What does IoT mean for the smart factory?

For a long time, the Internet of Things (IoT) was associated with bringing sci fi into our homes; the fridge that reorders its own food, selecting music or tv choices using speech rather than a remote control, controlling lighting and heating from anywhere in the world using a mobile phone. With devices like the Amazon Echo being responsible for huge sales, we’re actually quite close to that vision of the future (still, nobody cares for smart fridges!). But more significantly, IoT has a bigger job at hand; it is reinventing manufacturing businesses.


The smart factory and Industry 4.0

“We must deal quickly with the fusion of the online world and the world of industrial production. In Germany, we call it Industrie 4.0.” Angela Merkel, Chancellor of Germany.

The smart factory/Industry 4.0 is here. The smart factory uses technology to join up machinery, people, suppliers and customers for more efficient working. It goes beyond lean manufacturing, where the focus is purely on manufacturing efficiency. Smart refers to joined-up thinking across the business, so customer feedback can get a new product into production quicker, a production fault can be addressed immediately – or even anticipated before it happens, machinery downtime can be predicted and managed. The advent of big data, predictive analytics and cloud storage alongside advancements in automation and the popularization of connected devices means that factories are being transformed from massive mechanical beasts into agile, intelligence-driven, IT-focused process oragnizations.


The new value chain

The massive advancements in these technologies have brought about what is termed ‘the fourth industrial revolution’. The value chain as we know (knew) it is today outdated; now the smart factory can connect every element of the value chain, both supporting and primary activities and processes, for automated, joined-up analysis and fast actions. Marketing, production and goods-in can now work seamlessly together to meet market demand in a whole new way. 

Technology manufacturer Flex, comments: “While the current supply chain system consists of several steps—marketing, product development, manufacturing, and distribution—that occur independent of one another, smart manufacturing could streamline the time, effort, and communication between each step, creating faster and more reliable service… Now we have a new set of customers coming to us with a sketch of a product idea. They’re asking Flex to design it. For us, this is driving a need for new ways of working, new processes in the manufacturing space.”



Joined-up thinking is all well and good – any medic will tell you the benefit of a multi-disciplinary approach to treating patients – but the benefit of any business investment needs to be greater than the input. So, what are the benefits of creating a smart factory environment?

  1. Greater flexibility with reduced environmental impact
    The interconnection of production and information enables manufacturing sites to move towards optimum performance, leading to shorter time to market and greatly reduced waste production.
  2. Increased quality and reduced costs
    The development of self-configuring machines means that increasingly difficult tasks can be carried out by machines to deliver cost savings and better-quality goods and services.
  3. Staying competitive
    With the pace of advancement and the accessibility for all company sizes, not investing in the digital revolution could leave you standing.

Capgemini’s research ‘Smart Factories: How can manufacturers realize the potential of digital industrial revolution’ (May 2017) summarized its key findings:

  • Smart factories could add $500 billion to $1.5 trillion in value added to the global economy in five years.
  • Manufacturers predict overall efficiency to grow annually over the next five years at 7 times the rate of growth since 1990.
  • Capgemini estimates that smart factories can nearly double operating profit and margin for an average automotive OEM manufacturer.

Cisco also comments: “IoT technologies are connecting new devices, sensors, machines, and other assets together.... Early adopters are already seeing big reductions in equipment downtime (from 15 to 95%), process waste and energy consumption in factories.” Chris Steck, Head of Standardization, IoT & Industries.


The thinking factory

Can a factory really sense, think and react? It clearly isn’t a living, breathing thing, but the technology is there for data to be processed, analyzed (according to preprogrammed rules and thresholds), and actions produced for follow-up. Machinery sensors, customer experience management systems, health and safety regulations; all these things can produce data which can be continuously monitored and effortlessly processed. Gone are the days of the weekly engineer machine checks, customer service teams dealing with problems in a bubble, manufacturing processes needing months – or even years - to change in response to feedback.


Predictive analytics for maintenance

Having the ability to constantly monitor machinery and components rather than wait for an engineer to do his/her rounds, a long-term picture can be built up of any trends and any unusual happenings, with the aim of reducing unplanned downtime, extending the periods between scheduled maintenance and basing scrap value and timing decisions on the machine’s health rather than using an age-based calculation. Connecting production devices such as machinery sensors, motors and switches to send data in real time enables constant monitoring and analysis to provide actionable insights, with the aim of better understanding machinery health and enabling a real-time approach to maintenance and management.

In response to demand, component and machinery manufacturers now fit new machinery with IoT-enabled sensors, while the retrofit market continues to grow and develop. Being able to capture machinery data is critical in predicting downtime, faults and remaining useful life (prognostics). This predictive maintenance approach underpins the smart factory, enabling efficiency in stock control, delivery and time to market, increased quality and the agility to respond to changing requirements.

Another Smart factory enabler is scalability. You don’t need to redesign the whole factory to get started, you can begin with basic sensors on a small number of machines and build the case for Return on Investment from there. If you like the results, you can add more sensors, more processes, more automation, more automated analysis.



As with all industrial revolutions, the fourth industrial revolution comes with its own set of challenges. Employers and employees must adjust their mindsets to accommodate the new skillsets required, the redefining of the business structure and indeed the cultural shift to becoming an agile, intelligence-led operation.

The threat of cyber-attacks continues to be high profile, with recent ransomware and malware attacks hitting the headlines at Renault (France), the NHS (UK) and Cadbury’s (Australia) amongst others – this is a threat which does not recognize geographical borders or industry sectors. This is one of the new rules in our ever-more connected lives.


The journey to a smart future
“Whether you refer to it as Industry 4.0 (led by Germany), The Industrial Internet (led by the USA) or business as usual, it is impossible to avoid it.” Nathan Robinson, CEO of The Leadership Network.


The growth of IoT and the smart factory is largely driven by the spotlight on advanced manufacturing techniques, but increased pressure on energy consumption, regulations on waste and a growing emphasis on environmental credentials also build a solid case for maximizing operational efficiency and agility, making it more than simply aspirational; it is the future of business.


Senseye – Scalable Predictive Maintenance

Senseye uses data collected by the Industrial IoT to automatically understand the current and future health of all factory machinery (not just the critical assets!). It’s designed to be easy to use and enables predictive maintenance without the pain. Download your free brochure here:

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