12 minute read 10 May 2019
engineering in factory

How smart factories will reshape the shop floor


Craig Lyjak

EY Global Smart Factory Leader

Operational Excellence thought leader. Digital innovator. Passionate developer of people. Foodie. Father.

12 minute read 10 May 2019
Related topics Alliances

The EY Smart factory helps you go beyond simple automation to a fully integrated and flexible system that delivers value.

Manufacturers have long pursued manufacturing excellence programs to continually improve the performance of their facilities and equipment. Many of those initiatives have been successful for a time, but they lacked staying power. Even today, most of the manufacturers struggle to achieve and sustain higher levels of performance.

And now, in the age of digital transformation, manufacturers must also deal with the escalating digital disruption that increasingly challenges their competitiveness and their ability to grow. The good news is, there is a powerful alternative. It is called the “smart factory.”

What is the “smart factory?”

The smart factory can help manufacturers improve performance in a dynamic, digital world.

The smart factory is an environment in which cyber-physical systems monitor the physical processes of the factory, provide analysis and automate or support the controls and decision-making. This improves manufacturing efficiency and effectiveness.

Interest in smart factory applications continues to grow because of the significant operational benefits and competitive advantage it can generate for the manufacturers. These include:

  • Real-time, on-demand visibility into performance across the production chain
  • Information and technologies to improve physical process control
  • Flexible, adaptive, and proactive production
  • End-to-end integration with suppliers and customers

Such benefits translate into a major impact on key performance metrics. For instance, by boosting overall equipment effectiveness (OEE), the smart factory can help manufacturers increase revenue and defer capital investment. It can also improve workforce productivity and morale, and substantially reduce operational costs.

Indeed, the potential cost savings alone are a major incentive to make the shop floor "smarter." A survey by the US Department of Commerce estimates that the smart factory could save US manufacturers as much as $57 billion dollars annually.

Gaps in the smart factory initiatives

Despite widespread interest in the smart factory, overall adoption continues to be slow.

As digital technologies continue to mature, there is a pervasive aspiration across manufacturers to embrace the smart factory concept. Unfortunately, interest and enthusiasm have not necessarily translated into a widespread progress toward a genuine smart factory.

Pockets of success have emerged, but a broad, full-fledged transformation is yet to occur. Most of the progress has been in automation, particularly the kind geared towards a simple cost reduction.

One could argue that such initiatives do make the factory incrementally smarter. However, they do not include truly game-changing technologies, such as artificial intelligence (AI), the Internet of Things (IoT), augmented reality and blockchain. Majority of the smart factory initiatives are yet to move beyond the pilot stage.

Capturing value from the smart factory

How can manufacturers accelerate their progress and begin capturing the value that the smart factory can generate? EY teams have identified four key actions that can help transform the smart factory from a concept to a large-scale reality at a faster pace:

  1. Get strategic
  2. Get a framework
  3. Get tactical
  4. Get the right solution

Get strategic

It is time for the manufacturers to kick their smart factory initiatives into higher gear.

Manufacturers need to ensure that they have an overarching strategic plan that concurrently considers their operations technology, information technology and operations excellence maturity. Because the digital technologies that underpin the smart factory will have an impact across the company, the entire organization must be aligned to its vision as to where it is going and how it will get there. One needs a strategy that combines operations technology, information technology and the leading practices in operations excellence.

This creates an opportunity to significantly increase performance by ensuring that the smart factory initiatives are based on business value and are connected, scalable and sustainable. Importantly, this strategy should provide the context for prioritizing investments in the right technologies, i.e., those that solve specific business problems.

For instance, if a company’s top goal is to reduce headcount and streamline specific processes, implementing robotic process automation (RPA) could be the first order of business. The strategy should also enable the identification of key smaller-scale, targeted programs that can be executed quickly and can generate returns. The company can use these returns to fund bigger and better initiatives that deliver significant results.

However, the strategy also needs to go beyond technology to address the people and process dimensions. The smart factory will never achieve its full promise unless a manufacturer understands how work will change in a smart factory setting. The manufacturer also needs to understand the changes that would be required in the skills and talent needed to execute specific processes.

