• James Abbott - MD Challenge Engineering

Time to Smarten Up: The Why and How of Smart Factories

The Smart Factory: data, technology, the Internet of Things (IoT), process, and cybersecurity, make for higher productivity, flexibility, and adaptability.

You may have noticed that the word ‘smart’ is slowly becoming the norm when it comes to our devices. Smart phones, smart TVs, watches, and cars, are all great examples of the revolution in automation, connectivity and –to an extent–autonomous operation of the devices all around us.

As our devices are more ‘self-aware’ of their function, their status, and other information, they can react accordingly to attain higher grades of efficiency, accuracy, and flexibility.

It seems logical that while developing smarter and better products, factories will also need to become smart.

Envision a manufacturing environment where every single action taken, by every element involved in the process is no longer linear and siloed, but instead measured, analysed, and utilised. This data then interacts with all the other elements, converging and unifying individual actions towards common goals; productivity, accuracy, flexibility, reactivity, and overall efficiency.

This is a reality that’s quickly shifting the manufacturing paradigm of factories everywhere. According to Forbes, smart manufacturing is set to render a 7x increase in productivity by the year 2022. An impressive 43% of manufacturers have an operational smart factory endeavour in place, with another 33% already working on the development of one.


Although no two industries, or even factories within the same industry are the same, there are some key aspects that any organisation should look out for when considering making a factory smart.

1. Data and algorithms

In order to power a smart factory, manufacturers should focus on having the means to create, collect, and analyse continuous streams of information. Then, take subsequent courses of action for the enhancement of the operations involved in the data and ultimately, the results obtained. The way this data is combined, processed, and the actions resulting from it is what really makes it valuable.

2. Technology

For a smart factory to function at all, it is necessary that plant equipment is able to communicate with each other, and also with a central control system. Depending of the complexities that every business needs to solve, many diverse and sophisticated options are available like the Internet of Things (IoT), analytics platforms, and digital supply network stacks.

3. Process and governance

A smart factory can autonomously run production processes, optimise them, and adapt them. These extremely valuable features also imply that decision-making roles will inevitably go from human to machine “hands”. This will create the need to modify – or altogether redesign – an organisation’s decision-making processes in order to prepare for the possible new and different questions that are likely to arise.

4. People

Even if some human roles are replaced with robotics, AI, and other forms of automation; other human roles will inevitable transform, and new ones will emerge. This may include the need to constantly develop and maintain the technology for example.

5. Cybersecurity

The connected nature of a smart factory is what gives it its magic. It’s also what makes it more prone to be targeted by cyberattacks, so cybersecurity is a fundamental part of the whole factory’s architecture and should always be considered a priority.


Although it’s almost impossible to establish a direct investment-benefit correlation, the raw numbers referenced above are great indicators that smart solutions are almost always the right choice. Especially if you aim for higher productivity, flexibility, adaptability, and reactiveness when participating in competitive markets, and eliminating inefficiencies and hazards in the workplace.

What kind of costs are involved?

When it comes to smart factories, there’s no ‘one size fits all’. Expenses vary greatly from factory to factory, depending on the type of industry, rate of automation aspired, technology applied, and a number of other criteria specific to each individual case.

If you’re looking to apply smart solutions to your business and would like more detailed assessment and budget expectations, it’s best to talk to experts dedicated to the smart factory industry. Some good places to start can be Smart Factory expos like the Smart Factory Expo in UK and SFE Smart Factory Expo in Japan.


There’s no single guide that can completely set the specific steps to make factories smart, given that every operation has different complexities involved in its production process. An organisation should undertake the challenge with its own needs and capabilities into consideration. Nevertheless, these steps can be used as a starting point:

1. Start small and scale up

Focus on specific automation opportunities. No matter at what level of the network; identifying, digitizing, and analysing these opportunities gives way to actions that add value to the process. Once a single asset has transitioned into being smart, the process can be tested in a manageable environment, iterated, and eventually scaled to production lines, factories, and factory networks.

2. Don’t lose sight of the specific needs

Every factory has a different strategy and environment, which will define what the specific issues are that must be addressed in order to add value using smart factory solutions.

3. Smart technologies are just as important as how they’re used

The smart factory journey doesn’t end at having a set of connected assets in place. Hardware and software for the proper storage, management, and analysis of the data collected, as well as the means to act upon them, are all critical. Human talent is also crucial to propel the process effectively, and to assess the transition in all areas.

4. Think outside the factory box

It is rare that an organisation exclusively consists of a single factory. True and global connectivity means that the factory is capable of projecting its performance beyond itself, having an impact on and being capable of interacting with the whole supply chain, partners and even customers. The dynamic, connected, and transparent nature of a smart factory provides endless opportunities that can only be seized with creative thinking. It enables an organisation to be more effective and efficient in rapidly shifting and ever-more complex markets and ecosystems.

You can learn much more about smart factories in this paper from Deloitte.

At Challenge Engineering, in Sydney Australia, we machine custom metal and plastic components, and pride ourselves on great customer service. We can manufacture and deliver anywhere in Australia. Please contact us and find out how we can assist your business.Sign up to Challenge Engineering’s blog, send through a Request A Quote form, email us or phone (02) 9632 0010.

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