A concise overview of smart factories and Industry 4.0

Industry 4.0

Industry 4.0 is the name of the fourth industrial revolution we are witnessing. These are not some futuristic visions, but processes that are already taking place now. If we look at previous industrial revolutions, no one can say that they were not needed - factories that did not submit to them were pushed out of the market. Thus, the first industrial revolution came as a result of the discovery of steam power and the invention of the steam engine, which made production begin to mechanize. The second revolution came as a result of the invention of electricity and the concept of the assembly line. The third industrial revolution was triggered by the development of computers - programmable controllers that allowed certain processes to be automated, that is, to be performed without human intervention (such as opening a valve when a certain pressure level is exceeded).

So what triggered the fourth industrial revolution? It is based on two main pillars:

  1. Technological developments
  2. Internet ubiquity

Although the third industrial revolution was already based on the development of computers, it is only in the 21st century that technologies are available that allow highly sophisticated data analysis and the processing of huge data sets. Machine learning and artificial intelligence are replacing humans in many areas, and digital twins are invaluable decision support. Not to mention virtual reality, cloud computing, 3D printing, blockchain technology, etc. The second pillar of Industry 4.0 is the ubiquity of the Internet and its development into increasingly powerful wireless networks. The Internet is used not only by computers, but also by other devices - phones, sensors, printers, machines, robots, etc. In the industrial sector, we are talking about the marriage of IT and OT - that is, computer and operating technologies, and devices that communicate with each other via the Internet are IoT (Internet of Things) devices.

Digital maturity of organizations

The concept of Industry 4.0 can be better understood in the context of an enterprise's level of digital maturity. The acatech organization has carved out 6 levels of digital maturity for organizations, assigning different values to them.

The first two are computerization and connectivity (machine-to-machine connections, connection via Internet protocol) - these are the phases of digitization. Only after digitization come the phases that bring us closer to Industry 4.0 and the smart factory. These are the phase of providing visibility and the phase of transparency - in short, the use of such technologies that will allow managers and systems to keep track of what is happening in the factory, as well as understand why it is happening. This is achievable using a digital twin that maps production processes. Such a system could be an ERP / MES / MOM that collects automatically or into which large amounts of data about what is happening are entered manually. Big Data technologies, on the other hand, make it possible to organize this data, process it and then infer from it. The next phase is the factory's predictive capabilities. For example, what will happen when a new order comes in from a customer - will the deadlines for other orders be extended and, if so, for when? Or how much will the purchase of a new machine improve the processing of X type of orders? The final, highest level of digital maturity is the ability to adapt autonomously.

This means implementing such solutions that are capable of independently prompting the best decisions in the shortest possible time and implementing them on their own. For example, after receiving information about a machine failure, the system itself schedules the machine adding a break of a certain time for maintenance, adjusts the schedules of other workstations and sends a notification to the person responsible for maintenance. In addition, it checks if there is a risk of delays in orders as a result of the unexpected failure and sends appropriate notifications to customers.

Source: Industrie 4.0 Maturity Index 2020, acatech
Source: Industrie 4.0 Maturity Index 2020, acatech

As a result of reaching the highest level 6 of digital maturity thus defined, we can speak of an intelligent factory. Level 5 and 6 systems bring the greatest value to factory owners, which is primarily due to the speed of response to unexpected events. Studies show that the more time that elapses after an event, the greater the loss or less profit an organization can make by responding appropriately. In traditional, let's say “manually” managed organizations, the response time is very long - it includes the time to obtain information (e.g., about a machine breakdown - the operator must inform the maintenance worker, the latter must inform the shift manager), analyze this information (the manager must think about how to reschedule the work, which order to execute now, how long the repair will take, etc.), make a decision (the manager must think about how to change the work schedule, which order to execute now, how long the repair will take, etc.), and make a decision (the manager must think about how to make a decision). ), make a decision (the manager must consult the decision with the manager and planners, check the deadlines for the interrupted order and others, consider their priorities, arrange a new schedule) and implement it (the manager must inform each operator that there is a new schedule and task allocation, obtain missing resources, notify the customer service department of possible delays, etc.).

This can result in a number of adverse effects, such as increased waiting time for operators to be assigned tasks.

The implementation of modern, integrated systems that support the management of production operations in real time will significantly reduce response time and thus reduce losses or increase the benefits of proper response to an incident. In a factory using such a solution, information about a malfunction will reach all concerned people in a fraction of a second (the system will receive a signal from the machine and automatic alerts will appear), a new optimal schedule will be generated automatically, taking into account the assigned priorities and the estimated time of machine repair, a new work allocation will be generated, and if there are possible delays in the execution of orders, the customer will automatically receive a message with a new completion date.

Source: Industrie 4.0 Maturity Index 2020, acatech

Features of the smart factory

The smart factory, thanks to the solutions used, will have a number of features that distinguish it from other traditional manufacturing plants.1

It will be connected in three dimensions: 1) the combination of machines, sensors, computers, location devices, 2) it will work on a single data platform, so that each internal addressee of the process (each department and each employee ) will always have an up-to-date set of information necessary to carry out its tasks and make decisions, 3) it will be part of a coherent ecosystem of manufacturers and their customers, who, thanks to the real-time communication provided, will be able to plan more optimally their production orders dependent, for example, on the supplies of other manufacturers, and share their production capacities among themselves.