Get a framework

Advanced technology, supported by standard ways of working and powered by Microsoft Azure, helps empower a capable workforce to deliver value.

With a solid strategy in place, manufacturers need a framework that can guide subsequent smart factory initiatives. Such a framework enables manufacturers to integrate human capabilities and smart technologies to help accelerate and sustain performance improvement.

One example of this is the EY Smart Factory framework. Running on Microsoft Azure, it includes integrated and standard ways of working for sustainable operational excellence. It provides online services that help build and sustain capability and empower people. The framework also incorporates a number of important solutions, including:

  • Off-the-shelf use cases that have been tried and tested
  • Point solutions to address critical shop floor challenges
  • Practical applications of digital technologies focused on creating immediate value

The EY Smart Factory framework is built on the Catalyst Smart Deployment system, which is a cloud-based operational excellence solution that helps companies enhance their supply chain and manufacturing performance improvement programs.

The EY Catalyst system helps clients deliver a production system that gives the entire workforce access to an extensive intellectual property database containing tens of thousands of supply chain operational capabilities in multiple languages. With the EY Smart Factory framework, manufacturers can make more informed decisions. This ultimately helps them lower costs, reduce waste and boost sales through more effective demand fulfillment.

Get tactical

The entire organization must be aligned to its smart factory vision and how it will get there.

The EY Smart Factory framework can help manufacturers address the tactical and people side of the business. Most fundamentally, it means closing the gaps in the operational excellence capabilities, which are the source of most of the performance issues.

Historically, the biggest obstacle that manufacturers face while applying smart factory technologies is the inconsistency in capabilities across various processes — for instance, how people operate and maintain equipment, how they solve problems and what they do in their downtime.

Time and time again we see, even in the best-run companies, instances in which people are not “rowing in the same direction.” This is the root cause of breakdowns, waste and other problems that undermine performance.

Take, for example, loss analysis. Despite their best efforts, most manufacturers still struggle to minimize losses in production, whether it is in productivity, energy or material. Such losses are the single-biggest drag on competitiveness and profitability. For the new smart technologies to have a big impact, a manufacturer first needs to re-examine every production process and address the shortcomings that lead to losses.

Ultimately, the goal should be to develop a zero-loss culture — no waste, no unplanned downtime, no maintenance breakdowns and no productivity leakage. This is where the production system in the EY Smart Factory framework comes in. It supports manufacturers in the deployment of integrated processes and standards to help ensure that everyone from the line operator to the supervisor can execute their work consistently and with a high level of quality.

The key is the EY Catalyst Smart Deployment system, which acts as a digital coach that helps employees continually assess and build the skills that are critical to keeping the factory humming. The digital coach provides 24/7 global access to what the shop floor employees need to do their jobs, develop new capabilities and continually improve their performance. This includes:

  • A leading-practice self-assessment capability used by the shop floor teams to evaluate themselves against a phased maturity map
  • A 90-day improvement road map based on the leading-practice self-assessment gap report that acknowledges the good work done to date and maps the “gap to good”
  • Online learning and in-house training materials that the trainers and leaders can access to improve and to sustain the improvement
  • Performance improvement tracking that makes the ratio of improvement in practice and its impact on the KPI results visible and accessible to everyone
  • Consistency in the performance standards and improvement methods, which helps leaders compare “apples to apples” and identify challenges and opportunities

At the end of the day, it is about helping to ensure that all the improvement methods, tools, and processes are available to and focused on the people who are running the factory. This will make the people more empowered. They will be able to see the impact that they have on the process and its outputs, which will encourage them to make suggestions based on their observations and experience.

In short, it will put the ownership of performance where it belongs: on the shop floor where products are manufactured.

Get the right solution

Key applications within the EY Smart Factory framework can help accelerate the transformation of specific aspects of manufacturing.

Manufacturers should also leverage the right solutions to help accelerate and sustain their progress, keeping in mind the specific business value and performance impact of each. Pre-built smart factory applications are one example.

These applications include modules that leverage a common data structure, code and user experience. They integrate different digital technologies to automate work processes and make equipment smarter in the key areas of a manufacturer’s operations.

