we will not soon forget, filled with unimaginable change caused by the pandemic. The manufacturing industry witnessed a sea change: a significant disruption in terms of business continuity, operational visibility, remote work, employee safety, and the list goes on. However, businesses have responded and are continually adapting as we all embrace the recovery process.

We have seen manufacturers rise to unprecedented challenges and adapt new business processes, models and ways of working as they accelerate their use of digital technology through necessity and with increasing confidence in its potential and benefits.

To help you accelerate this journey, we announced our plans for the Microsoft Cloud for Manufacturing, and showcased some of our existing capabilities for manufacturers at Hannover Messe 2021: What’s next for manufacturing. We invite you to our next update on progress on our Industry Clouds at Microsoft Inspire.

Bringing together released and new manufacturing capabilities on Microsoft Azure, Microsoft 365, Microsoft Dynamics 365, and Microsoft Power Platform, the Microsoft Cloud for Manufacturing will empower your business to accelerate pandemic recovery and create operational resiliency.

Enabling what’s next with Microsoft Cloud for Manufacturing

Below are five trends that COVID-19 has accelerated in 2020 and that we expect to see persist in 2021 and beyond. These are areas where we believe Microsoft and our partners can help you connect the dots across your manufacturing operations, workforce, design and engineering processes, customer engagements, and the end-to-end value chain with the Microsoft Cloud for Manufacturing.

  1. Securing factories and field assets is essential
  2. The frontline needs retooling and reskilling
  3. The journey to product-as-a service is accelerating
  4. Partnerships and ecosystems are critical to manufacturing
  5. Resilience and sustainability are top-of-mind for all manufacturing stakeholders

Trend #1: Securing factories and field assets is essential

A pre-pandemic PwC study shows that 91 percent of industrial companies are investing in digital factories, but only six percent of all respondents describe their factories as “fully digitized.” McKinsey & Co. asked in 2019 if there would be broad-scale innovation to keep up with ‘Lighthouse’ manufacturers? It seems the pandemic may have accelerated digital factory investments. In MAPI’s 2020 study, the Manufacturer Alliance for Productivity and Innovation (MAPI) found that 62 percent of leaders surveyed are continuing smart factory investments, and allocating 20 percent more to those initiatives than last year.  

As a result, there is understandable concern about Cyber-Physical System (CPS) risk in Operational Technology (OT) and industrial control system (ICS) environments such as electricity, water, transportation, data centers, smart buildings, food, pharmaceuticals, chemicals, oil and gas, and other critical manufactured products.  

62 percent of manufacturers are concerned about securing their solutions edge-to-cloud. To strengthen and streamline the Internet of Things (IoT) and OT security, we recently announced the general availability of Azure Defender for IoT This security technology has been deployed in some of the world’s largest and most complex environments, including global 2000 firms in manufacturing, chemicals and life sciences. 

Trend #2: The frontline needs retooling and reskilling

Manufacturers cite collaboration tools as the technology they implemented most in 2020. Such tools enabled them to improve productivity for remote and frontline workers.

Manufacturers are eagerly embracing technology that can attract, train, and retain the next generation of workers, giving them the ability to address existing skills gaps and new needs to secure remote work and enhance safety for frontline workers as they build more agile factories, create more resilient supply chains and enable always-on service for their customers.

Microsoft is also doing our part to empower the next generation in today’s new digital age. For example, in June 2020, we launched a global skills initiative and reinforced our commitment to reskill the 25 million people unemployed as a result of the pandemic, and in the US we launched a new program to equip those in underserved communities to participate fully in the future of work. We have already engaged over 650,000 learners.

Trend #3: The journey to product-as-a service is accelerating

While we have been working with many of our customers for several years to realize their vision for product-as-a-service, the pandemic has only accelerated the need for always-on service.

Manufacturers are telling us there is a great need to have a fully connected system that provides one single view of their customers and assets. This will give them the intelligence to enable proactive service, accelerate agent and technician productivity, and simplify the contact center technology stack to reduce fragmentation and maintenance overhead. To that end, Microsoft has invested in the critical scenarios that manufacturers need to optimize support delivery and enhance customer satisfaction.

Trend #4: Partnerships and ecosystems are critical to manufacturing

In research conducted during the pandemic, 85 percent of manufacturers believe production ecosystems are important to the future competitiveness of their business.

Illustrating the impact of a manufacturing ecosystem with a shared mission, consider the VentilatorChallengUK. It took thirty of the UK’s biggest companies to come together—including Microsoft partners Accenture, Avanade, PTC, and Siemens—and leverage Microsoft Teams, Microsoft HoloLens and Dynamics 365 Supply Chain Management to set up a brand new supply chain and produce 20 years’ worth of ventilators in 12 weeks during the VentilatorChallengeUK. Every ventilator built has the potential to save a life. Now that is impact from a diverse and powerful ecosystem of manufacturing partners.

Trend #5: Resilience and sustainability are top-of-mind for all manufacturing stakeholders

As a manufacturer ourselves, Microsoft is on a mission to be carbon neutral and water positive by 2030 and erase our carbon footprint by 2050. But we will only find success by partnering with others to amplify awareness and develop joint solutions that benefit both the business and the environment.

Our collaboration with key manufacturers has resulted in outstanding sustainability outcomes. A group of ‘lighthouse’ manufacturing companies, identified by the World Economic Forum (WEF), in collaboration with McKinsey & Company, are leading the way here. For example, one of the WEF Lighthouses reports that Schneider Electric has reduced as much as 78 percent of their carbon footprint using Industry 4.0 technologies and Azure. And we have helped stainless steel manufacturer Outokumpu leverage AI and Azure to increase output by 15 percent while reducing quality defects by 40 percent and cutting CO2 emissions. Customers have also showcased their ability to drive new product-as-a-service opportunities while addressing sustainability, such as Buhler Group with their food safety initiatives and Ecolab who is solving the world’s water challenges with Microsoft’s cloud technologies

Stay Updated on Microsoft Cloud for Manufacturing

Looking ahead, we expect to see manufacturing organizations continue to use newly implemented technology throughout the pandemic recovery period and into what becomes the next phase of the new normal.

Join us at Microsoft Inspire for our next Industry Cloud update. 

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