What Is Smart Manufacturing? Benefits & Examples

Each industrial revolution since the original that began in the 1760s has brought new ways for manufacturers to produce goods faster and more efficiently than before. Today, businesses are embracing smart manufacturing, which — as this article will detail — integrates advanced digital technologies to create highly connected, data-rich production environments. This approach not only streamlines operations but also adapts in real time to supply-chain fluctuations and customer demands, making manufacturing processes more resilient and sustainable.

What Is Smart Manufacturing?

Smart manufacturing is the integration of advanced digital technologies with traditional processes to deliver the critical information needed to improve decision-making, increase efficiency, reduce costs, and boost agility.

Smart manufacturing replaces outdated, rigid systems with connected, cloud-based technology that operates collaboratively with workers and adapts to the current and future needs of the business. A variety of technologies are necessary for smart manufacturing, including internet-connected devices and sensors that collect and communicate real-time data. That data is used to optimize manufacturing processes and workflows, uncover areas for automation, predict equipment maintenance needs, respond promptly to market changes and ensure product quality.

Key Takeaways

• Smart manufacturing creates connected, data-driven production environments through the use of networked industrial devices and equipment, real-time data collection and adaptable processes.
• It makes possible cutting-edge technological approaches for optimizing production capabilities, such as collaborative robots, digital twins and augmented reality.
• With smart manufacturing, data-driven insights inform better decision-making to help manufacturers achieve strategic goals, such as innovation, growth, cost reduction and sustainability.
• Successfully adopting smart manufacturing requires more than technology — it demands investing in the digital skills and data literacy necessary for workers to effectively leverage smart manufacturing capabilities.

Smart Manufacturing Explained

Ninety-five percent of manufacturers around the world are using or assessing smart manufacturing technology, marking a 13% increase over 2023’s 84%, according to Rockwell Automation’s “2024 State of Smart Manufacturing Report.” To do so, the report notes, they’re investing in hardware, including networking equipment, connected devices, sensors, instruments, industrial computers and programmable logic controllers (PLCs); and software solutions that address production monitoring, quality management, supply-chain planning, energy management and enterprise resource planning (ERP).

The main premise behind smart manufacturing is to create automated and flexible manufacturing processes that optimize production capabilities and “respond in real time to meet changing demands and conditions in the factory, in the supply network and in customer needs,” as defined by the U.S. National Institute of Standards and Technology (NIST). By mining data-driven insights from advanced analytics, smart manufacturing is meant to drive continuous operational improvements while producing the highest-quality products. Technologies like digital twins, 3D printing and virtual reality provide manufacturers with additional tools to optimize their production capabilities.

As businesses move toward more cost-effective, energy-efficient and sustainable production of goods, smart manufacturing is considered essential. It may also be good news for workers: As manufacturers increase their uptake of smart manufacturing technologies, 94% said they expect to either hire additional employees or “repurpose” their existing workers for new or different roles, according to the Rockwell report.

Smart Manufacturing vs. Intelligent Manufacturing

Smart manufacturing and intelligent manufacturing are closely related, though “intelligent” edges out “smart” in terms of how far they can go. Whereas smart manufacturing focuses on connectivity among machines, real-time data collection and responsive manufacturing processes that are directed by humans, intelligent manufacturing ups the ante by integrating advanced artificial intelligence (AI) and machine learning (ML) to build an ecosystem that can make complex decisions autonomously, self-optimize, adapt and maintain its components. For example, an intelligent manufacturing system can use AI to analyze production data in real time and flag potential product-quality issues before work gets underway.

Smart Manufacturing: A Brief History

From the introduction of water and steam power during the first industrial revolution, to the rise of mass production enabled by electricity and assembly lines in the second, to the automated processes driven by computer systems in the third, each new era of manufacturing has led to smarter ways of manufacturing. The term “smart manufacturing” was coined in the mid-2000s, when programmable 3D printing, fast prototyping and software-connected factory automation began to, once again, transform manufacturing.

Smart manufacturing is considered a key component of the fourth industrial revolution — “the next phase in the digitization of the manufacturing sector,” says McKinsey & Company. Key technologies for this modern era include cyber-physical systems, the Industrial Internet of Things (IIoT), cloud computing, AI, ML, robotics and advanced analytics. Together, these data-driven capabilities power automated manufacturing processes that can adapt in real time to changing production demands and conditions.

