The document discusses the transition from traditional manufacturing to smart factories, emphasizing the benefits of Industry 4.0 technologies like IoT and AI for more efficient production systems. It highlights the current divide between manufacturers using advanced smart technology and those adhering to conventional methods due to comfort and perceived risks. Additionally, it addresses future challenges such as cybersecurity, connectivity, and the evolving role of industrial engineers in integrating these complex systems.

1. Smart Factory
IE 484 - Spring 2019
02/06/2019
Can Ergelmis
Elbert Iliadi
Viswajit Mani Kumar Koyada
Aman Mehta
Azeez Mehta
Manopat Niyomthai
Nishok Saravanan
1. Introduction

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Every manufacturer these days started to switch from traditional factory layouts to smart factories for a
more connected, free and flexible manufacturing system. These smart factories allow manufacturers to
produce in a more efficient and at the same time more controlled manner. Smart factories can successfully
integrate data from networks that it’s connected, thus decreasing the chances of error. These factories
combine physical manufacturing machines with digitally-automated machines. AI is the technology that
makes it possible for manufacturers to work in a electronically connected and fast operating environment.
The AI technology changed the linear and sequential supply chain process to an interconnected and self-
operating supply network. These connected and smart operating systems are also referred as the Industry
4.0 system.Industry 4.0 includes internet of things, cloud computing, cyber-physical systemsand cognitive
computing. These cyber-physical systems monitor physical systems, create a virtual scenario of the real
world and make decisions. Considering the fast-trackproduction of these integrated complex robot-physical
systems, manufacturers are turning their factories into smart factories and adopting the Industry 4.0
approach for an effortless and self-operating supply network.
2. Current Manufacturing Environment
Even though there is a considerable portion of companies and manufacturers that have adopted the Industry
4.0 approach in their “smart factories”, there are still many factories that manufacture in a more
conventional way. Therefore, we can say that the current manufacturing environment is split into two
categories; smart factories and people oriented manufacturers. So, why do some factories stick to the old
approach while the rest is adopting the new, futuristic manufacturing style? Well, it is obvious that with an
established Industry 4.0 system, you can produce more goods and do it in an efficient and fast-paced
manner. However, some people still stick to the old ways because it is what they’re used to and they don’t
want to waste time setting up a whole new system and adapting to it. Therefore,many companies produce
in a setting where people control the process and machines do the work. Owners of these companies don’t
want robots controlling the manufacturing process or making decisions. They are not used to AI controlling
the entire process and they believe there might be serious issues with that. Thus, they just stick to their
conventional ways thinking that integrated systems are not fully capable of the things that humans can do.
3. Smart Factory and its Concepts
The smart factory takes a leap forward from traditional automation to a fully connected and flexible
system—one that can use a constant flow of data from connected production systems to drive
manufacturing, digitization of operations through the digital twin, inventory tracking and other activities
across the entire manufacturing network1
. The National Institute of Standards and Technology (NIST)
defines Smart Manufacturing as systems that are “fully-integrated, collaborative manufacturing systems
that respond in real time to meet changing demands and conditions in the factory, in the supply network,
and in customer needs.” In this paper we will know more about the different concepts of Smart factory like
Flexible Production, Industry 4.0 and Human Centered Manufacturing2
.
3.1 Flexible Manufacturing Systems
According to the CIRP Encyclopedia of Production Engineering, Flexible Manufacturing Systems are
defined as an integrated group of manufacturing equipment and/or cross-trained work teams that can
produce a variety of parts in the mid-volume production range. Flexible refers to the systems capability to
1
The smart factory. (n.d.). Retrieved from https://www2.deloitte.com/insights/us/en/focus/industry-4-0/smart-factory-connected-
manufacturing.html
2
MoreAdvanced Manufacturing and Factory Automation Resources. (n.d.). Retrieved from
https://www.manufacturingtomorrow.com/article/2017/02/what-is-smart-manufacturing--the-smart-factory/9166

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manufacture different part variants and production quantity can be adjusted in response to changing
demand3
. In other words, it is a manufacturing system that can readily adapt to changing needs, both in
terms of the product itself and the quantity produced. ‘Flexibility’ splits into two major categories: Machine
flexibility and Routing flexibility. Machine flexibility is the capability of a machine to perform different
operations required by a given setof part types and includes quick machine setup and jig changing. Routing
capability is the capability of processing a given set of part types using more than one route4
.
