Rockwell Automation Embraces Cloud Based Manufacturing Business Digitalization

Rockwell Automation embraces cloud-based digitalization of entire manufacturing businesses with the acquisition of Plex Systems for $2.22 billion. PLEX Systems comprehensive cloud-based SaaS (System as a Service) manufacturing business solution provides any size manufacturer with an efficient way to achieve integrated digitalization of all functions, including Enterprise Resource Planning (ERP), Manufacturing Execution System (MES/MOM), Quality Management System (QMS), Analytics and Industrial Internet of Things (IIoT), and Supply Chain Management (SCM). This addition means Rockwell Automation is a full-service provider for manufacturers of all sizes complementing the company’s current software & controls, intelligent devices, and lifecycle services offerings.

Enabling small and medium enterprises (SME) manufacturers

The PLEX Systems offering provides all size manufacturers a cost-effective means to achieve complete manufacturing business digitalization. This is particularly important for small and medium manufacturers that could not afford the scale of investment required to gain these benefits. Plex Systems cloud-based offerings provides Small and Medium Enterprises (SME) manufacturers the opportunity for complete manufacturing business digitalization. In the past, the large investment required to have these capabilities was beyond the financial capacity of SMEs. Smaller manufacturing companies are an important part of industry. In the United States, companies with fewer than 100 employees make up more than 94% of all U.S. manufacturers. In Europe, there are approximately 22.6 million small and medium-sized enterprises (SMEs) in the European Union in 2021.

I have been following Plex Systems since 2013 and interviewed a user, Hiawatha Rubber, a company with fewer than 50 employees and was very impressed. The increased efficiencies achieved were a fundamental part of Hiawatha’s competitive strategy, improving operations and successfully pursuing new growth markets that contributed to increased margins to generate record profits in the first 18 months. Hiawatha implemented Plex Systems cloud-based solutions in five months, resulting in eliminating non-value add activities and increasing margins to generate record profits in the first 18 months. Read more about it in this article.

Manufacturing success factors

The success factors in manufacturing are changing, making it imperative that all size companies use automation and business digitalization as a strategic tool to compete to achieve competitive costs, increased productivity and quality. A company can successfully compete only if it outperforms rivals by delivering greater value to customers, creating comparable value at a lower cost, or both. Automation in business digitalization is the best way to achieve this goal over the long term by improving sustainable operational effectiveness. Waiting until competitors make these investments manufacturers make themselves vulnerable, keeping them in catch up mode.

Rockwell organization fit

I discussed this with Rockwell’s Brian Shepherd, Senior Vice President Software and Control to understand how PLEX will fit in to the organization.

Rockwell’s Brian Shepherd, senior vice president Software and Control, discussed the PLEX acquisition.

Regarding the acquisition, Rockwell Automation Chairman and CEO Blake Moret stated, “Combining Plex’s cutting-edge cloud technology with Rockwell’s existing software portfolio and domain expertise will add customer value and create more ways to win."

I asked Shepherd about this combination. He said, “PLEX fits like a puzzle piece perfectly into the FactoryTalk Operations Hub software." When asked about customers who already had ERP and other elements offered by Plex, he commented, “Plex gives us two options. Companies that have larger and more mature IT infrastructure and capabilities that already have an ERP and supply chain system Plex provides integration for other manufacturing capabilities including manufacturing execution and quality.”

“PLEX fits like a puzzle piece perfectly into the FactoryTalk Operations Hub software." -Brian Shepherd

PLEX is particularly interesting since it scales from very small manufacturers to large which is a good fit for the range of Rockwell Automation customers. Shepherd described how the offerings will be sold and delivered to users: “In addition to Plex the offerings will be sold by Rockwell Automation and its distributors.” In North America, Rockwell Automation Distributors have relationships selling traditional electrical and control products to the majority of all size manufacturing organizations for years.

I asked how Rockwell Automation will provide assistance to customers, particularly small and medium manufacturers, since many of the Plex functions require consultant help to implement. Shepherd described how consulting services are under the Rockwell Automation Lifecycle Services group. It’s worth noting that in 2020, Rockwell Automation reorganized its operating segments into three new operating segments with lifecycle services being significant.

Shepherd views this as a large and exciting opportunity. “It is a transformation for Rockwell to grow from automation roots to take a bigger, more significant, more strategic position across manufacturing at our customers," he said.

Thoughts & observations

The entire manufacturing industry is experiencing major changes with key factors for success changing with the influx of technologies enabling greater efficiencies. New levels of automation and digitalization are shifting the playing field with low labor cost no longer a winning strategy. Cloud-based SaaS (System as a Service), edge computing, innovative sensors and Internet of Things technologies are leveling the playing field enabling manufacturers of all sizes to compete.