Benefits of Smart Manufacturing

As manufacturers continuously strive to be more cost effective, energy efficient and sustainable, smart manufacturing is becoming essential. Indeed, the White House has designated smart manufacturing as one of four critical and emerging technologies (CETs) that make up the field of advanced manufacturing and are deemed vital for national security. The other three are additive manufacturing, clean and sustainable manufacturing, and nanomanufacturing.

The benefits of smart manufacturing can be grouped into four main categories: operational improvements, quality enhancements, cost and efficiency savings, and strategic advantages. Let’s break them down.

Operational Improvements

Smart manufacturing represents a fundamental shift in how manufacturing systems operate. Some of the key operational improvements it has brought about include:

• Enhanced productivity: Smart manufacturing boosts productivity by integrating interconnected systems that automate and optimize factory operations, leading to increased output. The collection and analysis of data in real time — whether about equipment performance, production flow or inventory levels — help managers understand what’s going on and then make adjustments to keep production running apace.
• Enhanced efficiency: Real-time monitoring, data analysis and automation streamline production processes and workflows for fast product turnaround. These capabilities also help reduce waste, maximize resources (machines and workers) and minimize energy consumption, all of which collectively lead to cost savings and leaner manufacturing operations.
• Overall equipment efficiency (OEE): Operational efficiency in manufacturing is achieved, in part, by maximizing the number of outputs with the least amount of waste (think: time, materials, equipment usage and other resources). OEE is a manufacturing key performance indicator that tracks the percentage of time the company is producing high-quality products relative to downtime, such as when equipment is being repaired. Put another way, OEE measures actual productivity.
• Optimized assets: Manufacturers spent nearly $238 billion on equipment in 2022, according to the most recent data from the U.S. Census Bureau. Through proactive, real-time monitoring and analysis, smart manufacturing makes sure these assets are operating at their peak. This data also helps to improve equipment utilization and reliability by predicting maintenance needs and reducing downtime.
• Maximum flexibility: Another smart manufacturing benefit comes from the visibility it provides across manufacturing processes and the supply chain. This allows for quick adaptation to changes in demand, supply-chain variability, production requirements and business strategies. Production output and schedules can be dynamically updated and inventory can be managed more effectively, for example. This high level of responsiveness improves overall operational performance.

Quality Enhancements

The importance of quality in manufacturing cannot be overstated, whether referring to the quality of internal processes or of products. Smart manufacturing is tied to:

• Enhanced quality control: Quality control focuses on the processes, workflows and techniques that lead to consistent production of superior products. By tracking OEE, for example, manufacturers can pick up on a bottleneck in the production line and take corrective actions that result in a more reliable manufacturing process.
• Improved product quality: Smart manufacturing raises product quality through use of precision technologies, such as computer numerical control (CNC) machining and 3D printing, that ensure each product adheres to the highest standards. These systems continuously monitor production, instantly detecting and fixing even the slightest deviations, resulting in higher-quality end products.
• Reduced errors: The automation of tasks not only eliminates human errors, but real-time data from sensors about equipment health helps ensure that machines are functioning optimally, reducing the likelihood of product defects. Corrective actions can be applied before goods proceed to their next stage or are shipped to customers, which reduces costs associated with rework and returns, boosts customer satisfaction and builds a positive brand reputation.

Cost and Efficiency Savings

Smart manufacturing saves companies significant amounts of money by automating processes, optimizing energy use and minimizing waste.

• Cost reduction: By automating processes, enhancing efficiency and reducing waste and energy consumption, smart manufacturing technologies help manufacturers reduce their operational costs. Of course, smart manufacturing itself requires a financial investment, but, as a result, nearly two-thirds of manufacturers expect to become more competitive and build business resilience over the long term, according to the Rockwell report.
• Predictive maintenance: Predictive maintenance harnesses the power of real-time data to anticipate equipment failures before they occur. This foresight enables timely maintenance of machinery — before the need for expensive repairs — thereby extending their life span and protecting manufacturers’ initial investments.
• Reduced downtime: Predictive maintenance also minimizes the costs of unplanned production halts. By proactively identifying and troubleshooting equipment issues, manufacturers are able to maintain a steady production flow, which is crucial for operational efficiency and cost savings.