According to a study in the International Journal of Flexible Manufacturing Systems, some advantages of
flexible manufacturing systems are labor and capital savings, decreased lead and delivery times, improved
quality and the most obvious, increased flexibility to adapt to changes, both internal to the system and
externalto the economic needs5
.However,the conventionally assumedbenefits like small-batch production
and high volume production are not strongly supported with data with possible reasons including: flexible
manufacturing systems are technology-based and technology is not yet mature enough, complexity involved
in planning & implementation, and requirement of skilled employees which can drive up costs6
.
3.2 Industry 4.0
According to the International Electrotechnical Commission (2015), a revolutionary concept for the future
of smart factories is Industry 4.0 which originated in Germany. Industry 4.0 which is the 4th
industrial
revolution fueled by the smart devices,networked economy, technologies and processesthatare effortlessly
connected. The vision of this concept is decentralized intelligence where there is seamless smart
communication between the various machines on the factory floor via technologies like IOT and smart
embedded devices. It not only aims to incorporate functions on the shop floor but integration across several
core functions, from production, material sourcing, supply chain and warehousing, all the way to sale of
the final product. This would lead to intelligent, flexible and networked production environments with
greater operational efficiency, responsive manufacturing and improved product design. Numerous
industrial associations in Germany such as VDMA, Bitkom and ZVEI, large companies and research
organization have launched programs to stimulate quicker implementation of Industry 4.0. Industrie 4.0
and its underlying technologies will not only automate and optimize the existing business processes of
companies, it will also open new opportunities and transform the way companies interact with customers,
suppliers, employees and governments.
3.3 Human Centered Manufacturing
According to the International Electrotechnical Commission (2015), another novel concept that is making
strides is human centered manufacturing which is essentially putting the focus on humans and adapting the
work conditions to be more suitable for the workers in the factory. So far in the manufacturing world, the
relationship between the workers and the factory was mostly fixed. In the factory, the manufacturing
schedule was created according to a business plan and a workforce was directed according to those
specifics. Workers modified their life around the manufacturing schedule and sacrificed their personal
schedules and sometimes their health and well being. Productivity was restricted by the degree to which
workers could unite their minds with the factory. Human centered manufacturing hopes to change this
3
Reinhart, G., & Laperriere, L. (2014). CIRP encyclopedia of production engineering. Berlin: Springer.
4
Tsubone, H., & Horikawa, M. (1999). A Comparison Between Machine Flexibility and Routing Flexibility. International
Journal of Flexible Manufacturing Systems,11(1), 83-84. Retrieved from
https://link.springer.com/article/10.1023/A:1008096724273.
5
Ranta, J., & Tchijov, I. (1990). Economics and success factors of flexible manufacturing systems:Theconventional explanation
revisited. International Journal of Flexible Manufacturing Systems,2(3), 169-170. Retrieved from
https://link.springer.com/article/10.1007/BF00404671.
6
Advantages & Disadvantages of Flexible Manufacturing System. (n.d.). Retrieved from
https://www.cpvmfg.com/news/advantages-disadvantages-flexible-manufacturing-system/

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situation by the use of advanced IT that allows dynamic arrangement of worker schedule so that their
personal schedules are more respected. Moreover, smart robotic technologies will be able to contribute to
improvement of ergonomics in production to help address the needs of workers and support them in heavy
intensive and routine tasks, which will provide workers with the opportunity to focus on knowledge-
intensive activities. Customer integration and customer-driven product design choices is also a part of this
concept of focusing on the human aspect in manufacturing.
