Smart Factory Strategy Becomes Table Stakes for OEMs

If you’re involved in the manufacturing industry, you should have heard of Industry 4.0, or at least of Smart Factory or Industrial IoT. If you haven’t, then it’s time to learn more about what many refer to as the fourth industrial revolution following the first three revolutions of mechanization, mass production, and computerized automation.

Industry 4.0 is the manufacturing part of the digital revolution. At its heart are connected and intelligent manufacturing systems that are agile, efficient, cheaper and faster, producing better products. I’ve been studying and writing about Industry 4.0 since it was conceived around six years ago.

6 thinks you need to know about the 4th industrial revolution

Here are six things you really need to know:

1)    Your manufacturing partner should be heading to Industry 4.0 nirvana.

If you outsource or buy parts from a manufacturer, ask them about their Industry 4.0 or Smart Factory strategy. If they look at you blankly or suggest it’s not important, look for a new manufacturer! If you or they do not have a strategy, you’re in serious danger of irrelevance as the digital revolution drives change and disruption in your industry. You need to be part of this industrial revolution to stay competitive. In my view, there is a strong likelihood that brands will cease using vendors that don’t employ Smart Factory processes.

2)    Data is at the core of Industry 4.0

In the Smart Factory, data is the fuel and the lubricant that makes every machine work. Get control of your data and you have control of your factory, your processes and your products. It’s about more than simply collecting data, it’s about what you do with it. Once you have data, the most important thing is how you use it and share it. Data needs to be delivered to every stakeholder in a way that drives value and helps them do their job better. Raw data is impossible to consume, especially in the volumes that we collect. Good customizable dashboards are essential, as is the ability to drill down when needed. Think hard about who gets what data. Customers, operators, managers, etc. all have different data needs; give them what they need and not much more.

3)    You need to Read, Record, Relay and React

Every part of the manufacturing process should be able to read, record, relay, and react to data:

  • Reading every product, part or consumable that enters a machine or process, including data on the operators or consumable is essential.
  • Recording every action that occurs in detail, down to the torque of each screwdriver, the pressure of each SMT placement, or the temperature of each reflow profile, is needed to create the full manufacturing picture.
  • Relaying this data must be uniform and available in an open protocol throughout the factory and beyond.
  • And lastly, each machine should to be able to react  to external data to improve its own process performance. Get these cornerstones working and the rest will follow, miss any and you’ll have holes in your data throwing you straight back to Industry 3.0.

4)     Embrace the augmented age

Ok, so what’s the augmented age? Until recently we used our tools to assist us, even robots or automation tools. Now we are entering an age where we collaborate with  our tools, making joint, or augmented, decisions. The human machine partnership is changing rapidly and Industry 4.0 will utilize this to make factories smarter. Embrace it! Augmented Reality (AR), and Virtual Reality (VR), are finding their way onto the factory floor for all kinds of solutions including maintenance or process diagnosis. Artificial Intelligence (AI) is life changing, and at times somewhat scary. AI is opening the door to self-learning systems or cyber physical systems, that will drive better processes and products, an important element of Industry 4.0.

5)     Get connected along the supply chain

Share data along the whole supply chain. Connect your design team and vendors on the supply side, your customers and even the consumer on the demand side. The digital thread starts at the idea or order and carries though the whole life of the product. This delivers all kinds of benefits, such as consumer engagement and full traceability. Engagement can be enhanced by sharing data with consumers, making them not just a user but part of a community and even brand ambassadors. In medical, aerospace and almost every other industry, full traceability is now demanded. Never underestimate the financial cost and brand damage of a product recall. Full traceability reduces the number of products recalled and sometimes the need to recall at all. Industry 4.0 delivers traceability as a byproduct.

6)     Great products and solutions come from Industry 4.0

Smarter Factories produce smarter products that benefit consumers! After all, without consumer buy in, the whole process is technology for technology’s sake and that sucks. Mass customization, or personalization at scale is the current holy grail. The ability to take online custom product orders, and use technologies like 3D printing to fulfil them quickly and economically is exciting to brands and fits with the consumer’s desire for instant gratification. At the core of Industry 4.0 is the ideal of ‘lot size of one’; the concept that an assembly is unique and able to inform machines and processes of what it needs as it passes through each stage of manufacturing. This is real in the automotive sector with thousands of versions of a car available. Expect to see it in consumer goods more and more.

These are just my top six things to know on Industry 4.0, but don’t forget the robots are coming, that next month there will be new ideas and that new players of all shapes and sizes are joining the market. The industrial revolution is happening and it will change the face of manufacturing forever.

Ignore it and risk of being ignored!

7 comments on “Smart Factory Strategy Becomes Table Stakes for OEMs

  1. salynage
    August 15, 2017


  2. AegisUS
    August 16, 2017

    Great points on Industry 4.0 Phil!

    So you're saying we shouldn't be concerned about an impending AI Apocalypse in Manufacturing? 

  3. davimcdonnell
    August 17, 2017

    Excellent article about the critical need for manufacturers to adopt a smart factory strategy! Join the revolution or be left behind..

    Your point about the importance of manufacturers sharing digestable data to their vendors is key. I feel as though some manufacturers overwhelm their customers (and maybe feel overwhelmed internally) by the amount of raw data a smart factory system provides. It needs to be pared down and customized to each customer so that it's easy to read and offers obvious solutions. 

    August 17, 2017

    I think strategies around AI and the social impact are not yet thought through. This is an important debate to have and one that involves government as well as companies and unions. Another article on this topic is coming soon! 

  5. liamrandall
    August 28, 2017

    Indeed, we should be thankful to the author as he has shared such an informative post with everyone. In order to maximize the return on investment it is very much necessary to plan strategies in such a way that the organization should move upward and shows the progress time to time. Assignment Writing Services UK

    August 28, 2017

    thank you for the feedback Liam. You are absolutely right, any smart factory strategy has to focus on delivering benefits to both company and customer, and where possible to the consumer…

    August 29, 2017

    I think the Chinese OEM and EMS approcah to Smart Factory is fascinating. They clearly see the benifit, and their “Made in China 2025” startegy document has Industry 4.0 style initiatiives and automation as a coremerstone.  

    The larger EMS companies in China would love to add 'smartest', to 'biggest' and 'cheapest' in their decriptors, so the race is on to be the comapnies that emabrance the digital transformation and ensure they use it to deliver customer value and market differentiation.

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