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Why running smart factories

Smart factories are changing the face of manufacturing. Using connected devices, intelligent insight and automated processes, organisations can produce more, and better products in less time, for less money. But does it sound too good to be true?

With customer expectations increasing, against a backdrop of rapidly advancing technologies and intensifying competition, commercial success depends on working smarter. This is particularly poignant for industries that rely on mass physical output, like manufacturing.

The brave new world of Industry 4.0 - so-called because it’s seen as the Fourth Industrial Revolution - is characterised by intelligent machines that communicate with and learn from each other, with little to no human involvement.

This is the era of the ‘smart factory’, and it’s changing the way we do business.

As a physical manufacturing environment managed by virtual technologies, smart factories create exciting new possibilities for organisations across the sector.

Artificial Intelligence (AI) and the Internet of Things (IoT) can drive operational and financial gains through the cloud. In this setting, we are also witnessing the rise of IIoT, the Industrial Internet of Things, which uses intelligent robotics through the production cycle1.

This whitepaper explains more about what the smart factory means, how it benefits your business, and why it’s shaping the future of manufacturing.

THE MANUFACTURING REVOLUTIONComplete connectivity is coming. The World Economic Forum predicts that by 2020, there will be some 50 billion connected devices worldwide: more than double what we have today. IoT is changing our lives, in the home, workplace and everywhere in between.

For manufacturing, this is manifesting itself in the acceleration of IIoT. Robotics - and human-robot collaboration - is transforming infrastructure and operations1. It’s a revolution worth being part of.

Capgemini has estimated that smart factories could add up to $1.5 trillion to the global economy in the next five years alone2.

Manufacturers themselves believe efficiency could improve at seven times the current annual rate. It’s not just the technology, it’s the huge reduction in hardware and running costs that is making this happen.

Business leaders have a lot to gain. Apart from everyday on-site operations, this unprecedented visibility of processes and productivity means that they can make better decisions, based on real-time data, predictive analytics and accurate information rather than the traditional ‘gut feeling’ and trends.

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is good for business

Article Why running smart factories is good for business

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SMART FACTORIES EXPLAINEDSo, why are smart factories such a step change?

‘The Manufacturer’ magazine notes that, for factory infrastructure to be successful today, it must have a reliable and efficient pipeline to ‘progressively develop and then maximise the impact of innovative automation systems’.

IIoT and associated technologies make that happen. So, many of the traditional costs and overheads are immediately removed, and replaced with far more insightthan before. Demand for additional resources can be precisely predicted and flagged in advance, so that use is always optimal and ROI is maximised. New product designs can be updated and evaluated as they’re being created.

It’s a whole new way of doing things. However, despite the numerous and significant advantages, any move to create a smart factory is a major one. It must be well-planned and carefully executed to ensure the right results, according to each specific business need.

All this new technology comes with major responsibilities. Many organisations still feel that the cloud does not offer them the industrial-level security their business demands, and their customers can feel even more sceptical.

Humans may be slower, but they are perceived as safer, at least when it comes to sensitive information. There is also the worry about what might happen if that technology fails. Any cloud deployment or IIoT implementation must be highly effective to be trusted.

Meanwhile, as with any major change, the advent of new systems, processes and equipment requires new skills and talent to implement it. Organisations therefore must commit to an innovative training programme which attracts the right people and incentivises them to stay.

DOING BUSINESS, BETTERSmart factories bring together a raft of the latest advanced technologies to deliver seismic benefits for manufacturing businesses:

• Productivity and quality increases, by removing human error and constantly analysing operations to ensure maximum efficiency and optimal resource usage.

• Machines send alerts when maintenance is required, and can advise on specific issues - no more guesswork.

• Operational costs are greatly reduced, due to the above and also from lack of expensive hardware and required rental space. Existing machinery lifetimes are also extended.

• Intelligent and real-time predictive analytics can scale operations up and down on demand, for example during peak production periods - so you always work at optimal capacity.

• Business planning is made much easier: including logistics, maintenance, security etc.

• Equipment downtime is reduced, and disruption from upgrades and training is minimised.

According to McKinsey (2015):

A factory running on smart devices linked to a digital core with real-time analytics can reduce capital investment on equipment by 3%-5%.

Furthermore, the maintenance costs of this equipment can be reduced by as much as 40%, while equipment downtime can be reduced by up to 50%.

Across the world, this has a potential economic impact of $630 billion by 2025.

81% of global business leaders

feel that the Internet of

Things is critical to their

organisation’s future

success3.

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SOURCES:

1 Frost & Sullivan, January 20172 Capgemini: ‘Smart Factories: How can manufacturers realise the potential of digital industrial revolution’, May 20173 Oxford Economics: ‘Workforce 2020’ study for SAP