4.1 Trend - Past
Smart factories are a viable solution for companies to meet customer specifications and requirements faster
than ever before. Companies like Amazon, Tesla, Siemens and HP are some of the few companies that are
redefining the industrial process with new and innovative models of a smart factory. Klaus Helmrich,
management board member at Siemens, saysthat “Thanks to digitalization, the rollout time of new products
can be cut by 25-50 percent and engineering costs can be reduced by up to 30 percent. Meanwhile, energy
savings can increase by 70 percent.” A recent McKinsey (https://www.mckinsey.com/featured-
insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-
wages) study states that nearly 50% of current work activities are technically automatable by adapting
currently demonstrated smart manufacturing technologies.
4.2 Trend - Future
However, the long-term success of a Smart Factory or these smart manufacturing techniques rely on a
profound shift in the economy. There is a considerable need for research, development, prototyping,
practice and building experience for real life application of these new technologies. Manufactures need to
increase scale to make these technologies cost-effective over time. Although, some of these technologies
already exist, the implementation of even a small change in the manufacturing process can be a big change
for a company. Aspects such as education and training, along with the proper maintenance and handling of
system data pose a challenge for future implementation of these smart techniques.
5.1 Challenges - Cyber attacks, Data security
In the past,the securities of factories relied heavily on physical means. Isolated server rooms, locked doors,
and restriction of areas were deemed enough to safeguard the factories’ information. As factories become
“smarter” and more connected,it is clear that these physical means of protection are going to become more
vulnerable against cyber-attacks. According to the article “Security of Smart Manufacturing systems” there
have been countless incidents involving cyber attacks on factories. For example “In 2005 a worm called
Zotob disabled 13 of Daimler Chrysler's car manufacturing plants [16]across the US, causing them to be
offline from 5 to 50 min (a substantial amount of production time), stopping the activities of 50,000
assembly line workers.” This is a case where only a part of the factory was automated and the attack still
dealt significant damage. For smarter 4.0 industry factories where all components of the factory can be
targeted, we must make sure that adequate countermeasures are in place to deal with these cyber threats.
This challenge a big one because as long as there is distrust in the smart factories’ security system, people
will be reluctant to make their factories”smart”.Locks and passwords aren’t going to be enough anymore.
5.2 Challenges - Connectivity and Interoperability
Another big challenge factories of the future face is how we integrate all the information and systems
together. That is in a way the essence of a smart factory. How do we connect all the variables by having
different components of the factory exchange copious amounts of information and communicate
effectively. There are many things to take into account when we connect our system as stated in the paper
“Factory of the Future”. First of all the connection has to be on all three levels of physical (manufacturing

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plants, machines, IT (cloud, information flow), and business(align operation with business objectives). In
all these levels the connection also has to be both “vertical” and “ horizontal”. An example of vertical
integration would be from the bottom where the machines that produce the products can communicate
with sensors. The sensors would then communicate with the system, accessing MRP and order in parts for
the machine if it is missing. Horizontal integration would be the machines communicating with each other
to determine which one is going to do which task to achieve maximum efficiency. This is a simple
problem but one that must be solved in order to make these factories a reality. We were bounded by
technology before because we were not able to deal with so much information being passed around
however now that it is possible it is time to tackle this problem.
5.3 Challenges - Modelling and Simulation
According to the Factoryof the Future article7
, modelling and simulation is listed asone of the technological
challenges that will a smart factory will be faced with mainly due to “model, domain and tool
incompatibility”. Modelling and simulation is used to tackle the increasing complexity of product and
production development systems by going from conceptual design to a detailed finish which reportedly
determined 80% of costs and and the detailed path of time and resources respectively. One problem
mentioned in the article is the disconnect that still exists between modelling tools resulting in the exchange
of only basic information. A suggested solution for this is the “creation of product-production semantics”,
which allows models and simulations to interact at a higher abstraction level, sharing more than basic
information. Another problem is bringing the virtual models into real life. This, in combination with the
fact that current models and simulations are based on well-understood notions, making them ineffective in
many unanticipated situations. The solution for this would be an upgrade is software that can handle real-
time changes, and more.
