Agility in Manufacturing: The Rise of Smart Factories

I wrote an article last month about agility in manufacturing, and how privately held and family-owned manufacturing companies need to look at any blind spots in their supply chain that might be holding them back.

And I want to reiterate that, in my opinion, “agility” in the manufacturing world isn’t necessarily all about speed and pivoting. But it does mean being prepared to adapt to changing market and business conditions — and in the manufacturing industry, that means getting the right fundamentals in place.

In the first article in this series, I focused on the importance of remaking the supply chain to build redundancy and resiliency into the parts of the business over which manufacturers have less control. Today, I want to talk about how technology on the factory floor can also help manufacturers stay agile and positioned for growth.

Smart Factory Transformation Unlocks Agility

Manufacturing companies can’t afford to change business processes on the fly to avoid a particular risk or seize a new opportunity. On the contrary, manufacturing businesses rely on clear, repeatable processes — with well-defined inputs and outputs — to keep operations running smoothly and predictably.

Preparedness starts with transparency and full visibility into every part of the manufacturing operation.

Agility in manufacturing requires accurate data — and smart factories deliver just that.

I’ve talked about how a Digital Operations Platform (DOP) is the evolution of ERP, and that still holds true; but smart factories take that concept to the next level. Before we dive into why smart factories will transform the manufacturing world, let’s get clear on the definition.

A smart factory is a digitally enabled manufacturing facility, where devices and operational systems are connected, allowing data to be collected and shared in real time. There are different flavors and levels of complexity — for example, some smart factories incorporate automation, AI-powered analytics, and even robots on the factory floor.

Deloitte goes into a lot more detail on the subject in this article (I highly recommend it if you want to know more about how manufacturing companies are implementing smart factories), but for the purposes of this discussion, I want to focus on the ways that digital technologies contribute to agility in the manufacturing environment.

Connectivity eliminates silos

One of the defining attributes of a smart factory is the interconnectedness of all its parts. With the advent of 5G on the factory floor, devices can easily collect data and share it with IT and operational technology (OT) systems in real time. This digital integration enables a full end-to-end view of manufacturing operations, eliminating blind spots and illuminating bottlenecks in the demand-to-supply workflow.

Automation drives efficiency

With real-time data being injected into the digital ecosystem continuously, there’s a huge opportunity for automation. Automating critical business processes not only increases efficiency, it also frees up employees for higher value work. In fact, smart technology can create new roles in the organization itself, leading to new upskilling opportunities for current team members and more avenues for innovation.

Analytics generate actionable insights

The power of a smart factory doesn’t only rest on the way data can be moved around the digital ecosystem. Analytics can correlate enormous amounts of information, at scale, and uncover important patterns in ways that humans cannot. From process improvements to predictive maintenance, to production forecasts, analytics applications empower manufacturing personnel to make informed decisions and anticipate changes in the operational environment.

An ERP System Ties Your Data Together

Of course, having a lot of data at your disposal isn’t all that useful if you don’t have a way to connect the dots and use the information in a relevant business context.

Smart factory or not, an ERP is the first step to connecting all of your business systems, so you have an end-to-end view of your operations. If you don’t have an ERP that can manage that demand-to-supply process properly, it’s much more difficult to get the value out of any additional layer of technology that you might lay on top of the equipment.

For example, you may put “smart” devices out on the shop floor, or put sensors on some of your existing equipment, but unless you have a centralized system where you can integrate that data, you won’t be able to get the full visibility you need in order to achieve the full scale and speed you’re looking for.

Knowledge Is Power — and Preparation Is Key

And this gets to the heart of implementing any transformational technology: you need to be intentional about it and understand not only the “big picture” of what you’re hoping to achieve, but also the ways in which the change will impact your existing processes and people.

Here at Syte, we always start our client engagements with a Transformation Readiness Evaluation to help them identify where their existing capabilities and capacities are, relative to taking on any business transformation initiative. After that, we go through a rigorous Business Process Assessment exercise where we take a detailed look at how the organization is currently operating — the processes and procedures involved, the people and skill sets required — to understand how any change would impact those areas.

While we use these frameworks in the context of helping our clients choose the right ERP solution for their manufacturing businesses, it applies equally well to any large-scale change initiative.

Investing in “smart” technologies on the factory floor may seem like a no-brainer, but it’s going to disrupt the way things are currently done. That has implications not only for existing operational workflows, but also for your employees. I’ve seen many change initiatives flounder because of insufficient planning and miscommunication, leading to sluggish adoption. Proactive change management will ensure a smoother transition and more resilience in the face of any hiccups along the way.

At the end of the day, any smart factory initiative — no matter how incremental — is going to require careful planning and analysis. In particular, making sure your IT and OT teams are engaged is absolutely critical. Mutual understanding and collaboration between these two functions will make or break your leap into the world of the smart factory. But the upside is that getting that collaboration right will pay huge dividends well into the future.

Digital Technology Drives Operational Efficiency — and More

Smart factories are going to be key drivers of growth and competitiveness in manufacturing. While privately held and family-owned manufacturing businesses may not be ready for (or need!) robots or AI-powered software on the factory floor, there are many simpler innovations they can consider to make sure their factories are ready for the future. And having the right ERP system in place on top of any new layer of technology will ensure they get the most out of it.

Are you considering any smart factory initiatives for your manufacturing business? We’d love to help you evaluate your options. You can schedule a complimentary consultation session right here.