Its operations will be subject to continuous optimization in terms of using the right resources, at the right time and in the right order.

A smart factory is transparent - data extracted from machines, sensors, robots and other devices make it possible to understand what is happening, draw conclusions and make decisions, including autonomous ones without human involvement. Transparency also means knowing what path a product has gone through, the use of what resources it required, where and under what conditions it was stored, etc. Such a set of information may be necessary to market a product (e.g., in the food industry), it may be useful as part of marketing, or it may be part of a circular economy (reporting on resources used, calculating carbon footprint, instructions on how to decompose a product and how to dispose of or refurbish it at the end of its life, etc.).

Another strongly related characteristic of a smart factory is proactivity and agility. Proactivity refers to Level 5 of digital maturity - the ability to anticipate the consequences of various decisions and operations. This refers to data-driven prediction, precise forecasts and simulations, performed over a very short period of time and allowing decisions to be made that are optimal for the entire organization. Anticipation is also aimed at preventing unwanted events such as a shortage of raw materials or a machine breakdown. Agility, on the other hand, is the implementation of decisions made immediately and without undue delay and the possibility of quick correction. This feature is particularly important in high production dynamics, when production orders involve short runs or single products.

The final feature of smart factories is its sustainability. Given the predictions of the destruction of the earth's ecosystems for the next few decades, as well as the goals set by the European Union bodies for manufacturers (climate neutrality by 2050, the Fit for 55 package to reduce greenhouse gas emissions by 55% relative to 1990 by 2030), we must keep these aspects in mind when defining the factories of tomorrow. Among other things, the idea of Industry 5.0 grew out of this trend, which expanded Industry 4.0 precisely to include environmental aspects, but also to include human-centricity and robots and their cooperation with humans.

Benefits for manufacturers from the implementation of Industry 4.0 and Smart Factory concepts

Only having defined all these terms can we consider what digitization and process automation towards a smart factory brings to manufacturers.

The first group of benefits is the efficiency of operations and, above all, the efficiency of resource utilization. Thanks to systems for acquiring data and converting it into valuable information, we are able to automate the arrangement of the most optimal schedules depending on certain priorities (e.g. minimizing changeover time or minimizing energy consumption). These schedules will follow any unexpected events that arise and automatically update themselves. What's more, they will be available immediately to all stakeholders, preventing work stoppages. Automating the process of distributing tasks among shop floor workers and robots is another tool to increase resource efficiency. Imagine that a worker never waits for a new task assignment-any change in the work schedule is immediately communicated to him, and tasks are assigned according to his skills or preferences. In addition, in smart factories it is possible to increase production flexibility, i.e. shorten series or produce single products. Manual management of schedules with such high variability would not make economic sense. With the right software, efficient flexible production is possible.

The second group of benefits is improved product quality. Thanks to the automation and robotization of processes, we can weave quality control in after each stage of production to catch any imperfections as early as possible, which in turn leads to a reduction in wasted resources. Without appropriate solutions to support the work of humans and robots, such continuous quality control would be difficult to implement, as each defect detected leads to a change in the production schedule due to the need to either repair the defective product or produce it from scratch. Improved quality control processes lead to fewer complaints and increased confidence in a manufacturer's product.

The third group of benefits, stemming in part from the previous two, is the reduction of operating costs. Most efficiency in the use of resources (optimal, always up-to-date schedules, employees who always know what they are supposed to do and monitored in terms of work progress, reduction of defects, use of waste, etc.) leads to a reduction in the cost of producing a given product. This, in turn, translates into greater growth opportunities for the organization and a better competitive position for the company.

The fourth group of benefits are environmental ones. Transforming a factory to circular manufacturing does not have to mean a revolution, because every step in this direction is important for climate protection and for conscious consumers. For example, the use of cloud-based applications is, on a global scale, much more environmentally friendly than the use of solutions requiring local hardware resources. Using variable electricity tariffs and scheduling work in such a way as to reduce peak electricity demand on a global scale is also environmentally friendly. The aforementioned zero-waste policies (waste accounting and utilization, continuous quality control) are also measures that can be implemented in almost any industry with the support of the right tools.

The last group of benefits are those related to the worker. The industrial sector has suffered in recent years from the exodus of labor to other industries. It has so far been perceived many times as a sector where work is hard, often harmful to health and not very developing. By implementing the right solutions, factories are able to attract talented workers. Such as, for example, reporting on the progress of work via terminals on the shop floor, displaying digital instructions tailored to the individual worker, automatically collecting feedback on the task at hand, or automating the tracking of weights that workers lift on the job and not allowing them to exceed limits. Employees using these types of solutions are increasing their digital skills and appreciating the facilitation that these systems bring to them. Just as today no accountant would want to work in a company where the books have to be kept manually on pieces of paper, the same will happen in the manufacturing sector before long.


  1. The smart factory (deloitte.com)
  2. Industrie 4.0 Maturity Index. Managing the Digital Transformation of Companies – UPDATE 2020 - acatech - National Academy of Science and Engineering
  3. Industry 4.0: Digitalisation for productivity and growth | Think Tank | European Parliament (europa.eu)

Discover New Blog Posts

Stay updated with our latest blog posts.

Never miss another Post!

Subscribe to our newsletter!