Strategic Advantages

Smart manufacturing can help companies achieve broader business goals, from standing out in a crowded marketplace, to top-line growth or a stronger bottom line.

• Beyond continuous improvement: Manufacturers must be nimble, quickly adjusting to changes like fluctuating raw material costs or shifts in product demand. Smart manufacturing not only streamlines manufacturers’ processes for continuous improvement but also goes beyond — to improve profitability and overall cost structures, foster innovation and competitive differentiation, and drive growth and business expansion.
• Management and transparency: By collecting data throughout the supply chain, on the factory floor and in the warehouse, smart manufacturing provides a clear, data-derived picture of the entire manufacturing process. This paves the way for all of the operational gains discussed throughout this article and for more effective management, as well. Companies can also use this data to demonstrate regulatory compliance and to better plan and manage their processes, ensuring more efficient and responsive operations.
• Sustainability: Smart manufacturing is key for companies aiming to establish eco-friendly practices and streamline resource use, including energy and water conservation. It also supports the creation of circular supply chains that minimize waste and promote recycling. This approach is not only beneficial for the environment, but it also makes good business sense: U.S. consumers say they are willing to pay a premium for sustainable products — 11%, on average, according to a Bain & Co. report. Moreover, executives surveyed for that report expect that circular products and services will increase their revenue by an average of 30% by 2030.

Key Technologies for Smart Manufacturing

Smart manufacturing requires the convergence of several advanced technologies to deliver connected and flexible manufacturing capabilities. These technologies include:

• Cloud computing: Lying at the heart of smart manufacturing, cloud computing provides an always-on, scalable platform that stores, processes and manages vast amounts of data. Using vendor-hosted cloud services, manufacturers are able to channel data insights to fine-tune operations, forecast maintenance needs, collaborate seamlessly with supply-chain partners and adapt to shifts in market demand.
• Industrial Internet of Things: The IIoT is a network of connected systems, devices, sensors and applications that provide visibility into supply chains, manufacturing processes and inventory. This intelligent network allows for a transparent view into every aspect of the manufacturing process, from supply-chain logistics to the factory floor, providing insights that can be used to enhance operational efficiency and boost productivity.
• Sensors: Sensors are the eyes and ears on the production floor. During production, they continuously monitor critical aspects of equipment, such as temperature, vibration and energy use, flagging any spikes or irregularities that signal it’s time for maintenance. Beyond machinery, sensors also track inventory, monitor environmental conditions and protect workers who, for example, get too close to dangerous equipment.
• Digital twins: These virtual representations of a product, process or system are used to simulate, predict and optimize the performance and maintenance of their real-life counterparts. They rely on sensors and network technology to collect real-time data, enabling manufacturers to test changes to products and processes without risking downtime or failures that could impair the business.
• Virtual and augmented reality (VR/AR): VR immerses users in a 3D visual space. It allows engineers and operators in different locations to collaborate on product design and problem-solving, which can speed up development. It’s also useful for training employees on complex machinery without the physical risks. AR overlays computer-generated components onto the user’s visual field, offering real-time, hands-on guidance, such as for complex equipment assembly.
• Big data analytics: With the advent of the IIoT, manufacturers are have large volumes of data that require data crunching. Big data analytics turns this information into actionable insights that improve efficiency and product quality, predict equipment failures, reduce costs and inform strategic decisions.
• 3D printing: 3D printing, also known as additive manufacturing, builds complex products and components layer by layer from plastics, metals and other materials that create a three-dimensional product. 3D printing allows for rapid prototyping, ultimately reducing time to market and driving down manufacturing costs. Perhaps a testament to its effectiveness, the global 3D printing market size is projected to grow from $27.5 billion in 2024 to $150.2 billion by 2032, a compound annual growth rate of 23.6%, according to Fortune Business Insights.
• Collaborative robots (cobots): Unlike traditional industrial robots that often operate in isolation for safety reasons, cobots work alongside human workers on the manufacturing floor. They’re equipped with sensors and tools that allow them to perceive their surroundings. Cobots can be employed for a variety of tasks, including product assembly, machine tending, quality inspection, packaging and palletizing, all of which can reduce strain on human workers and increase efficiency.
• Enterprise resource planning: A cloud-based ERP system centralizes all aspects of the manufacturing process, from production and inventory management to customer relationship management, accounting and beyond. This creates a cohesive and real-time overview of operations that empowers manufacturers to streamline workflows, adapt to market shifts and become more innovative in their manufacturing practices. According to the Rockwell report, 76% of manufacturers have already adopted or plan to adopt an ERP solution.
• Edge computing: Edge computing processes data closer to the sources from which the data is collected — in supplier locations, factories and warehouses — instead of at a remote data center. The term comes from the idea that data centers lie at the core of a network and customer premises are at the edges. This local processing leads to faster decision-making and less use of network bandwidth. Edge computing complements cloud computing: The cloud handles heavy-duty data processing and storage, while the edge handles immediate, on-site needs that call for lighter processing loads.

