IT Infrastructure for Multi-Plant Manufacturers: SD-WAN vs MPLS Cost

Introduction 

For organisations with multiple plants, warehouses, distribution centres, and offices, the wide area network does not act merely as an IT network but rather as a connectivity layer that supports anything from manufacturing processes, ERP operations, supply chains, cloud services, and IoT devices to communications among different sites. 

In the debate about SD-WAN vs MPLS costs, MPLS guarantees predictable links and good performance, although it can get expensive over time due to dedicated lines that are needed as both the bandwidth request and the number of locations grow. In contrast, SD-WAN can make use of different transport technologies, from broadband internet to LTE/5G connections to MPLS, and at the same time manage the traffic efficiently from one location. 

In most cases, replacing MPLS with SD-WAN is neither a necessary nor a feasible solution for multi-plant manufacturers. Instead, a hybrid solution can be used that maintains MPLS for the most important traffic while switching to the cheaper internet services for everything else. 

Is SD-WAN Cheaper Than MPLS? 

In several multi-site manufacturing environments, WAN expenses can be lowered via SD-WAN, which employs broadband, LTE/5G and many other internet options along with or instead of dedicated MPLS connections over an MPLS-based architecture. Nevertheless, the realisation of these savings depends on a variety of factors such as bandwidth needs, locations used, security, licensing costs related to SD-WAN, equipment used, installation costs, etc. 

TCO comparison is the right thing to do, and not mere monthly costs. 

TL;DR 

• MPLS provides predictable, private WAN connectivity but can become expensive at scale. 

• SD-WAN creates a software-controlled WAN layer that can use multiple network connections. 

• SD-WAN can combine MPLS + broadband + LTE/5G instead of depending on a single circuit. 

• Manufacturers can potentially reduce connectivity costs while improving bandwidth flexibility. 

• SD-WAN can also centralise network management across geographically distributed plants. 

• Security must be designed carefully because internet-based connectivity introduces additional exposure. 

• A hybrid SD-WAN + MPLS model can be appropriate for plants with strict reliability or application requirements. 

Why WAN Infrastructure Matters for Multi-Plant Manufacturers 

A manufacturing-wide area network (WAN) links manufacturing facilities with corporate sites to the different applications and systems that they use on a day-by-day basis. 

For example, a manufacturer with multiple plants may require connectivity to: 

• Manufacturing sites 

• Corporate headquarters 

• Regional sites 

• Warehouses 

• Distribution centres 

• Supplier location 

• Cloud computing facilities 

• Data storage sites 

• Remote engineering teams 

These sites may use applications such as: 

• ERP systems 

• Manufacturing Execution Systems 

• Warehouse Management Systems 

• Enterprise Resource Planning systems 

• Industrial IoT platforms 

• Video surveillance systems 

• Voice and video communication systems 

• Cloud computing applications 

• CAD and engineering applications 

It is important to highlight that equipment failure not only disrupts the email exchange process or office productivity. 

It is also true that the ability to operate is a key factor for manufacturers because connectivity affects production visibility, stock management, plant monitoring, transportation issues, and communications. 

What Is MPLS? 

MPLS (Multiprotocol Label Switching) is a WAN technology that manages traffic over predetermined routes in a service provider's network. 

MPLS has been frequently chosen by businesses due to its ability to provide reliable connectivity between locations. Cisco refers to MPLS as an age-old protocol for transporting packets through business networks. 

Why manufacturers use MPLS 

MPLS can be useful when a manufacturer requires: 

• Predictable network performance 

• Managed connectivity 

• Defined service-level agreements 

• Consistent latency 

• Private WAN connectivity 

• Connectivity for business-critical applications 

However, MPLS generally requires dedicated circuits at the locations that need access to the MPLS network. 

The scalability challenge 

Imagine a manufacturer with 20 plants. 

If every plant needs additional bandwidth, adding capacity through dedicated MPLS circuits can increase recurring connectivity expenditure. 

The problem becomes more significant when: 

• Plants are geographically dispersed. 

• Cloud usage is increasing. 

• Video and IoT traffic are growing. 

• New facilities need to be connected quickly. 

• Multiple redundant links are required. 

What Is SD-WAN? 

SD-WAN, or Software-Defined Wide Area Network, is a software-controlled WAN architecture that can manage multiple underlying network connections from a central control layer. 

Unlike an architecture dependent on one type of circuit, SD-WAN can work across different transports such as: 

• MPLS 

• Broadband 

• Dedicated internet 

• LTE 

• 5G 

IBM describes SD-WAN as a virtualised WAN architecture that centralises management and allows organisations to optimise connectivity across different network infrastructures. 

How SD-WAN works 

An SD-WAN platform evaluates network conditions and application requirements to determine how traffic should be handled. 