The EY Smart Factory framework includes four such applications that can make a positive impact on a factory’s performance:

  1. A smart quality management application can continually optimize processes to maintain quality control and minimize (and ultimately eliminate) loss.
  2. A smart energy application can give a manufacturer deep visibility into how energy is used across a facility. This will help the manufacturer to reduce energy usage, pay less per unit of energy and reduce greenhouse gas emissions.
  3. A smart maintenance management application can log defects and help manufacturers predict and plan maintenance by continually monitoring equipment conditions.
  4. A smart planning and materials management application can autonomously control stock and synchronize the shop floor’s needs with the larger supply chain.

The EY-Microsoft alliance offers additional solutions

Microsoft IoT edge simplifies the process of pulling together data that resides in multiple systems.

Additionally, a variety of solutions from Microsoft, an EY alliance partner, are available or are emerging. These solutions can help manufacturers develop more intelligent, connected technologies and processes. One such solution is the Microsoft Azure IoT Edge, which is a boon for operations managers.

Microsoft Azure IoT Edge

Typically for a manufacturer, important data resides in multiple systems around the company, such as ERP, manufacturing, execution, lab monitoring, and quality and safety. This makes it difficult for the operations managers to get a consolidated view of performance across their operations.

Historically, companies have had to create custom code to extract data from each individual system, put that data into the appropriate context and create a single dashboard to display the information needed by the managers. IoT Edge simplifies that process right from the beginning.

The IoT Edge software still needs to be configured; however, it includes robust capabilities for creating a standard data model, contextualizing data and connecting the Edge device to the relevant systems. In fact, Microsoft has connectors for all the major systems that have been deployed in a manufacturing environment.

This enables a manufacturer to spend more time on configuring the dashboard instead of investing time on custom code to extract data from disparate systems, which is helpful in driving better-informed business decisions.

Microsoft Dynamics 365

Another such solution is the Microsoft Dynamics 365, which can help manufacturers transform various aspects of their shop floor operations. Mixed reality is one example.

The Microsoft Dynamics Remote Assist application combines Microsoft HoloLens (a self-contained, head-mounted, holographic computer) with mixed reality video calling, annotations and file sharing. This enables professionals to remotely troubleshoot complex problems and help technicians. This powerful application helps manufacturers save time, reduce travel costs and improve operational efficiency on the shop floor.

With Microsoft Dynamics 365 Layout, shop floor designers can visualize and walk through proposed layouts with holograms in the physical world or in virtual reality and make changes in real time. Microsoft Dynamics 365 Layout easily imports floorplans from Microsoft Visio and 3D models from other apps. It allows designers to experience layouts at scale and share their vision in context to make better decisions.

In short, it helps them move from concept to completion faster with fewer costs. Hence, Microsoft Dynamics 365 can become the “glue” that unifies relationships, processes and data across not only the shop floor but the entire organization.

Leveraging Microsoft Dynamics Common Data Service, manufacturers can integrate information across disparate systems and applications, allowing a company to push and pull data across all of them. If a company brings all this data together into a unified repository in the cloud via Microsoft Azure, it can then apply AI and analytics to that data to become much more "intelligent."

The EY-Microsoft alliance: what to expect

The combined power of the EY and Microsoft alliance has led to the creation of innovative solutions that help clients digitally transform more quickly with less risk. We provide the technologies and insights that the manufacturers need to remove the barriers to digital adoption. We can help manufacturers increase their return on their investments in the digital technologies that are key to a more intelligent and connected manufacturer.

By paying equal attention to the strategic and tactical dimensions of transformation — complemented by key solutions that can reduce digital technology deployment time, effort and risk — manufacturers can reshape the shop floor into the high-performance machine that will help them thrive in this age of digital transformation.


With manufacturing excellence programs lacking staying power and digital disruption gaining momentum, it is time for the manufacturers to embrace the smart factory. The EY Smart Factory helps you reshape the shop floor into the high-performance machine that will help youthrive in the age of digital transformation.

About this article


Craig Lyjak

EY Global Smart Factory Leader

Operational Excellence thought leader. Digital innovator. Passionate developer of people. Foodie. Father.

Related topics Alliances