Seven misconceptions about smart factories

Sheila Zabeu -

September 17, 2021

No, there isn’t (yet!) a test that measures the Intelligence Quotient (IQ) of manufacturing centers, but a report recently published by IoT Analytics takes an in-depth look at three main elements any project involving smart factories should consider: processes, people and technology. Covering 10 case studies in detail, the study “Smart Factories Insights Report 2021” presents the technologies deployed and the objectives achieved, as well as providing an overview of smart factory maturity models.

The research gathered 80 factories and, from commonalities between them and their best practices, defined smart factory as “a holistic transformation of people, processes, and technologies in conjunction with the use of data to achieve the intended performance and business objectives of one or more production centers”.

“The ‘intelligence’ of a factory is measured from a set of factors. Factories of all shapes and sizes can assess their maturity and begin their journeys, for example, using digital maturity models such as the Acatech model or Fraunhofer’s I4.0 assessment model, which are discussed in the report. According to our research, this amorphous nature of smart factories has led to seven common misconceptions,” says Sharmila Annaswamy, senior analyst at IoT Analytics.

As the smart factory example, according to the study, Moderna has demonstrated that investing in production technology, personnel and processes can yield huge dividends. The current generation of smart factories is not necessarily characterized by high-tech greenfield facilities.

Reminiscent of a children’s game where we are challenged to point out seven mistakes in a pair of nearly identical drawings, the executive highlights seven common misconceptions about what it takes to make a factory smart:

1. Imagine that smart factories must be created from scratch. IoT Analytics research shows that many facilities already in operation (called brownfield versus greenfield, which is built from scratch) can also become smarter. Providers of industrial automation solutions can help in this endeavor.

2. Only large organizations can have smart factories. Being small and budget-constrained is no reason to be discouraged. There are ways to help smaller companies not to fall behind in the smart factory race. For example, non-profit initiatives such as Smart Factory OWL and Smart Factory KL (in German) allow manufacturers to learn about and test technologies and discuss solutions with professionals in the field. In addition, pay-per-use (or as-a-service) models are emerging that can bring the concept and practice of smart factories closer to SMEs.

3. There is a single model for all types of factories. The research identified not just one, but eight typical smart factory performance and business objectives, which were grouped into three types: operational, commercial, and R&D. And each of these groups has a different type of deployment. For example, there are factories that want to increase the agility of operational processes and thus generate more value. Moderna’s project was one such case, and its design ended up resulting in very high dividend payments to shareholders – the company’s shares were valued at less than $20 at the end of 2019 and are trading in 2021 for $400.

4. Smart factory initiatives are primarily about technology. It is true that technology is an essential part of smart factories, but it is not the only piece, according to the IoT Analytics survey. There are less tangible aspects, mainly related to people and processes, that need to be addressed in projects. One very important concept is change management, which should ensure transparent transformation processes and make employees feel included.

5. Smart factory projects replace existing continuous improvement measures. Smart factory initiatives need to work in tandem with process improvement solutions such as Six Sigma and Lean Manufacturing), rather than replacing them.

6. Transferring successful initiatives from one factory to another is easy. Each production environment has its own particularities and therefore smart factory approaches often vary. Some companies find it easier to first try out some technologies and use cases in a plant already in operation before building a new smart factory from scratch. This is what happened with Siemens’ Amberg plant and its new factory in Chengdu, China. Other companies use a different approach, building a new factory and adopting it as a core element in their smart factory strategy.

7. Smart factories must be fully automated. Contrary to what one might imagine, automation is not a prerequisite for smart factories. Data, rather, is the fundamental basis for all smart factory use cases, says the study. It is the technologies for capturing, orchestrating, and analyzing data that will enable production centers to make faster, better-informed intelligent decisions.

The global smart factory market is expected to reach $330.1 billion by 2028, according to a new report by Reports and Data. Easier monitoring reduced waste and accelerated production are some of the key benefits sought.

Given rapidly changing customer preferences and the availability of promising technologies, companies of all shapes and sizes can (and should) have a comprehensive smart factory strategy in 2021 – regardless of their current digital maturity. The message is clear: companies that have already embarked on their smart factory journey will continue to adapt better to the dynamic business environment and grow faster than those that have not.

IoT Analytics’ own study gives the recipe for investing in the model properly.

  • Action point 1: focus on a use case, not a technology. Out of the many use cases that exist, choose an applicable use case of high ROI and high benefit, and then experiment with the appropriate technologies. (Note: IoT Analytics has conducted several IoT use case analyses and measured the ROI of each one).
  • Action point 2: Don’t wait for employee engagement. Involve frontline workers from the very beginning of the smart factory project. Ease their doubts through transparent communication and empower them through skills enhancement efforts. Communicate, communicate, communicate.
  • Action point 3: Tie the smart factory to an existing process improvement initiative. Support the initiative with smart factory technologies to make processes more efficient with technology.

The transition to Industry 4.0 will depend on the successful adoption of many new technologies. To accelerate smart manufacturing, digital twins of machines and operations will be a necessity, as will factory automation and real-time control of equipment and tasks. For example, Ericsson’s Tallinn plant has demonstrated that augmented reality problem solving, reduced average fault detection time, combined with better ergonomics and faster information sharing, can increase productivity by up to 50%.

Industry 4.0 will help make smart machines smarter, factories more efficient, processes with less waste, production lines more flexible and productivity higher. Built on smart, secure, and wireless connectivity, there are opportunities to extend machine life through predictive maintenance, support fast material handling, monitor every detail on the shop floor, and leverage collaborative robots simultaneously with mobile communication. This will help factories achieve their goal of becoming fully automated factories.

Each industrial infrastructure has its own set of monitoring requirements, depending on how it is set up, the nature of the production process, and so on. In fact, there are many variables that come into play, so there is certainly no one-size-fits-all approach to be recommended. Instead, it all comes down to defining the goals and actions you need to take in your environment. What goal do you need to achieve and what do you need to know to achieve it.