Smart Factory – The Internet of Things in Automation

IMG_3267With the growth of IT connected technologies, the factory of the near-future is expected to work quite differently than the one of today. The smart factory concept is increasingly discussed in relationship to the industrial sector. So what exactly is a smart factory and why it is so important? While there is no official definition of smart factory, the term is generally used to mean a production facility that is highly digitized and connected. The smart factory concept is often thought of as the outcome or vision of the fourth industrial revolution or Industry 4.0.


The defining characteristics of the smart factory are visibility, connectivity and autonomy. Factories have long relied on automation, but smart factories take this concept much further and are able to run without much human intervention. Through the use of modern technologies, the smart factory systems can learn and adapt in near real time or real time, enabling factories that are far more flexible than those of the past.

Extensive use of Industrial Internet of Things (IIoT) provide increasingly sophisticated analytics and smart applications based on AI and machine learning take over much of the routine management tasks, enabling workers, managers and executives to focus on handling exceptions and making sound strategic and tactical decisions.

Smart technology

Used by manufacturing companies, a smart factory works by employing technology such as artificial intelligence (AI), robotics, analytics, big data and the internet of things (IoT) and can run largely autonomously with the ability to self-correct.

Increasingly sophisticated analytics and applications based on AI and machine learning handle many of the routine tasks, freeing up people to focus on handling exceptions and making higher-level decisions. Robots are expected to populate smart factories for routine work, working alongside people.

Smart autonomy

Extensive use of IoT sensors and devices connects machines and enables visibility into their condition as well as into factory processes, creating an industrial internet of things (IIoT). 

Production machines participate in the manufacturing execution system’s local network to receive orders, report progress, access work instructions and interact with the quality and traceability systems. Plant floor workers have ready access to schedules, instructions, quality data, inventory status and demand changes. The entire enterprise, including engineering, sales and marketing, executives, field service, materials and planning, accounting and even customers and suppliers are electronically linked to monitor needs and activities, collaborate across the extended enterprise and work together to increase speed and efficiency.

Smart sensors

Given that one of the most fundamental characteristics of a smart factory is its connectedness, sensors are critical to linking devices, machines and systems to provide data needed to make real-time decisions. In a similar way that smart home devices accomplish routine actions like dimming lights at a certain time or triggering alerts when something is amiss, the ideal smart factory runs itself on a much larger scale, self-correcting where appropriate and alerting for human intervention where needed. In addition, the extensive amount of data provides real-time insight to supply chain stakeholders, both inside the factory and to the business and partners. In this way, agility can increase exponentially and issues can be addressed proactively. Already, IoT technologies have helped to monitor industrial operations, provide supply chain visibility and predict equipment downtime.

As the vision of the smart factory concept unfolds, expectations are that smart factories will be able to greatly reduce or eliminate defects and unplanned downtime, reduce waste and optimize output and efficiency.

Smart factory concept near-future

While this may all sound like a futuristic vision, the technologies needed to bring this smart factory concept to life are available and in use today, and a growing number of manufacturers are enjoying the benefits of digital manufacturing and IIoT visibility. Technology continues to evolve, of course, and a broader footprint, tighter integration and more automation are certainly in the works. Major developments in human-machine interfaces, including better analytics, augmented reality and voice technology, will serve to bring the people, the factory and the supply chain closer together in the foreseeable future.

A recent report by Capgemini’s Digital Transformation Institute suggested that the industrial manufacturing, aerospace and defense, and automotive industries are most aggressively pursuing smart factory initiatives. The report stated that 76% ofmanufacturers are either planning or pursuing a smart factory initiative, and smart factories could add more than $1 trillion in value to the global economy in five years.

Technologies to create a version of the smart factory already exist and early adopters are exploring the benefits. However, a number of challenges block widespread adoption, with data integration arguably the primary challenge. To create the ideal connected manufacturing and digital supply network embodied by the smart factory requires dealing with massive amounts of data from different components in diverse industries and in different formats. Numerous other challenges exist, from cost to business leader buy-in.

With the rapid pace of technology developments building in this area, including in human-machine interfaces and better analytics, more businesses are expected to look for ways to create their own smart factory endeavors.