How Smart Factories Will Revolutionize Manufacturing

Factories are getting smart. How will this pivotal trend impact your business?

John Edwards, Technology Journalist & Author

November 28, 2023

4 Min Read
Smart factory or industry 4.0 concept where internet of things (IOT) helps connect robots with cloud computing and increase automation.
NicoElNino via Alamy Stock

At a Glance

  • Smart factories are coming and IT leaders need to get ready.
  • Early adopters include any organization manufacturing with legacy technology and systems.
  • Supply chain pressures and economic conditions are pushing smart factory needs even faster.

A smart factory is a highly digitalized and connected facility in which automation and self-optimization allows machinery and equipment to streamline essential processes. Smart factories provide the cornerstone for Industry 4.0. Smart factory benefits go beyond the physical production of goods and into key business functions, including planning, supply chain logistics, and product development.

A smart factory is a key component in the broader shift to comprehensive smart manufacturing operations, says Tim Gaus, a principal with business advisory firm Deloitte Consulting in an email interview. “It’s inclusive of all of the processes and tools that drive greater value both within the four walls of a factory and across a company’s supply network,” he explains. “[It] represents a leap forward from more traditional automation to a fully connected and flexible system -- one that can use a constant stream of data from connected operations and production systems to learn and adapt to new demands.”

A smart factory takes advantage of multiple technologies to make manufacturing practices completely comprehensive, observes Doug Johnson, director of product management, ERP, at smart manufacturing platform developer Plex by Rockwell Automation. “The focus is to deploy a series of technologies that will connect your entire manufacturing process ... into one safe and secure location,” he explains in an email interview. These technologies include cloud computing, big data analytics, sensors, and the Industrial Internet of Things (IIoT).

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Multiple Benefits

While smart factory adoption presents many benefits, at the highest level, organizations are engineering solutions addressing some of the world’s greatest challenges. Adopters will be better able to derive actionable insights from their operations and transfer this knowledge for future use, Gaus says. He adds that adopters also stand to gain a reliable and secure technologies base that will take their business into the future, protect their operations from malicious cyberattacks, solve problems completely in the digital world, and create improved culture and employee experiences that will boost greater transparency and trust with frontline workers.

Smart factories can benefit enterprises of all sizes and in a variety of industries, including automotive, food and beverage, consumer packaged goods (CPG), rubbers and plastics manufacturing, and electronics. “Businesses in these industries often have complex manufacturing processes with many moving parts, which makes them excellent candidates for a smart factory,” Johnson explains. Additionally, businesses that wish to reduce costs, improve efficiency, have a high focus on quality control, and want to to be very agile and responsive to change, will likely benefit from a smart factory deployment.

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Potential Adopters

Any organization with manufacturing operations that are currently using legacy systems to power their operations, as well as those that are looking to improve their efficiency, sustainability, customer experience, and overall competitive posture can benefit from smart factory and manufacturing solutions, Gaus says. “By engineering an end-to-end smart manufacturing operation, organizations can increase efficiency and sustainability, build resilience, and create new levels of growth and competitive advantage.” He adds that Deloitte’s 2023 Manufacturing Outlook report revealed that more than 60 percent of surveyed executives are now partnering with specialized technology companies to further their smart manufacturing initiatives in the coming years.

Starting Small

Getting into smart manufacturing can be daunting for many businesses. “We tell our clients to think big, start small, and scale fast,” Gaus says. “Start with the highest value investments, add improvements to your legacy processes to show ROI and overall impact, and then start to work your way to other areas.”

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Smart factory technologies are highly complex systems, which means they can be difficult to manage and expensive to implement and maintain. “Businesses need to carefully consider their available budget and ensure they have the necessary expertise and resources in place to support a smart factory initiative,” Johnson says. Additionally, selecting the right smart factory technology solution is a critical decision. “It’s essential to consider various factors to ensure the technology aligns with your goals and planned growth, is cost-effective, and will provide long-term benefits.” Key considerations include business objective alignment, scalability, user-friendliness, and reliability.

Growing Pressure

The global economy is becoming increasingly competitive as customer expectations for high-quality products rise. “Further, the skilled worker shortage, supply chain disruptions, and economic challenges are placing added pressure on the manufacturing sector,” Johnson says. He points to a recent Plex study on smart manufacturing in which twice as many respondents reported that they lack the technology to outpace their competition compared to the prior year. In the same report, 97 percent of participants reported plans to use smart manufacturing technology. “Leveraging smart technologies and adopting data-driven approaches to manufacturing,” Johnson notes, “is critical for businesses to improve their efficiency and productivity to remain competitive.”

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Supply Chain

About the Author(s)

John Edwards

Technology Journalist & Author

John Edwards is a veteran business technology journalist. His work has appeared in The New York Times, The Washington Post, and numerous business and technology publications, including Computerworld, CFO Magazine, IBM Data Management Magazine, RFID Journal, and Electronic Design. He has also written columns for The Economist's Business Intelligence Unit and PricewaterhouseCoopers' Communications Direct. John has authored several books on business technology topics. His work began appearing online as early as 1983. Throughout the 1980s and 90s, he wrote daily news and feature articles for both the CompuServe and Prodigy online services. His "Behind the Screens" commentaries made him the world's first known professional blogger.

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