“Smart Manufacturing”: What you need to know

Smart Manufacturing

According to Statista, arguably the major international global market research organization, the number of Internet of Things (IoT) connected devices worldwide will exceed 30 billion by 2020. Statista suggests the number of machine-to-machine (M2M) devices (the key to smart manufacturing processes) will more than double globally from 1.5 billion to 3.3 billion by 2021.

Over the last decade, the evolution in digital computing and communications has fundamentally changed the way manufacturing plants operate. Manufacturing equipment and control technologies are becoming dramatically smarter as digital base informational systems and technology as a whole increasingly merge into the bedrock on which most manufacturing is now based.

Like it or not, you and your manufacturing business can no longer afford to ignore these developments. When you replace obsolete and worn out equipment and buy new equipment for new opportunities, you are actually driving your plant into becoming a “smart manufacturing” organization, even if you see yourself as simply a growing SME. Over the next decade, your manufacturing world will undergo massive change in how you manage your business and how you make your products.  Yes, the manufacturing world is indeed changing. Here are some insights on what is happening and about to happen to your business and your plant over the next decade.

Smart Manufacturing (and how does Industry 4.0 fits in)?

The term “Industry 4.0” was the name given by the German government for its strategy for computerizing industries such as manufacturing.  The focus was to build the world’s first smart factory and dates back to a report presented at the 2011 Hanover Fair.  Industry 4.0 suggested a fourth industrial revolution, the first three being the introduction of mechanization in the late 1800’s, then assembly lines, and electric energy up to the late 1990’s, which is now Industry 4.0 digital computing and digital based technologies. These processes can be summarized as “Smart Manufacturing”.

Smart Manufacturing is the tangible net outcome and result of the Industry 4.0 strategy driven through IoT capable connected devices. Smart manufacturing embraces the outcomes from the following six categories: Big data, Data analytics, Robotics, Machine learning, Sensor technologies and Artificial intelligence. These outcomes combine to optimize your manufacturing process, assist you in running your business more efficiently and help you better understand your long-term opportunities. Smart manufacturing will shifts the nature of job requirements and increase worker safety. The specific impacts of IoT smart manufacturing are the followings:

1. Greatly improved operating efficiency

By understanding in greater depth than traditional monitoring methods what is happening at each stage of the manufacturing process, plant managers can now implement real-time solutions and minimize machine downtime. This results in greater productivity efficiency and reduced costs.

2. Minimal machine downtime

Artificial intelligence (AI) algorithms are working behind-the-scenes all around us. Ever had an ad pop-up on your Facebook feed within seconds of opening it on your phone? AI is already greatly impacting your life.  Built into equipment and systems, AI is now analyzing both operational and failure logs to turn real-time IoT sensor data into predictive maintenance and business management insights. It is now also possible to retro fit much older equipment at a cost that provides a strong ROI. With new emerging technology and advancing AI, the latest offerings of new machines can, in many cases, now run their own diagnostics and are “self-healing” with a built-in ability to re-calibrate themselves.

3. Driving advances in increased worker safety

Automated tracking and analysis of people’s movements and activities are now widely available whereby risk is mitigated through safety systems. These often warn people inside the factory about specific injury risks, while monitoring for lapses in focus or mistakes during new or routine tasks. These systems can also send out for medical assistance if needed.

4. Driving inventory management and optimization

Tracking software has taken barcoding for both scheduling and following the location of parts and products before, during, and after manufacturing to an entirely new level. The results are better inventory management and decreased costs on orders with consistent scheduling.

5. Greatly improved supply chain management

Many manufacturers fail to appreciate that they are already using IoT every time they contact a carrier to bring them items from across the country and/or world. Integrating this external data to internal production management software scheduling parts and product orders increasingly improves the entire production supply chain management as a whole. In addition, it is now possible to include even those items easily recycled or to be reused, thereby further lowering the cost of materials for manufacturers.

Smart Manufacturing’s risks all manufacturers face

As with the risks for all digital-based systems (from your credit card to your personal identity), there are risks yet to be resolved for manufacturers. However, since there is no real return option to “the good old days,” these risks have to be realized, appreciated and dealt with. There three that are the topic of much discussion and are generally well-appreciated in industry, but not completely resolved.

1. Cybersecurity

The greater the digital internet connectedness a smart factory creates, the greater the opportunities there are for hacking from ransomware and viruses and the tampering of digital supply networks (DSN). Many manufacturers have not taken their security as seriously as is required in their technology adoption in the digital world of IOT. There is a mentality that a break-in “won’t happen to me”.

As with the risk of the theft of your personal digital based identity, these security risks are changing drastically in the manufacturing industry. Smart factory or not, all manufacturers need to up their game in preventing hacking and theft.

2. The lack of standardization

Common terminologies and standards are lacking among engineers, IT professionals, and manufacturers. The biggest challenge in fully developing smart manufacturing is a lack of standardization.

Before fully-harmonizing new technologies onto the manufacturing floor, open standards and open-source software need to be standardized in order to help offset costs and reduce the risks associated with proprietary software. While industry is making progress in developing and using smart manufacturing, the systemic infrastructure and capabilities needed to deliver and mobilize a knowledge-based manufacturing environment are lagging behind.

The costs (while coming down remain relatively high) create a significant barrier to entry—particularly for the smaller and medium-size enterprises (SMEs). The present revenue model most widely used by software technology developers creates a recurring burden on SMEs through proprietary licensing and mandatory annual maintenance fees approaches. When standardization occurs, fully-connected supply chains will follow and be adopted more rapidly and there won’t be any hesitation to implement new technologies as they begin to emerge.

3. Lost manufacturing jobs.

There is no question that the evolution of manufacturing into smart factories will bring an end to the economic viability of many existing manufacturing occupations and skills. The shift will impact governments, corporations, educational institutions, families, and many others. Jobs are gradually being lost and some have even shifted from one part of the world to another. But more importantly, new jobs, trades and human resources are being created in a response to this new age of manufacturing.


Interconnected digital-based devices and technologies offer major benefits to both manufacturers and their customers, which increases the value proposition to both. In order to compete and take advantage of shifting customer expectation for more sophisticated products and growth opportunities for business both next door and across the world, you as a manufacturer have to get with the program. That means the sooner you embrace “smart manufacturing”, the better off you will be in the near and long term.

Yes, it will require investment. Yes, there will be startup frustrations and risks. But as with most adoptions in manufacturing, your shift to smart manufacturing will more than likely be an evolutionary process. You can be selective as to what and how you invest in it. Smart manufacturing is starting to have revolutionary impact. The more you know about smart manufacturing, the more insight you gain regarding selecting your entry point and the better and more successful you will be in adapting to it.

But the question is: will you?


About the Author:


KEVIN LUSK, Advanced Manufacturing and Senior Executive Leadership Champion, CME

Kevin Lusk is CME’s Advanced Manufacturing and Senior Executive Leadership Champion. Kevin's extensive background in innovation and technology includes metal fabrication, vehicle manufacture, composites and robotics. He holds several patents and is a past board chair of the Composite Innovation Center. Kevin currently serves on the boards of several organizations serving the Manitoba manufacturing industry including the new university of Manitoba’s Innovation Hub.