The manufacturing industry has seen significant changes over the last decade due to the fourth industrial revolution. Also known as Industry 4.0, this revolution has been fueled by new technologies like automation, IIoT, cloud computing and AI.

Manufacturers that have invested in these technologies are seeing visible improvements, proving smart factories are here to stay. Early adopters reported average three-year gains of 10% or better for factory output, factory capacity utilization, and labor productivity.

Today, the majority of manufacturers agree on the importance of smart factories in the future of the industry. In the United States, 86% of manufacturers believe that, by 2025, smart factories will be driving the competition in the industry. Moreover, 83% also believe that smart factories will transform how products are manufactured. In such times, businesses have to move towards upgrading their manufacturing facilities to smart factories.

Here’s a five-step guide to help you upgrade your manufacturing to a smart factory system.

Step 1: Decide on Goals and Identify Your Needs

Making changes to the manufacturing system is capital-intensive, and such critical responsibilities demand top leadership involvement. To begin the process of upgrading, the top management has to take initiative and get involved in the process throughout the project. This helps in making important decisions related to identifying the need for upgrades, long-term goals, allocation of resources, and expected ROI.

For a successful upgrade to a smart factory, top management has to involve all the employees in the process. Employees know the manufacturing system closely. They can help identify needs for changes, suggest solutions for improving the product and create a culture centered around efficiency, productivity and safety.

The first step is finished when the management has defined the goals of upgrading to a smart factory, the need for changes, the KPIs (Key Performance Indicators), and the expected ROI through efficiency and productivity. The goals and needs of the plant should be in line with the long-term strategy of the enterprise.

Step 2: Choosing the Critical Areas for Upgrades

Creating a smart factory out of your conventional factory isn’t a one-time change but a long process that involves allocating resources based on the goals and needs identified in the first step. The second step – choosing critical areas – is key to starting off the process on the right foot.

For this, the current production system and processes are analyzed for efficiency, productivity and bottlenecks. The analysis highlights various opportunities for smart technologies and modern processes to improve system efficiency. These opportunities are listed based on their criticality to the system. For example, if a workstation breakdown can bring the whole plant to a halt, it is the most critical and at the top. If an area upgrade can improve efficiency by a large amount, it is also critical.

Solving the issues in these critical areas reduces unplanned downtime and provides higher return on investment through improved productivity. Consequently, they become the perfect choices for implementing pilot projects. The results of these projects, in terms of unplanned downtime reduction and productivity improvement, can help choose the next upgrades and critical areas.

Step 3: Investing in Workstation and Workforce Upgrades

Smart factories are a result of Industry 4.0 technologies like IIoT, automation, big data analysis, AI and more, which have been advancing rapidly over the years. The third step is investing in these technologies to bring the changes for the critical areas identified in the first two steps. Smart factories tend to have customized solutions for assets with sensors, automated processes and new tools to improve worker productivity.

The workstations and assets with sensors create the IIoT for the system that allows communication between all the plant’s assets. To handle the data from all assets, inventory and orders, an EAM software is central – it handles predictive maintenance as well. Predictive maintenance can be implemented using real-time data from assets to achieve near-zero unplanned downtime.

A smart factory isn’t just about workstations but about the workforce as well. After all, workers are the ones who have to utilize these technologies to get the best out of them. It is vital to invest in training the workforce to use all the features of the new systems and workstations to achieve the productivity goals.

Step 4: Data Collection and Analysis for Optimization

Data drives improvements in the modern manufacturing industry. All assets produce large amounts of data but only a small part is utilized by most manufacturers. A smart factory has to be focused on collecting data efficiently and analyzing it thoroughly. Investing in capable IIoT and EAM software for data collection and analysis becomes important for this reason as well.

The data from workstation sensors is collected and processed by the system to create useful insights into the production. Various KPIs (Key Performance Indicators) can be monitored using real-time data. Close collaboration between the IT and OT departments can help ensure better data collection and analysis. Data experts from the IT department can train other employees to ensure a better understanding of data analysis.

After analysis, the insights should be discussed to identify opportunities for improvement in the production, as well as in management. Management should make decisions based on the learnings and keep track of the effects of the changes over time.

Step 5: Monitor, Learn, Improve

As mentioned earlier, upgrading your manufacturing system to a smart factory is a continuous process. A smart factory provides the data and tools which the employees have to utilize efficiently to improve results by making changes and upgrades. Monitoring the progress with the available systems and EAM software highlights various opportunities for improvement across the factory. With the available information about the productivity, costs and efficiency since last changes, management can make better decisions about which improvements to prioritize. 

Developments over the last decade have made it clear that smart factories are here to stay. The key to effective upgrading is utilizing tools and strategies efficiently in the critical areas, and monitoring the progress. Businesses that want to remain competitive must start upgrading their systems to move towards smart factories. The five steps listed here will help you create a good plan for your journey of creating a smart factory.

Author’s Bio

For over 30 years, Eric Whitley has been a noteworthy leader in the Manufacturing space. In addition to the many publications and articles Eric has written on various manufacturing topics, you may know him from his efforts leading the Total Productive Maintenance effort at Autoliv ASP or from his involvement in the Management Certification programs at The Ohio State University, where he served as an adjunct faculty member.  

After an extensive career as a reliability and business improvement consultant, Eric joined L2L, where he currently serves as the Director of Smart Manufacturing. His role in this position is to help clients learn and implement L2L’s pragmatic and simple approach to corporate digital transformation.   

Eric lives with his wife of 35 years in Northern Utah. When Eric is not working, he can usually be found on the water with a fishing rod in his hands.