Artem Kroupenev, VP of strategy at Augury, dives into the fundamental difference between a smart factory and a smart business, concluding with a few steps to power the transition from the former to the latter.
Factories are much more than manufacturing operations. Changes in the means of production spur human progress. Industrial production was driven by leaps in technology, such as the steam engine that helped power the industrial revolution in the late 1700s and early 1800s. Today, we’re on the brink of the fourth stage of that revolution, where sensors combine with ubiquitous connectivity to produce data and insights that were beyond our wildest dreams just a few decades ago.
However, the end goal is not just to use industry 4.0 technologies to build smart factories but to build smart businesses.
It Takes More Than Smarts
The transition from industry 2.0 to industry 3.0 was driven by business objectives combined with technology. That same combination will enable you to carve your own path to industry 4.0. Supply chain professionals should start with concrete use cases for new technologies and apply them to the business objectives they hope to achieve.
To determine the business objectives you need to achieve, start by asking what can bring customers the most value. The answer might change and evolve over time, which means agility and flexibilityOpens a new window  should be the hallmarks of your smart business. To incorporate those characteristics, you must recognize that the transformation won’t happen if you pursue it alone. Engage with an ecosystem of vendors and customers that extends well beyond the walls of any particular production site.
Just look at Airbus, whose manufacturing operation relies on many vendorsOpens a new window  for various products and services. Suppliers need to provide different components just in time to assemble the plane. If Airbus saw a quick change in demand and failed to share that news with suppliers immediately, they would be hit hard. However, as COVID-19 hit, Airbus quickly recognized a shift in demand and forecasted a massive industry-wide upheaval. Because Airbus is a smart business, it informed its global ecosystem of suppliers and customers immediately, and these groups were able to prepare accordingly.
Smart Factories vs. Smart Businesses
A smart factory is simply a combination of use cases that provide key insights into all the elements of a technology-enabled factory. These insights include throughput, yield, and quality; the health of manufacturing assets or their utilization rates; and predictability of the factory’s performance based on both inputs and outputs. In other words, smart factories are an amalgamation of use cases that might have been implemented in a piecemeal way to accomplish certain goals.
Once you have created a network of smart factories, you can start to think about what it means to be a smart business. A smart business knows when and where it’s best to produce certain things and how to predict supply and demand based on insights in the broader ecosystem. If a smart factory is a factory enabled by insights, then a smart business enables the entire supply chain to be predictive based on these insights.
People often mistakenly assume that the transformation is about implementing technology — but it’s really all about using insights at scale. To leverage your existing technology investments in the pursuit of those insights and the creation of a smart business, start with these three steps:
1. Understand Your Machines
Operational insights look at how machines, processes, and people function and predict how they’ll operate under certain conditions in the future. This knowledge increases the agility of your operation and becomes a tool that you can use to improve forecasting and enable your entire supply chain to function more smoothly.
Start by better understanding individual machines. Then apply the insights you gather across entire production lines. Look for a machine health solution that can monitor your assets’ performance and utilize AI capabilities to diagnose irregularities. This way, you can drastically improve the reliability of your machines at scale.
2. Analyze Data to Gain Insights
The filter between a smart factory and a smart business is a combination of domain expertise and AI. AI has become a massive buzzword, but it is being successfully implemented in specific use cases, including machine health, process optimization, automatic quality control, and optimization of demand forecasting and supply chain transportation networks.
You can power AI by capturing purposeful data through tools like sensors on your machines, but human experts add operational context to automated analysis. By combining AI with expert users, you can apply insights, make decisions, and implement improvements based on experience.
3. Share Insights with Your Ecosystem of Stakeholders
Learning and insights can’t impact operations if they never go beyond the site. Instead, share this knowledge with partners, including suppliers, other factories, and customers.
Look for a platform that allows you to share machine data easily. This will allow users to share insights and solutions with each other and help new users understand the full context of a machine’s history. When information can flow freely throughout the ecosystem, it can improve understanding and enable better decision-making. For example, when maintenance teams, reliability experts, and operations teams share information and collaborate effectively about critical machines, they can keep those assets online even when not all members of the team are on the ground at facilities.
We are moving toward a more holistic networked approach to manufacturing, but we’re not quite there yet. In the pursuit of smart factories, manufacturers are still integrating new technology into industry 3.0 processes. The real benefit of the smart factory, however, extends beyond the walls of any single facility. Forward-looking manufacturers know that smart businesses, rather than smart factories alone, will be the real achievement of industry 4.0. And to get there, it will take operational and mechanical data to inform stronger, more strategic decisions at a businesswide level.
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