6. Role ofIEs
The role of Industrial Engineers will still be very important in the new age of factories. Industrial engineers
have to develop systems that integrate people,materials, and equipment in the most productive, efficient,
and safest manner. The most crucial aspect of industrial engineering roles is the analysis, design, and the
development of systems8
. With new technologies being implemented, IEs have to make sure that the
integration of these complex systems work well together. According to the paper by Professor Michael
Sanders of Kettering University, the future role of IEs will migrate from micro-level to a more
comprehensive macro-level . For example many of the statistical process control used by the quality
department for many decades, have now been widely integrated into software applications that rely on
databases that are directly measured from the production floor9
. In the field of manufacturing specifically,
IEs have to be more knowledgeable in the software applications in system optimization and process
modelling. It is the role of IEs to be able to integrate these interrelated software applications from the
machines to the organizational level of the various functions of the organization. These new enterprise
systems of the smart factory will also have to interact with real time customer data. Therefore,IEs not only
focus on internal production issues, but be able to understand and find solutions for the entire supply chain
that meets operation needs and key performance indicators.
7
Factory of the future(Rep.). (n.d.). Geneva: International Electrotechnical Commission. Retrieved from
https://www.iec.ch/whitepaper/pdf/iecWP-futurefactory-LR-en.pdf.
8
Musharavati, F. (2012, July 9). Advancing Service Operations:TheChanging Role of Industrial Engineering. Retrieved
February 5, 2019, from https://www.omicsonline.org/open-access/advancing-service-operations-the-changing-role-of-industrial-
engineering-2169-0316.1000102.php?aid=8377
9
Sanders, M., & Morrison, K. (n.d.). The New Role of Industrial Engineers May Not Include Traditional Industrial Engineering
Practices (9.1278). Retrieved from Industrial & Manufacturing Engineering & Business Kettering University website:
https://peer.asee.org/the-new-role-of-industrial-engineers-may-not-include-traditional-industrial-engineering-practices.pdf

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7. Predictions
The smart factory of the future is a large technological leap from what a factory has been for
decades. According to a study by Deloitte, the ability to adjust to and learn from data in real time can
make the smart factory more responsive, proactive, and predictive, and enables the organization to avoid
operational downtime and other productivity challenges. The use of fully automated production system is
clearly the direction of the smart factory where machines connect to the internet and interact with real
time data that creates a more responsive and flexible production processes than ever before. Advanced
smart factories can also be able to become much more agile by quickly adapting to dynamic schedules
and product changes that increases productivity and minimize waste. The processes within a smart factory
will also no longer be separate entities. The usual distinct processes such as manufacturing operations,
warehousing, inventory, quality, maintenance, environment and safety will be digitally connected with
each other. Although a smart factory can be considered as a “dark factory” , people will most likely be
involved and crucial to the success of the smart factory operation. Roles in which people used to take
apart in will certainly change and jobs evolve into more cross-functional roles in smart factories10
.
8. Conclusion
Connecting what happens within the four walls of a factory in order to achieve a truly successful
outcome, companies should consider investing in smart factories. Investing in a smart factory capability
can help manufacturers to differentiate themselves among their competitors and function more efficiently
and effectively in a complex and rapidly shifting ecosystem. By understanding how smart manufacturing
works, companies can take smart decisions about how to deploy the technologies and move forward in
their manufacturing journey.
References:
1. Factory of the future: White paper. (2015). Geneva: IEC.
9. Tuptuk, N., & Hailes, S. (2018). Security of smart manufacturing systems. Journal of manufacturing
systems, 47, 93-106.
10
Burke, R., Mussomeli, A., Laaper, S., Hartigan, M., & Sniderman, B. (2017, August 31). The smart factory - Responsive,
adaptive, connected manufacturing. Retrieved February 5, 2019, from https://www2.deloitte.com/insights/us/en/focus/industry-4-
0/smart-factory-connected-manufacturing.html