Smart Factory

Smart factory refers to a self-organizing production environment, such as modern logistics systems and manufacturing facilities. Smart factories are almost entirely autonomous.

Smart factory - a term that many manufacturers are well familiar with. Smart factories are at the heart of Industry 4.0, but what are they? And what advantages does smart manufacturing offer? We have summarized the most important points for you in this article. Read on for insights into the challenges, technologies, and processes associated with a smart factory.


What is a smart factory?

A smart factory is a highly digitalized and networked manufacturing plant. It is based on smart manufacturing with the aim of creating production facilities that are completely self-organizing and optimized.

They include manufacturing plants as well as logistics systems, planning environments, and product development. The processes take place with minimal human interaction, running on technologies such as artificial intelligence (AI), robotics, Big Data, and the Internet of Things (IoT).


What are the benefits of the smart factory?

At the heart of a smart factory, manufacturing is its technologies. By using sensors and robots, for example, intelligent data can be collected and processed. This data provides many advantages for production facilities. These include, among others:

Increased productivity

Real-time data shows what is currently required for production. Suppliers, for example, can easily make adjustments to orders based on inventory data. In this way, only what is actually needed in the smart factory is delivered. Downtimes due to missing parts and waste are thus greatly reduced, which generally lowers production costs and increases customer satisfaction through faster delivery times.

Improved product quality

The costs saved through optimized productivity can be invested in product development. An analysis of smart manufacturing data helps you answer the following questions:

  1. Where do customer needs lie?
  2. What opportunities are there for new products with higher quality?

Energy efficiency

For some time now, climate targets have been an important issue in the manufacturing industry. By reducing waste, smart manufacturing can reduce the carbon footprint. Energy savings gained through smart manufacturing also contribute to a better energy balance. Reducing energy waste also has an impact on the price of goods, making them more affordable to the end consumer.

Intelligent monitoring & maintenance

The system sends a preventive warning message as soon as equipment, motors, or bearings require maintenance. Ideally, it directly notifies a maintenance team, which takes care of the repair. As a result, major production disruptions can be prevented in advance.

Safe and efficient transport with SDV (Self-Driving-Vehicles)

Sensor technology makes the transport of products by SDV within the smart factory safer and more efficient. It automatically detects unexpected obstacles and immediately initiates an evasive maneuver. The avoidance of accidents or unnecessary detours keeps production running optimally.

Depending on the application, there can be even more advantages of a smart factory.


What are the challenges for smart factories?

To successfully implement the path to a smart factory, a strategy for conversion and future adaptability is the most important requirement. This strategy should take the following challenges, among others, into account:

Data integration

The processing of huge amounts of data is one of the biggest challenges facing smart factories. Without a Big Data strategy, no basis for decision-making can be created for the machines, and thus no ideally networked factory or digital delivery network can be established. Enterprise architecture helps you develop new strategies because it provides a holistic overview of the company and its technologies. 


This point can also be one of the advantages of the successful implementation of smart manufacturing. But to build a smart factory, you have to invest in digital technologies in advance. These investments will pay off in the long term if successfully implemented, as operations will run more reliably and efficiently and can react more quickly to changes in the market. Due to the initially high costs, a forward-thinking strategy is extremely important in order to exploit the full potential of smart manufacturing in as little time as possible.


The increased use of technologies in smart manufacturing also offers more opportunities for potential attackers. It's not just the machines within a production plant that are networked, but also, for example, outsourced processes, suppliers, and departments. This increases the demand for cybersecurity. To avoid economic damage, a fortified cybersecurity practice is a critical, basic requirement for any successful smart factory.

Technology and processes within a smart factory

The technologies and processes used differ depending on each facility. Accordingly, there is no golden rule for integration and application. The most important core technologies in smart manufacturing include:

Intelligent sensors

By means of sensors on production goods, machines, and other equipment, the production quality of the entire factory can be monitored in real-time. Central process parameters are compared with sample values. If there are deviations in these values - for example during production - it is possible to intervene early and initiate countermeasures.

This reduces production errors and the resulting waste. In connection with predictive maintenance, the sensors provide precise data on when a machine should be serviced. Production stoppages due to machine failures or high maintenance costs can be avoided.

Digital twin

A digital twin represents almost real-time digital images of physical properties and objects such as machines, tools, production goods, robots, and even factory buildings. Based on data analysis, simulations of possible scenarios can be generated using the digital twin.

