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Is it cost-effective to upgrade to a Smart Factory?

Upgrading to a smart factory isn’t something that should be taken on lightly. The costs and complications involved, whether starting from scratch or reviewing legacy products make it an expensive project in terms of time and money. However, the long-term advantages easily outweigh the costs.

The major benefits of an upgrade generally include increases in outputs, quality and consistency. From a technical standpoint, digitalisation provides plenty of operational support throughout entire manufacturing plants.

It’s been estimated that by 2020, Industry 4.0 is expected to bring a cost reduction of around 3.6% a year across process industries around the world. This means that the total global revenue gains could be close to $421 billion.

With 76% of manufacturers already having an ongoing smart factory initiative or formulating one, it’s clear to see that the adoption of digital manufacturing technology has become widespread across the industry. If the forecast by Capgemini is correct then those who aren’t willing to embrace digitalisation could quickly find themselves being driven out of their core markets by technologically-advanced competitors.

By streamlining and automating data, smart factories can collect and provide advanced production analysis. The information can then be used by managers to make informed decisions across the production line. This helps predictive maintenance by providing more visibility on potential issues, virtually eliminating unplanned production downtime, which is estimated to cost the automotive industry approximately £7,000 a minute.

Alongside this, manufacturers can expect enhanced levels of productivity as they receive detailed insights into the entire factory’s operations. From bottlenecks and machine performance to other inefficiencies that may be impacting the business, companies can use this data to increase their yields and quality while reducing waste.

Combining all these smart factory features allows businesses to improve the transparency of their entire networks. This means that manufacturers who operate on a global scale can use the digitalisation of their plants as an opportunity to manage and control their entire network from a single screen. This does more than simply iron out inefficiencies, it also helps develop global best practices.

While the benefits are clear, starting the implementation can be labour-intensive and time-consuming. Alongside this, the upfront costs that are associated with upgrading a factory’s infrastructure can be intimidating. Despite this, Capgemini estimate that smart factories can nearly double the operating profit and margin for the average automotive OEM manufacturer.

With so much to gain, upgrading to a smart factory and embracing Industry 4.0 is essential and companies are starting to see that they must adapt or get left behind. However, one of the biggest hurdles that is frequently encountered is the integration of multiple technologies that need to work in tandem.

Although multiple technologies will be required when upgrading to a smart factory, each segments of the digitalisation puzzle should be completed piece by piece. Fully digitalised enterprises aren’t expected to become a reality until 2030, but manufacturing companies should be starting their digitalisation journey now.


Smart factories have already begun revolutionising the industry standard, so investing into the technology is key for any manufacturer to maintain a competitive edge. 

At Underwoods, we’re experts in the products that make smart factories tick and as Siemens approved partners, we promise the highest levels of service and technical knowledge. To find out how we can help, contact us today.

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