Definition

smart factory

Contributor(s): Diann Daniel

A smart factory is a highly digitized and connected production facility that relies on smart manufacturing. Thought to be the so-called factory of the future and still in its infancy, the concept of the smart factory is considered an important outcome of the fourth industrial revolution, or Industry 4.0.

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.

Characteristics of a smart factory

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. 

Smart factory technology and processes

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).  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 factories rely on smart manufacturing, which connects the plant to other entities in the digital supply network, enabling more effective supply chain management. They also rely on digital manufacturing, which uses a digital twin to connect a product digitally at all stages in its lifecycle.

In addition, production machines can be used in the manufacturing execution system's local network to receive orders, report progress, access work instructions and interact with quality and traceability systems. Plant floor workers can more readily see important information such as instructions, schedules, quality data, inventory status and demand changes.

In the vision of a fully connected smart factory, each facility is linked to the others and the entire enterprise is linked across departments and externally to customers and suppliers. In this way, needs and activities can be monitored and collaboration is enabled across the extended enterprise to increase speed and efficiency.

Smart factory benefits and challenges

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.

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.

This was last updated in April 2018

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