Smart Manufacturing Examples

Smart manufacturing is transforming industrial operations worldwide. The following examples highlight a few companies that have successfully applied smart manufacturing principles.

• Ford Motor Co.: Over the years the automaker has put cobots to work in a variety of ways. For example, cobots are used to sand the bodies of automobiles and vacuum any dust left behind, ensuring a smooth surface for painting. Cobots are deployed on the engine assembly line, where they grease camshafts, fill engines with oil and then check for leaks. Cobots are also assisting workers with disabilities, helping them perform their jobs safely.
• Micron Technology: The production of silicon wafers used in computer chips is an exacting process involving hundreds of minute steps. Micron monitors the status of its wafer-processing machines using acoustic sensors that detect changes in typical sounds, which might indicate an impending problem and trigger predictive maintenance. Micron also uses digital twins for thermal monitoring, overlaying infrared images taken during normal conditions to compare with current heat maps for detecting temperature anomalies. When deviations are spotted, the system alerts the operators, enabling preventive maintenance.
• GlaxoSmithKline (GSK): The pharmaceutical company invested $120 million in smart manufacturing at one of its facilities to speed up the production and delivery of vaccines and medicines. GSK employs advanced analytics and digital twins for early fault detection in manufacturing processes, while robots in labs enhance quality-testing accuracy. Digital mathematical models can forecast the performance of vaccines and medicines, reducing batch rejections, while electronic batch records automate data capture and minimize the likelihood of human error.

Graduate to Smart Manufacturing With NetSuite

NetSuite for Manufacturing is a cloud-based ERP solution that works hand in hand with smart manufacturing, providing a centralized platform that stores and processes the wealth of data generated by factory floors and supply chains. NetSuite for Manufacturing automatically balances supply and demand, optimizing resource allocation, order management and inventory management. With real-time visibility into production, managers are able to make data-informed decisions that ensure the efficiency of their operations, the quality of their products, the best use of their resources and the ability to innovate faster — all of which contribute to a more competitive and sustainable manufacturing process.

Smart manufacturers are adopting new technologies to transform their operations, creating a highly connected manufacturing ecosystem that analyzes real-time data to improve production processes, resource allocation and sustainable practices. By embracing innovations such as sensors, the IIoT, cloud computing and advanced analytics, companies are achieving new levels of automation, optimization and agility.

Smart Manufacturing FAQ

What is meant by smart manufacturing?

Smart manufacturing integrates advanced digital technologies, such as sensors, the industrial Internet of Things and cloud computing, into traditional manufacturing processes. Its adoption leads to increased efficiency and agility in factory operations, as well as improved resiliency and sustainability.

What is an example of smart manufacturing?

Predictive maintenance is one example of smart manufacturing, where data from sensors embedded in manufacturing equipment is analyzed to predict when a machine might fail. This proactive approach allows companies to address issues before they lead to equipment breakdowns that result in wasteful downtime and lost productivity.

What is intelligent manufacturing?

Intelligent manufacturing uses the same technologies as smart technologies but adds artificial intelligence and machine learning to create a manufacturing process that can self-optimize, self-diagnose and make independent decisions by learning and adapting to real-time data.

Is Industry 4.0 the same as smart manufacturing?

Smart manufacturing is considered a key component of the transition to Industry 4.0; the terms are often used interchangeably. Smart manufacturing, however, typically focuses on the technologies required to produce goods more efficiently, reliably and flexibly at the factory level. Industry 4.0 refers to the broader Fourth Industrial Revolution, following mechanization, mass production and automation.