In this virtual world, predictions about results can be made without affecting the real production of the smart factory. This saves valuable time and protects the physical process from possible errors.

Assistance systems

Assistance systems such as autonomous transport systems or robotic solutions are already widely used in industrial production. As an extension of lean approaches, they are intended to relieve employees of physical and time strain, especially in routine tasks, so that they can concentrate on decision-making at a higher level.

Big Data analysis

In a smart factory, there is a huge flow of data - machines, products, departments, and other potential external sources generate data in various formats. The use of this data forms the basis for the technologies mentioned above. Therefore, the strategy for dealing with Big Data is very important. The data must be processed, analyzed, and intelligently used in decision-making processes. In other words: Big Data must be transformed into Smart Data.


What does a successful transition to a smart factory look like?

As already mentioned, the path to smart manufacturing varies from company to company. Likewise, each smart factory will be structured differently. However, there are five components that are the same for everyone if implemented successfully:

1. Data and algorithms

A smart factory lives on data. You control all processes, make decisions, warn of errors, and can make proactive predictions with the help of the digital twin. Creating, collecting, managing, storing, and, above all, analyzing the strategy and means of data flows and then reacting to them is a basic requirement for the successful path to smart manufacturing. Over time, these data sets are becoming larger and larger and are covering more and more processes.

Analysis, storage, and management capabilities should always be adapted to the requirements when scaling the smart factory. Real-time data visualization can present the captured data transparently. This enables the company to make more accurate decisions. 

2. Technology

One of the most important characteristics of a smart factory is connectivity. Only in this way can smart manufacturing function. The complete plant as well as individual machines, products, and other devices are connected to each other and a central control system to communicate with each other. This enables, for example, real-time data exchange between supplier and customer or more efficient cooperation between production and product development.

However, other technologies such as AI, augmented reality, or additive manufacturing should also be considered depending on the application. The number of underlying technologies and software of a Smart Factory can quickly increase. Application Portfolio Management helps you to keep track. You can save any costs for unused technologies in your portfolio, avoid possible legal infringements, and ensure that applications can be integrated into the current IT landscape as easily as possible.

With intelligent technology risk management, you also determine the functional fit and business criticality of each IT component and create cross-regional and cross-facility standards. 

3. Process and control

Self-optimization, self-adaptation, and autonomous operation of production are among the core features of an optimized and agile smart factory. Many decisions are made by machines without human intervention. This fundamentally changes traditional processes and administrative tasks. These must be adapted accordingly.

Closer networking with suppliers, customers, and other factories also requires new control models and process optimization. Decision-making processes must be rethought and redesigned in order to respond optimally to these changes. Business Capability Mapping creates a basis for discussion and planning that shows what measures need to be taken to meet current and future requirements.

4. Employees

Even if smart manufacturing means that many processes are automatically controlled by machines, employees are still the key to operations. However, roles and responsibilities will change. Some positions will no longer be necessary as they will be replaced by automation and AI. Other positions could be enhanced by new capabilities such as augmented reality or data visualization.

The change in roles and responsibilities of employees requires adaptable change management to motivate, develop, and train the workforce and to create innovative recruitment approaches.

5. Cybersecurity

The cybersecurity challenge mentioned above should be included as a priority in the strategy for implementing a smart factory from the outset. Especially when it comes to scaling beyond the factory level, a roadmap for technical security is extremely important.

Always with the approach: think big, start small, and scale quickly. The implementation can be as agile and flexible as the concept itself. Whether you start with a single plant or several connection points is up to you. However, it is recommended to start with one system in order to check the concept in advance in a manageable test environment. The positive results can then be transferred to other plants and factories.



Smart factories are the future, if not already the present. In order to remain competitive in the long term, companies should start the lengthy process of transformation or redesign now. At the very beginning, there is a vision and the strategy derived from it, which leads step-by-step to the goal. It is important to always keep an eye on the increasing demands on IT.

The increased use of technologies and the increasing networking of production sites with suppliers and customers requires a comprehensive strategy that optimally connects all components and ensures the future adaptability of the system.

Reducing IT applications to the bare essentials and standardizing applications across companies are core tasks of the LeanIX tool. We have already applied this successfully at NORMA Group.

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