Helping to demystify industrial
digitalisation in UK manufacturing

Being smarter about Smart Factory

21 April, 2020

Manufacturers are under pressure to be more efficient and profitable, driving them to new technologies born from the fourth industrial revolution. Completed by teknowlogy Group, a new survey has been released showcasing the use cases, barriers and future of the Smart Factory. Over two issues, Stratus Technologies will be offering insight into the results and what this means for the industrial sector. Greg Hookings, head of business development – digitalisation, Stratus Technologies reports.

Part one – Looking internally at Smart Factory initiatives 

First, what is the Smart Factory? The principle is to create an intelligent network throughout the manufacturing process, connecting machines and other systems that can control each other autonomously (or at least semiautonomously). This is the Smart Factory in the most basic sense; the concept encapsulates a multitude of cyber-physical systems and new, added capabilities such as virtual copies of the manufacturing plant (Digital Twins).

This survey of IT and OT decision makers at 204 European manufacturing companies with more than 500 employees, which have at least some level of Smart Factory initiatives in place, has offeredunrivalled insight into the internal drivers of deployment.

Maturity of the market

As a precursor to the survey, all participants had to have some level of Smart Factory initiative deployed.

With a combined 73% in the planning and early phase, this showcased exactly what was expected in the survey, that most initiatives are in the planning or early (often pilot) stage. But already an impressive one fifth (19%) are in the medium phase (already generating business impacts) and 8% with organisation-wide Smart Factory deployment. This is much higher than we might have expected and means that the business case has been won and executed by an encouraging proportion of companies in Europe.

Cost

As with any new technology, cost is the main challenge to the decision to deploy. In fact, over half (58%) cite “cost of purchase of Smart Factory solutions” as the biggest challenge to implementing a Smart Factory initiative. Almost half (48%) state that “building the business case for SmartFactory investment” is a significant challenge.

With the purse strings held tight, and manufacturers struggling to present a strong business case, is this slowing investment? With new initiatives it’s safe to say this would be expected, but the survey shows a surprising differing opinion. Of those surveyed 63% of companies are planning to increase their investment in Smart Factory in the next three years. This can be interpreted to show that despite the challenges of proving the return on investment and funding expansive projects, most companies are convinced that Smart Factory strategies are central to their future growth and sustainability.

An important underlying force behind this increased investment is reflective of the competitive landscape. Asking companies, is Smart Factory consideration part of their key strategic objective, on a scale of 1-10, the results show the European manufacturers not only see it as important, but directly related to theircompany’s future competitiveness.

It is understandable that many companies see high-cost initiatives as risky, with a delayed Return on Investment (ROI). Again, the survey has provided surprising results that should help prove the business case. 

When asked if their Smart Factory initiatives have achieved a Return on Investment, over half of respondents (56%) said they have not yet reached that point. This leaves 44% already benefitting from new initiatives, a very promising proportion at this stage of adoption – especially bearing in mind the first statistic reported, that 27% ofcompanies consider themselves in the medium or advanced phase of implementation.

This provides compelling evidence that the “cost of investment” challenge to deployment, can be countered with ROI statistics. Moreover, of those that have achieved ROI nearly all (97%) achieved this in under three years. This remarkable statistic effectively moves the investment from a long-term strategic consideration to a medium-short term one. It bears noting of course, that this doesn’t mean that any investment will pay off – but rather that the approach being adopted to date yields a very high potential for quick ROI.

Digital transformation

Smart Factory initiatives and Digital Transformation go hand in hand. Companies are using more digital technologies every day to modify manufacturing processes to meet thechanging needs of customers. Nearly half (47%) say “supporting digital transformation” is the vision forntroducing their Smart Factory initiatives.

Streamlining complex manufacturing systems and processes by allowing controllers, drivers, sensors and other devices to communicate gives manufacturers the tools they need to make real-time business decisions and make the most of what they have.

Asset utilisation

It’s not uncommon for manufacturers to seek to improve their operational efficiency, you could say there hasn’t been a manufacturer alive that hasn’t wanted to optimise! What’s different in this era is that the arc of optimisation can be steepened dramatically.

Asset utilisation is the true measure of total revenue earned for every asset a company owns. Smart Factory initiatives aid utilisation and asset performance by improving flexibility, visibility and efficiency of processes and enabling new business approaches, products and models. In fact, when asked which Smart Factory initiative has been deployed, we see a clear picture that the focus is often (and sensibly) making the most of what is available.

Condition monitoring, quality control and the connected worker (productivity) are all forms of asset utilisation. Whether that is the machinery on the plant floor or your skilled workforce, connecting these assets digitally gives manufacturers the tools to stay competitive.

Product

Manufacturing has changed in recent years, moving away from mass production of near-identical products towards mass customisation. With a high amount of variation, manufacturers are investing in Smart Factory initiatives (as shown above) to ensure orders are synchronised across all production facilities.

Mass customisation is already being evaluated (23%), planned (36%) and deployed (24%) by most European manufacturers. That is a total of 83% of manufacturers already on the journey towards mass customisation it shows the direction of the industry forthe near future, a future focused on agility and responsiveness, and improved efficiency.

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