Industry 4.0, or the so-called “fourth industrial revolution”, puts heavy emphasis on the role of automation and the Internet of Things in digitizing and streamlining the entire production process, thereby resulting in an ideal factory, where delays are eliminated or, at best, minimized, wastage are kept to a minimum, and efficiencies are improved without compromising product quality. This is known as the “Factory of the Future” or, to put it in simpler terms, the “Smart Factory”.

Things to Consider when Designing and Operating a Smart Factory

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In this article, you will learn about 1) what the smart factory is, as well as 2) designing and running a smart factory.


The Smart Factory also goes by other names, which basically mean the same thing. The more popular ones include “Smart Manufacturing” and “Intelligent Factory”. The names that are more in use, however, are “Smart Factory” and “Factory of the Future”.

There are several ways to define and describe the Smart Factory. Some describe it as a factory that will be comprised of systems that are significantly more intelligent and dynamic than the systems currently in use in manufacturing processes. Others say it is a factory that is certainly more flexible, and operates under the concept that the processes will be interlinked across networks.

When we speak of factories getting smart, it means that these manufacturing concerns will focus more on utilizing their best talent, and establishing or building industrial infrastructure that are designed to handle increased connectivity among all sensors and devices that are involved in a complete production line. This connected factory design that has become associated with the phrase “Smart Factory” is expected to increase growth and add value to the entire production chain.

Factories of today follow a certain system, depending on the nature of the operations and functions, and they are organized accordingly. However, in the Smart Factory, which is designed to be more intelligent and flexible, the organization will be done in a different manner. The difference lies in the use of networking. It also has a broader application, since the organization is not done on a per process basis. Instead, entire production chains are connected with each other.

The usual system would have, for example, the suppliers and logistics working separately from the product development process. In the same manner, factory and production planning will deem itself to be independent from the enterprise resource planning. Within the Smart Factory, their functions will impact each other.

The present setup of factories also follows a fixed program of operations, which could be very limiting and restrictive. As such, they are not allowed to deviate from what has been previously planned or programmed, even if doing so would enable production process to have improved efficiencies. In a setting that adapts the Smart Factory, processes can be easily improved as they, as well as the machinery and various equipment in use within the process, are designed for self-optimization. Decision-making will also be quick, since autonomy is granted within the processes.

Benefits of Smart Manufacturing

There are many reasons why manufacturers would feel compelled to make that transition to smart manufacturing and set up their own “factory of the future”.

Real-time capability and results

Smart manufacturing enables real-time collection of data, real-time analysis of the same, and consequently real-time decision-making.

This is considered to be the ultimate reason why anyone would want to have a Smart Factory. Taking advantage of the benefits of connectivity, networks and communication sensors, to name a few, will cut through the usual “long-way-around” operations. In any manufacturing process, time is considered to be money, and the more time that is spent unnecessarily on a single phase of the process is money wasted.

Streamlining operations

How many times have we come across manufacturers hitting themselves over the head once they realize they are spending a lot more than they should on production processes that are not really necessary, or could be simplified? Smart manufacturing makes streamlined operations possible, so the company will have more savings.


The overall efficiency of the production process – and the organization as a whole – will greatly benefit from the application of smart manufacturing concepts. This is closely related to the results of having streamlined operations. Perhaps this is most apparent in energy consumption. For example, the energy consumption on the old production process can be cut down in almost half once the whole process has been reevaluated and shortened considerably by doing away with stages that are not required or combining complimentary phases together.

Employee safety and comfort

It is a fact that not all factories are really employee- or worker-friendly. It could be that the workers directly involved in the production process find their work environment unsafe or uncomfortable. With the streamlining of operations, efficiencies are improved and management will have more time to focus on the welfare of its employees, particularly their safety and comfort. Thanks to automation, tasks that were usually performed manually will also be more manageable.

Similarly, the tools and machines that will be used in the production process are also designed to reduce worker fatigue, as well as pollution. Stress levels will be lowered considerably, if only for the simple reason that the workplace is more conducive to working, especially during prolonged periods.

And it is not just the lower-level workers that will benefit from this. Top management, or those that have to make the decisions will also be aided by information that is updated and accurate.

Key features or characteristics of a Smart Factory

Out of the many – often confusing – descriptions or definitions of Smart Factory, we can glean several of the key features or characteristics that define it.

  • Automation: Automation is said to be the key component of the Smart Factory. Through automation, particularly connected automation, factory efficiency will be vastly improved. This is thanks to labor costs and overhead being reduced, as the operations have become more streamlined. A smart factory will utilize an infrastructure that is better equipped to handle and manage a larger number of sensors and connected devices across the production line, using industrial Ethernet protocols. Lately, we see more automation options being developed, purposely to be integrated into factory machinery and equipment, allowing them to communicate with other devices.
  • Industrial internet: Smart Factories are supported by the infrastructure known as Industrial Internet, which is comprised of hundreds and thousands of sensors and devices that are managed by one central command or operator. This serves as the link that connects everything together.
  • Interconnection of systems within a system: In a Smart Factory, we are not talking of just one system working within the manufacturing process. More often than not, you will be looking at one system, which happens to be one among the several other systems that are interconnected or interlinked within a bigger, broader system. Perhaps the most identifiable systems within a Smart Factory are the cyber-physical systems and, thanks to adapting smart manufacturing concepts, each cyber-physical system has autonomy to make decisions on its own. In short, the Factory of the Future is pretty much a system of systems that involves manufacturing systems, workpiece carriers, assembly lines, and automated workstations, all interconnected via the Internet of Things.


