The smart factory

Responsive, adaptive, connected manufacturing

About the report

In this paper, we describe the concept and key features of the smart factory, and discuss how the smart factory can drive value and realize benefits, and provide suggestions on how organizations can take steps to build a true smart factory.


Viewpoints / key findings

The smart factory is a flexible system that can self-optimize performance across a broader network, self-adapt to and learn from new conditions in real or near-real time, and autonomously run entire production processes. It has the following major features: connectivity, optimization, transparency, proactivity, and agility. Each of these features can play a role in enabling more informed decisions and can help organizations improve the production process. The sample applications of digital technology in manufacturing process are shown in Table 1 below.

Just as there is no single smart factory configuration, there is likely no single path to successfully achieving a smart factory solution. Every smart factory could look different due to variations in line layouts, products, automation equipment, and other factors. However, at the same time, the components needed to enable a successful smart factory are largely universal, and each one is important: data, technology, process, people, and security. Manufacturers can consider which to prioritize for investment based on their own specific objectives.

A number of pathways to proceed on the journey that need to be defined, planned, and executed at a pace suitable to the organization and the challenge—or opportunity. As manufacturers consider how to build their smart factory, they can begin with the following steps:

  • Think big, start small, and scale fast: Manufacturers can get started down the path to a true smart factory at any level of their network—value creation can begin with and scale from a single asset, and use an agile approach to it­erate and grow.
  • Stay grounded in the specific needs of the factory: Customizing the approach to a company’s manufacturing strategy and environment can help ensure the resulting smart factory meets the needs of the manufacturer.
  • Don’t just begin and end with the technologies: Each smart factory journey would require transformation support across solution design, technology, and change management dimensions.
  • Think outside the four walls: The smart factory solution is a holistic solution. In order to achieve a truly successful outcome, organizations should consider the full array of supply chain partners and customers from the start.

Far from being an “end state”, the smart factory is an evolving solution—one that taps into multiple features such as agility, connectedness, and transparency. At a high level, the dynamic nature of the smart factory speaks to an unending call for creative thinking: imagining the possibilities of the nearly endless configurations that a smart factory solution makes plausible. Investing in a smart factory capability can enable manufacturers to differentiate themselves and function more effectively and efficiently in an ever-more complex and rapidly shifting ecosystem.

Table 1. Processes within a smart factory

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