How Manufacturers Can Attain the Smart Factory Ideal

Today’s global manufacturing marketplace is becoming increasingly competitive. With digitalization now rewriting the rules of engagement, businesses operating in this space are constantly having to combat an influx of new market entrants. To thrive and survive, manufacturing firms will need to initiate smart ‘connected’ factories that drive value in the form of improved productivity, while delivering the agility required to adapt to a fast-changing market much more effectively.

Connectivity, in the context of manufacturing, is not a new concept. Yet recent trends, such as robotics, artificial intelligence (AI), analytics, and the Internet of Things (IoT) have finally made the truly smart and connected factory an achievable reality—linking devices, systems, and machines to generate the data needed to make real-time decisions.

Along-time providing real-time insights into schedules, quality data, production status, and demand changes, today’s smart factory systems can also autonomously learn and adapt dynamically to self-optimize performance or run entire production processes. They can also be connected to the wider digital supply chain to enable enhanced collaboration across the extended enterprise—for example, linking directly with customers or suppliers to increase speed and efficiency for all.

Embracing the unknown

It’s fair to say that, until now, the move towards smart factories has been slow to take off for a variety of reasons—including not having the necessary in-house expertise, inhibitions about moving processes into the cloud, and concerns about the complexity of overhauling costly legacy systems. After all, why would a business want to rip and replace something that has taken years—and many millions—to acquire?

Another key reasonmany manufacturers have been reticent to make the shift to the smart factory model is the fear of the unknown. How will it impact my operations? What effect will it have on staff? What change management processes do I need to put in place? How can I measure value and success?

Yet it seems the manufacturing industry is about to take a big leap of faith. According to the analyst group IDC, the manufacturing sector is set to become a top investor in IoT technologies over the coming years. Indeed, IDC predicts that 2019 will see discrete manufacturers spend $119 billion on IoT this year, with process manufacturers spending $78 billion.

As we’ve seen, IoT is a key enabling technology that empowers traditional factories to become truly digital factories. Implementing connected sensors on machines will generate the data-driven insights operators and planners need to optimize production lines, predict component failures, initiate predictive maintenance, and synchronize material management.

Streamlining for success

With spending on IoT technologies seemingly on the rise, it appears that the drive towards the smart factory ideal is finally underway. However, to become truly connected and reap the benefits of greater collaboration, control, and growth—a manufacturer will need to bring all its factory operations and back office systems together, re-routing data generated on the production line to enable a virtual circle of continuous improvement.

Enterprise resource planning (ERP) is very much the glue that holds the smart factory together, allowing real-time data streams to be extracted and integrated for immediate analysis and informed decision making. By sending this information to an ERP solution, manufacturers are able to automatically update Bills of Materials, improve how assets are managed, and better connect their supply chain processes.

Latch and hinge manufacturer Southco is one such company that has benefited from using an ERP system and integrated analytics platform to discover the true level of plant utilization on its shop floor. Southco found that its overall equipment efficiency (OEE) levels were running at a mere 52% — a far cry from its target rate. Armed with this insight, the company was able to execute changes to raise this figure to 85%. The improved efficiencies also enabled the firm to retire five old machines and not institute any replacements—a move that has contributed a net gain of £550,000 to the company’s bottom line to date.

Working smarter, not harder

Realizing the smart factory ideal is not just about enabling connectivity—it’s about what you do with those connections to make your business run faster and smarter. Whether that’s tapping into automation and IoT for data collection to improve workflows, or streamlining processes that were labor-intensive in the past.

Aware that time equals money, Boers & Co Fine Metalworking Group realized it needed to achieve time compression across all of its processes to ensure it could meet the complex and fast-evolving demands of its customers. Using an ERP solution to roll-out a wide range of Quick Response Manufacturing (QRM) techniques, the company enabled the fast movement of jobs, projects, processes, and information across the business which together have significantly reduced customer lead-times. The new ERP platform delivers end-to-end intelligence throughout the factory which has both improved operational efficiencies, and enhanced collaboration across the supply chain.

Driving manufacturing success

By initiating fully-integrated smart factory systems that are capable of responding in real time to meet changing demands and conditions in the factory, the supply network, and customer needs, manufacturers will be well equipped to thrive in today’s particularly turbulent global marketplace.

However, the piecemeal adoption of new technologies, such as IoT, in isolation will not be enough to create a truly connected business. To unlock maximum value from every investment they make, manufacturers will need to think holistically. To make their smart factory an effective entity, they will need to use an ERP platform to bring their factory operations and other systems together in an integrated manner and close the communication gap between people, machines, processes, and real-time data.

Written by:  Terri Hiskey, Vice President of Product Marketing for Manufacturing at Epicor, for IT ProPortal.