Smart Factories Hold Significant Market Potential in Digitalization and Sustainability

Smart factories, smart manufacturing, and the Fourth Industrial Revolution (i.e., Industry 4.0) have emerged as a solution to how the manufacturing industry should adapt to modern society, where social and economic conditions are rapidly changing. This concept does not stop at simple production automation but requires automation in all areas, such as development, order, production, inspection, inventory management, and service and maintenance. 

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Smart manufacturing makes it possible to move beyond mass production for large quantities to customized products in small quantities, responding flexibly to customer demand changes. To do so, the factory needs to become smart in product development, market analysis, supply chain, production line changes, maintenance service for managing production lines, etc. An automated manufacturing facility can use various technologies such as connecting devices and continuously collecting and sharing data for operating machinery and production systems. These data analytics inform decisions to improve processes and address any issues that might arise. Smart factories utilize a variety of technologies, including AI, big data analytics, cloud computing, and the Industrial Internet of Things (IIoT).

An example of smart management of production lines is provided by Konica Minolta, a Japanese multinational technology company. The company provides AIRe Link, a remote service support tool that offers real-time assistance for equipment malfunction. Konica also collaborates with German telco Deutsche Telekom for pioneering 5G connection to AIRe Link service.

Companies also seek opportunity through merger and acquisition growth. For instance, Siemens, a German automation and engineering company, acquired UK-based IIoT firm Senseye in 2022. Senseye provides predictive maintenance solutions for industrial machines to manage and reduce unplanned downtime, thereby enhancing productivity and sustainability in manufacturing.

Industry 4.0 technologies also show substantial market potential in sustainability by expanding the concept of efficient facilities operations. For example, the Schneider Electric Lexington Smart Factory became one of the pioneers named a Sustainability Lighthouse by the World Economic Forum. The factory’s optimized energy efforts led to 26% energy reduction, 30% net CO2 reduction, and 20% water use reduction. The factory leveraged IoT connectivity with power meters and predictive analytics to optimize energy consumption.

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The smart manufacturing business has great potential because many old factories operate with historically grown production lines that include old machines. Industrial machines are often more than 20 years old. Sensors, software, and IoT-enabled industrial control systems can retrofit this older equipment to be suitable for digitalization. In addition, eco-friendly trends such as carbon neutrality are also contributing to the expansion of the smart factory market as automated and optimized manufacturing processes are replaced in factory facilities that are equipped with obsolete equipment and systems. A comprehensive smart factory solution that spans development, order, production, inspection, inventory management, service, and maintenance requires various integrated technologies across IT and OT. 

Defining a market entry direction is an essential step with so many different approaches to building a smart factory. Providing an advanced network technology for smart factories can be a suitable market entry plan for telcos as described in the earlier case of Deutsche Telekom. And improving IoT and analytics technology can be another market entry plan for automation companies as aforementioned in the cases of Siemens and Schneider Electric.