Adapting the Smart Manufacturing concept requires that we must first look into the main requirements. There are three identified critical components of a Smart Factory, and they are the ones that need the most attention when designing and running a smart factory.

1. Technology

The whole setup or architecture of a Smart Factory will not be able to hold any ground without technology.

The production facility may already have a system in place with respect to how the process is conducted and controlled. It may also be staffed with the most skilled and most talented workers. That does not mean, however, that they can stop looking for better, faster and easier ways to carry out each phase of the production process, subsequently improving the entire process in the long run.

This is why many are turning towards integration in order to improve the already existing manufacturing architecture. In the past, the traditional perception of manufacturers with regards to integration is having a set of devices being interconnected, such that communication is facilitated and becomes faster, with a central command center where all data gathered during the communication processes are collected and stored for future use.

That is no longer the case today (and in the future, if the trend in technological advances continue the way it is going now) as integration has gone beyond simple connectivity. Today, integration has become more comprehensive, encompassing a wider and broader scope. Most technologies are improved so that they have a lot more to offer, such as wireless networks, devices becoming more portable, and having more options when it comes to visualization tools.

Cross-device communication arising from high-technology automation is seen as one of the best things about a smart factory. In regular factory settings, although there are many machinery and equipment – robotics, even – that are utilized for communication along one production line, this is still quite limited. For one, it works along a single production line alone, and there is still a need for a human operator to keep an eye on things.

In a smart factory, the technology employed in the automation process covers more than a single production line; in fact, it is meant to manage the entire manufacturing process of the organization. And there is no longer a need for a human operator manning the controls, so to speak, at each phase.

2. People

Smart manufacturing will not succeed without the human factor. Who will operate the machines? Who will develop the technology and integrate them into the production line? Who will analyze the data or information gathered and, ultimately, make the decisions?

Human resource is one of the most important aspects of management and operations. This involves hiring the right people, with the right skill sets and qualifications for the job, and managing them so as to ensure continuous productivity.

There is this general misconception that, as a company becomes more automated and the process undergoes digitization, the need for manpower will be reduced. In fact, some even think that the use of machines and technology will soon render manpower or people to become redundant. That is not entirely correct. There are bound to be changed in the human resource make-up of an organization once automation for smart manufacturing is in place, but they can never completely do away with needing the human factor to keep the processes working.

The introduction of the Smart Factory is sure to require an upgrade in the manpower or talent requirements of a company. There will be a need for more machine operators, engineers, and even supervisors and managerial positions with the skill sets that are needed for smart manufacturing operations. Streamlining the production process via digitization is bound to render some tasks (and some people) redundant, but that does not mean that human assets will no longer be required. They will still be needed, albeit in different capacities, or with modified requirements or qualifications.

3. Operating System

In order to have a fully operational and successful Smart Factory, there has to be a well-defined operating system. What, exactly, will having a well-defined business operating system do? For starters, it will facilitate measurement. With a system in place, obtaining information and data will be done in real time, and measurement and the subsequent processing of these data will also enable making decisions – also in real time. Calculations and analysis, as well as reporting, will also be automated. Essentially, everything will be faster, because it will cut down the usual length of time of tedious manual work. Similarly, as it is already systematized, the probabilities of incurring errors will be reduced, as the human factor is also lessened to a certain extent.


In designing and running a Smart Factory, another factor that must be considered is IT Security. If you ask many experts on Smart Factories, they would say that “IT-security by Design” is the most important design principle, reiterating that IT security must be considered in great detail throughout the whole Smart Factory planning stage. Many make the mistake of inserting IT security parameters only after the Smart Factory has been set up, and this is not really a good idea, if you are going for efficiency and effectiveness in your smart manufacturing blueprint.

The Smart Factory environment entails the utilization of intensive digital communication between and among machines, networks and sensors, across divisions, companies or industries, as the case may be. This means getting the internet to work for you in sharing often critical information across channels.

This calls for action when it comes to the issue on data and information security. Information that flows across the communication network within a factory or a company already merits high levels of security; the challenge and the risk becomes higher once the information is shared across external networks.

Paying attention to IT security is very important for a Smart Factory, as it is one way to reduce business risks. Thus, management must invest in cyber security measures that will cover all aspects of the business, not just the technical or manufacturing side.

Here are some notes to be aware of when addressing the issue on IT and data security:

  • It is a collaborative effort among all members of the organization. It’s not just a decision that has to be made by top management, or planned by the technical departments. Thus, everyone has to be involved. Obtaining the input of every department is a good starting point. On the maintenance side, it would be a good idea to conduct regular trainings and campaigns centered on raising awareness among members of the organization regarding IT security.
  • Companies may also refer to various IT-security regulations imposed by governments as their points of reference. Presently, governments, not just the United States, are coming out with legislations that have an impact on Smart Factories and similar infrastructure.
  • Smart Factories have to invest in the appropriate hardware and software optimized to withstand attacks and other threats to data and IT security. Larger companies opt to set up their own information security management systems, staffing it with specialized personnel. In many cases, companies also acquire the services of IT security service providers to take care of that aspect for them.

Perhaps the greatest challenge or obstacle faced by manufacturers when setting up a Smart Factory is the cost involved. It certainly does not come cheap. The IT infrastructure alone requires substantial amounts of investment or capital outlay. In addition, the hiring of talent with specialized skills that will coincide with the requirements of the Smart Factory will also come at a steep price. Still, manufacturers are lucky in that they can still find cost-effective ways to implement smart manufacturing solutions and principles. In the long run, when implemented properly and operated correctly, the benefits provided by the Smart Factory will far outweigh the cost incurred by the manufacturers in getting it up and running.

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