Industry 4.0: building the smart factory

In the first of a new series of four articles on the matter of Industry 4.0 and its potential, Mike James from ATS Global explains the current status of smart factory deployment

By Guest on 26 May 2017
Industry 4.0: building the smart factory

This article first appeared in the Spring 2017 issue of The Record.

The initial report issued in 2013, which laid out the vision for Industry 4.0, clearly stated that it would take many years to realise. Curiously, I meet few people who have ever read the report. Even more curiously, I meet many people who are either somewhat denigrating about Industry 4.0 (“it’s just marketing”) or have invented the golden egg and are already ‘doing’ Industry 4.0.

I must admit that it makes this field of study even more fascinating when people take such extreme stances. To help form your own opinions, I thought it might be useful for readers to hear about a real case study.

A manufacturer of hearing aids approached us to turn one of their plants into a smart manufacturing showcase. They were more than willing to pay for a consultancy project to research the possible return on investment (ROI). For confidentiality reasons I will change some of the numbers, but keep the ratios to help relay the story.

In the initial review, we analysed the current steps and proposed the usual streamlining of information and operational technology systems to be able to measure and improve performance. In the later stages of this process, a manufacturing execution/manufacturing operations management system (MES/MOM) would be implemented. MES provides the glue between the relatively slow enterprise resource planning layer and the real-time shop floor environment. When we started the Industry 4.0 journey, we initially thought MES/MOM would be eliminated or at least significantly changed. Latest industry insights have shown that this is untrue and MES provides an important foundation for Industry 4.0 deployments. ROI for these stages is decent, but not dramatic: 37%.

In the full smart manufacturing deployment, people are fully replaced with automated manufacturing processes in electronic and assembly operations. There is a significant requirement for robots and a strong link to the design for manufacture process. Investment at the hearing aid plant is a planned US$80 million, delivering a projected ROI of 96%. This is not a deployment for the faint hearted, but it can be done. A word of caution, though. Success requires a high level of understanding from the manufacturing team. In the end, only smart people can build a smart factory!

Mike James is president of the Manufacturing Operation Management Institute


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