For example: 

Production-critical traffic → preferred high-quality link 

ERP traffic → prioritised path 

Video conferencing → dynamically optimised connection 

General internet traffic → broadband connection 

This application-aware approach is one of the reasons SD-WAN is increasingly considered for distributed enterprise networks. 

SD-WAN vs MPLS Cost Comparison 

The biggest difference is that MPLS is primarily a network transport technology, while SD-WAN is a software-defined networking layer that can manage multiple transports. 

Important: SD-WAN is not automatically cheaper. Its TCO depends on licensing, hardware, connectivity, security, implementation and support. 

What Makes MPLS Expensive for Manufacturers? 

1. Dedicated bandwidth 

MPLS bandwidth is typically provisioned through carrier circuits. As plants require more capacity, recurring connectivity costs can increase. 

2. Multiple locations 

A manufacturer with dozens of facilities may have dozens of WAN circuits to manage. 

3. Redundancy requirements 

If a plant requires two independent WAN connections, the business may need additional circuits and associated costs. 

4. Cloud traffic 

Modern manufacturing environments increasingly use cloud applications. 

Traditional hub-and-spoke architectures can route traffic through central locations before reaching cloud services, potentially adding latency and consuming WAN capacity. 

5. Expansion 

Opening a new manufacturing facility can require connectivity planning, carrier availability checks, installation and configuration. 

This can make WAN expansion slower and more expensive than using readily available internet services. 

How SD-WAN Can Reduce Network Costs 

SD-WAN can reduce WAN costs by allowing organisations to combine lower-cost connectivity options with intelligent traffic management instead of relying exclusively on expensive private circuits. 

1. Use broadband alongside MPLS 

A plant could use: 

• One MPLS connection 

• Two broadband connections 

• LTE/5G as additional backup 

SD-WAN can manage these connections as part of a unified WAN strategy. 

2. Increase bandwidth without relying entirely on MPLS 

Instead of upgrading an MPLS circuit whenever bandwidth requirements increase, organisations can potentially add broadband capacity where application and security requirements allow it. 

3. Reduce manual network management 

Centralised SD-WAN management can simplify configuration and monitoring across distributed locations. 

4. Improve link utilisation 

SD-WAN can make use of multiple available connections instead of leaving backup bandwidth idle under normal circumstances. 

5. Simplify new-site deployment 

Some SD-WAN architectures support zero-touch provisioning, allowing network equipment at a new location to be configured centrally. 

Manufacturing Use Cases 

1. ERP and MES Connectivity 

Manufacturing plants depend on ERP and MES platforms for production planning, inventory, orders and operational visibility. 

SD-WAN can prioritise application traffic based on defined business policies. 

2. Industrial IoT 

Connected machines can generate large amounts of data. 

SD-WAN can help organisations manage traffic across different connectivity paths while maintaining centralised visibility. 

3. CCTV and Video 

High-resolution video can consume significant bandwidth. 

Instead of sending every type of traffic through an expensive private connection, traffic can be segmented and prioritised according to business requirements. 

This approach can reduce dependence on a single connectivity type without forcing every site into the same network design. 

Step-by-Step: How to Compare SD-WAN vs MPLS Cost 

Step 1: List every location 

Create a complete inventory of: 

• Plants 

• Offices 

• Warehouses 

• Distribution centres 

• Data centres 

• Remote facilities 

Step 2: Document bandwidth requirements 

Record current and expected bandwidth for every site. 

Consider: 

• ERP 

• MES 

• IoT 

• CCTV 

• Voice 

• Video 

• Cloud applications 

• Backup traffic 

Step 3: Calculate current MPLS TCO 

Do not look only at monthly circuit charges. 

Include: 

• MPLS circuits 

• Installation 

• Router costs 

• Maintenance 

• Managed services 

• Support 

• Redundant circuits 

• Security appliances 

• IT administration 

Step 4: Build an SD-WAN TCO model 

Include: 

• SD-WAN appliances 

• Software subscriptions 

• Broadband 

• Dedicated internet 

• LTE/5G 

• Security licences 

• Deployment 

• Monitoring 

• Support 

• Training 

• Migration 

Step 5: Calculate downtime impact 

Ask: 

What does one hour of network downtime cost the plant? 

Consider: 

• Production delays 

• Lost orders 

• Idle employees 

• Logistics disruption 

• IT recovery 

• Customer impact 

Step 6: Compare three scenarios 

Build separate models for: 

1. MPLS-only 

2. SD-WAN with internet 

3. Hybrid SD-WAN + MPLS 

This gives management a more realistic picture than comparing circuit prices alone. 

Benefits of SD-WAN for Multi-Plant Manufacturers 

Cost flexibility 

Businesses can potentially reduce dependence on expensive private WAN circuits. 

Better scalability 

New plants and warehouses can be integrated using available connectivity options. 

