Smart factories, a result of digital transformation
Optimize and reconfigure business models
Even a basic smart factory can increase productivity by 30%.


Digital transformation can be divided into technical and structural aspects. The technical aspect involves the application of digital technologies such as IoT, big data, AI, and robotics, a prime example of which is the smart factory.

The domestic manufacturing industry is facing a decline in competitiveness compared to developing countries due to a decline in the working-age population resulting from a declining birth rate and rising labor costs. To secure manufacturing competitiveness amidst these structural changes, government support policies are expanding. Major manufacturing companies are also accelerating the adoption of smart factories to secure productivity and enhance efficiency.

Smart factories are an inevitable trend. So, let's take a closer look at smart factories.


The effects of introducing smart factories
In a smart factory, existing physical manufacturing processes, machinery, and production facilities are connected to the Internet of Things (IoT). The resulting big data is collected and analyzed using AI. Next, a cyber-physical system will be introduced that can automatically and intelligently control everything from actual machine facilities to manufacturing processes in virtual space.

This creates a flexible production system where equipment and components within the factory are connected and communicate with each other, enabling not only customized products but also multi-variety production at minimal cost and time. As process changes improve operational efficiency, they also enable optimization and restructuring of business models.

The advantage of accelerating data storage, processing, analysis, and reporting from hours or days to near real-time has implications for all areas, including manufacturing, production, marketing, sales, and customer service.

Analyzing data collected through products enables proactive failure prevention and remote maintenance and management. Beyond simply selling physical products as one-offs, this approach creates new revenue streams by offering various services for smart products.

Smart factories are a concept that includes factory automation that replaces human labor with machines, but that's not all. The key elements include digitalization, which involves accumulating sensors, cutting-edge processes, and data; network connectivity through IoT; and smartening, which involves analyzing collected data to identify problems and make decisions.

According to Capgemini, the economic impact generated by the introduction of smart factories is expected to reach up to $1.5 trillion globally over the five-year period from 2018 to 2022. Considering that the projected increase in global GDP over the same period is approximately $18.4 trillion, $1.5 trillion represents approximately 8%.


Stages of a smart factory
Smart factories can be broadly classified into four stages depending on the application of technology.

▲In the non-ICT phase, monitoring and management of production facilities, logistics, etc. are not only done manually, but also operated using paper documents. Next, ▲in the basic stage, production management is carried out by collecting information on production facilities and logistics through barcodes.

▲In the intermediate stage, sensors, IoT, and big data are used to build automated facilities, enabling real-time monitoring of manufacturing conditions. ▲In the advanced stage, the system is fully automated with production facilities that incorporate advanced ICT that combines the real and virtual.


Smart Factory Structure
Smart factories integrate IT with existing manufacturing technologies, converging various technologies such as sensors, precision control, networks, and data collection and analysis to form services. As such, they are broadly categorized into sensor devices, precision control equipment, network platforms, and manufacturing environment applications.

For sensor devices and precision control devices, information related to manufacturing and production, such as changes in the smart factory's production environment, product and inventory status, is detected and transmitted to applications, and the results of analysis and judgment are reflected and implemented in the manufacturing field.

The network platform connects sensor devices, precision control devices, and applications, providing efficient data channels.

Manufacturing environment applications are systems that directly participate in manufacturing execution or analyze data collected from field devices and make decisions based on established rules.am.


What is required for a smart factory?
For applications and platforms related to smart factories, horizontal and vertical integration are key issues, while for smart devices, connectivity between devices is a key issue. Consequently, innovation and integration of elemental technologies are taking place globally, primarily among system suppliers.

To maximize the added value of production systems, the supply of ICT-integrated machinery, equipment, and production system packages that combine hardware and software is expanding, moving away from the supply of existing equipment-centered production systems.

For a smart factory to succeed, it's not just the independent systems of each factory that matter; even the suppliers who provide parts and materials to the factory must be optimally interconnected. In other words, connectivity is key to a smart factory, and IIoT technology is required to make this possible.


Building IoT infrastructure: The first step toward building a smart factory.
The most crucial step in building a smart factory is establishing an IoT environment. All facilities and systems within the factory must be connected to a single communications network. Furthermore, to maximize the benefits of analysis, data must be collected reliably and without distortion. To achieve this, an IoT environment optimized for the factory environment must be established.

The most crucial element in building an optimized IoT environment is the unification of communication protocols. Currently, dozens of different communication protocols are used within factories. Because different protocols are used for each process, they are operated without being integrated with each other.

In environments where inter-process communication is impossible, meaningful data collection is impossible, making the use of big data/AI solutions impossible. Consequently, technologies like OPC-UA and IO-Link are emerging as alternatives, and only by leveraging these technologies to unify communication protocols can a true IoT environment be realized.


Smart factories: an irresistible trend
Smart factories are expected to strengthen manufacturing competitiveness and lead advanced industries in each country in the Fourth Industrial Revolution. Accordingly, the global market size is projected to grow by an average of 8% annually, reaching $287 billion by 2020.

Looking at the smart factory market by region, Asia and the Middle East are expected to show higher growth rates than the Americas and Europe.

In Asia, where many of the world's major companies' manufacturing plants are located, the adoption of smart factories by these companies is expected to be faster than in other regions. China will account for a significant portion of Asian market growth as it expands its manufacturing capacity.

Major industries expected to adopt smart factory technology include automobiles, semiconductors/electronics, energy, mining/metals, chemicals, and food and beverage. Industrial Internet of Things (IoT) and big data analysis are expected to become core technologies in the smart manufacturing sector.

In Korea, the smart factory market size is expected to grow at an average annual rate of 11.2% until 2020, reaching a size of USD 7.83 billion in 2020.

The productivity gains resulting from the introduction of smart factories are already being demonstrated through established case studies. The Ministry of SMEs and Startups, which oversees the implementation of smart factories for SMEs, announced that the 7,800 factories that had implemented smart factories by the end of last year had seen an average 30% improvement in productivity.

Additionally, the defect rate decreased by 43.5%, resulting in a 15.9% reduction in manufacturing costs. Considering that approximately 80% of the 7,800 companies were at the basic level, the impact of introducing smart factories is clear.