| Small business process and management improvement performance generally high
| Lv.1 level companies, the best effect on productivity improvement
| Lv.4 level enterprise, quality-cost-delivery improvement effect

The Ministry of SMEs and Startups announced on the 23rd the results of the ‘Smart Factory Distribution Project Performance Analysis’ and stated that “Small and medium-sized enterprises that introduced smart factories showed increased competitiveness, with productivity increasing by 30%, quality improving by 43.5%, cost decreasing by 15.9%, and delivery compliance increasing by 15.5% on average.”

It also announced that “as sales increased (7.7%), employment increased by an average of 3 people, and industrial accidents decreased by 18.3%, creating quality jobs.”

The survey was conducted on 5,003 companies that introduced smart factories from 2014 to 2017, and the Ministry of SMEs and Startups plans to use the results of this survey as basic data for establishing future smart factory policies.

This survey, in particular, departed from the existing survey method and utilized administrative data such as corporate data and Ministry of Employment and Labor data, and conducted a comparative analysis (Propensity Score Matching; PSM) with companies with similar conditions among companies that have not introduced smart factories.


Performance analysis before and after introducing smart factory
Small businesses improve processes (increase productivity)The results showed that the performance of management improvement (employment and sales growth rate, etc.) was generally high.

In terms of process improvement effects, productivity increased by 39.0% for companies with less than 10 employees, significantly exceeding the average (30.0%) improvement effect, and the quality, cost, and delivery improvement effects were also found to be the highest.

The results of the analysis based on sales also showed that companies with sales of less than 1 billion won showed a 31.2% decrease in cost, an improvement of about twice that of the average (15.9%), and also showed the highest improvement in production, quality, and delivery.

The management improvement effect was the greatest in companies with less than 10 employees, which created the most jobs with an 84.9% increase in employment, and also had the greatest effect in reducing the industrial accident rate.

In terms of sales, companies with sales of less than 1 billion won had a sales growth rate of 202.3%, far exceeding the overall average of 7.7%, and also recorded the highest employment growth rate (33.1%), showing a high improvement effect.
Comparison of management improvement performance (all participating companies)" src="/news_photo/LDFJ805LG9R2KPISKH1T.png" style="width: 600px; height: 149px; border-width: 1px; border-style: solid;" />
The results of the industry-by-industry analysis showed that industries with a high proportion of small businesses, such as food manufacturing and wood manufacturing, performed well.

By level of smart factory adoption, Level 1-2 (basic) companies, which account for the majority (78.7%) of adopting companies, showed the highest productivity improvement effect (31.2%).
/> However, the improvement effects in quality, cost, and delivery time were highest in Level 4 (middle 2) companies. Level 4 companies account for approximately 1% of 5,003 companies.


Comparison of performance depending on whether smart factory is introduced or not
As a result of a comparative analysis of companies that have introduced smart factories and companies that have not introduced smart factories under similar conditions, it was found that companies that have introduced smart factories had higher performance in sales, exports, and employment, and that this gap widened over time.

Kim Young-tae, director of the Ministry of SMEs and Startups’ Technology Innovation Policy Division, said, “Through the results of this survey, we were able to confirm once again the high performance of the smart factory distribution project, one of the government’s eight leading innovative growth projects.”

He continued, “Considering that small businesses with relatively more room for improvement show relatively high performance in introducing smart factories, it is necessary to implement a two-track strategy of expanding the base of smart factories for small businesses and building advanced factories.”

In order to quickly expand high-performance smart factories, the Ministry of SMEs and Startups plans to hold regional performance reporting sessions at 19 manufacturing innovation centers across the country starting in May of this year.