Centralised management 

Network policies can be managed from a central platform. 

Application awareness 

Critical applications can receive specific traffic policies. 

Connectivity redundancy 

Multiple WAN links can provide additional resilience. 

Cloud optimisation 

SD-WAN can help organisations manage traffic between plants and cloud applications more efficiently. 

Operational visibility 

Centralised monitoring provides greater visibility into application and network performance. 

Limitations and Risks 

SD-WAN is not a magic replacement for every MPLS deployment. 

1. Internet quality varies 

Underestimating migration costs 

Budget for: 

• Deployment 

• Testing 

• Training 

• Monitoring 

• Support 

• Temporary parallel operation 

Best Practices for Multi-Plant SD-WAN Deployment 

1. Segment IT and OT traffic. 

2. Define application priorities before deployment. 

3. Use redundant connectivity for critical facilities. 

4. Measure latency, jitter, packet loss and availability. 

5. Build security into the architecture. 

6. Start with a pilot plant. 

7. Maintain clear rollback procedures. 

8. Standardise configurations where possible. 

9. Monitor application performance continuously. 

10. Review WAN costs regularly as bandwidth requirements change. 

Expert Tips for Calculating SD-WAN ROI 

The strongest SD-WAN business case combines direct savings and operational savings. 

Direct savings 

Calculate reductions in: 

• MPLS circuits 

• Bandwidth charges 

• Hardware 

• WAN maintenance 

Indirect savings 

Consider: 

• Reduced troubleshooting time 

• Faster site deployment 

• Improved visibility 

• Less manual configuration 

• Lower downtime exposure 

• Better utilisation of existing links 

A manufacturer should therefore compare: 

SD-WAN TCO = Connectivity + Hardware + Licences + Security + Support + Deployment + Operations 

against: 

MPLS TCO = Circuits + Hardware + Security + Support + Redundancy + Operations 

Real-World Examples 

The possible financial advantage is more than just a hypothesis. 

Fortinet’s case analysis highlighted a situation in which HR Path was able to replace its MPLS setup with Secure SD-WAN, yielding a saving of at least US$13,000 annually for each location. 

Another example can be drawn from Pacific National, which had its SD-Branch implemented at 86 different locations. The organisation has improved network functionality, availability and reliability while the CIO claims that network charges have been halved. 

Manufacturing serves as a comparable example as well. A new Cisco case study about Nestlé provides detailed information regarding its international network, including about 1,700 locations, very costly MPLS connections, insufficient tools and performance difficulties. 

These cases demonstrate the importance of making a proper evaluation of the SD-WAN system based on each individualorganisation’ss circumstances and needs. 

Key Takeaways 

SD-WAN vs MPLS cost should be evaluated using total cost of ownership rather than circuit price alone. 

The key considerations are: 

• MPLS offers predictable managed connectivity. 

• SD-WAN can use multiple network transports. 

• SD-WAN can potentially reduce WAN connectivity costs. 

• Hybrid SD-WAN + MPLS can preserve private connectivity where it matters. 

• Broadband and 5G can provide additional bandwidth and redundancy. 

• Centralised management can reduce operational complexity. 

• Security and OT segmentation are essential for manufacturing. 

• The right architecture depends on application requirements, geography and business-criticality. 

9. Should a manufacturer use SD-WAN at every plant? 

Not necessarily. Site requirements differ. A large production plant may require different connectivity and redundancy from a small warehouse or sales office. 

10. What is the biggest mistake when calculating SD-WAN ROI? 

The biggest mistake is comparing only the monthly MPLS bill with the price of an internet connection. A proper analysis should include the complete TCO and operational impact. 

Conclusion 

For multi-plant manufacturers, the discussion around SD-WAN versus MPLS is ultimately about network architecture, not about connectivity prices. MPLS is able to provide reliable connectivity for applications and locations requiring that type of network service, but SD-WAN offers manufacturers the freedom to use MPLS together with broadband, internet and wireless data. This makes a hybrid SD-WAN architecture particularly valuable for organisations moving away from traditional WAN networks to cloud-based manufacturing processes. The best way to come to a decision is to model three cases: MPLS-only, SD-WAN, and hybrid SD-WAN + MPLS, based on real-life requirements from the locations, application traffic, carrier pricing, security needs and cost of maintenance. 

We aim not just to replace MPLS but rather to create a WAN that will provide the desired quality, reliability, security, scalability, and cost of service for each manufacturing location. Planning a WAN upgrade across multiple manufacturing plants? Start with a detailed assessment of your current connectivity, bandwidth requirements, application traffic and network costs. A structured SD-WAN vs MPLS TCO assessment can help identify where MPLS should be retained, where broadband or cellular connectivity can be introduced, and where a hybrid architecture can improve network flexibility. 

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