4 minute read 11 Mar 2019
Man working in factory

How the smart factory can make your shop floor smarter

By Craig Lyjak

EY Global Smart Factory Leader

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

4 minute read 11 Mar 2019
Related topics Alliances

The smart factory is a fully integrated system that provides a consolidated view of the factory, which improves manufacturing efficiency.

Manufacturers have long pursued manufacturing excellence programs to continually improve the performance of their facilities and equipment. Many of those initiatives were successful for a time. But they’ve proven to lack staying power, as most manufacturers still struggle to achieve higher levels of sustainable performance improvement.

What is worse, such initiatives are increasingly unsuited to an era of escalating digital disruption that challenges manufacturers’ competitiveness and ability to grow. The good news is, there’s a powerful alternative. It is called the smart factory.

The smart factory can be a boon for manufacturers facing ongoing pressure to improve their performance in a dynamic, digital world (which, frankly, includes pretty much all manufacturers). At a high level, the smart factory is an environment which has cyber-physical systems — interacting networks of physical and computational components. These systems monitor the physical processes of the factory, provide analysis, and automate or support controls and decision making, which improves manufacturing efficiency and effectiveness1.

The smart factory is no longer a futuristic vision

The smart factory is the heart of the broader Industry 4.0, or the Fourth Industrial Revolution, which refers to the gradual combination of traditional manufacturing and industrial practices with digital technologies. The most prominent of these technologies include:

  • Computer-aided design (CAD) and computer-aided engineering (CAE) software
  • Cloud computing
  • The Internet of Things (IoT)
  • Advanced sensor technologies
  • 3D printing
  • Industrial robotics
  • Data analytics
  • Artificial intelligence (AI) and machine learning (ML)
  • Enhanced machine-to-machine (M2M) communications

These technologies are more robust and are driven by more pervasive wireless connectivity.

Microsoft Dynamics as an accelerator

While a myriad of manufacturers have been working with many of these technologies for some time, we are likely to see smart factory momentum accelerate. Thanks to another important tool: Microsoft Dynamics.

As Microsoft Dynamics’ integration with smart factory processes and technologies grows, it will become an indispensable tool that can help manufacturers more easily and confidently deploy next-generation applications that infuse AI, predictive analytics, mixed reality, social, and mobile capabilities.

Take mixed reality, for example. Microsoft Dynamics’ Remote Assist application combines Microsoft HoloLens (a self-contained, holographic computer) with mixed reality video calling, annotations, and file sharing to enable experts to remotely troubleshoot complex problems and help technicians. This saves time, reduces travel costs and improves operational efficiency on the shop floor.

Another example is the Microsoft Dynamics 365 Layout. It enables the shop floor designers to visualize and walk through proposed designs with holograms in the physical world or in virtual reality, making changes in real time.

The Microsoft Dynamics 365 Layout easily imports floorplans from Microsoft Visio and 3D models from other apps. This enables designers to experience designs at scale and in context, and also to share their vision in context. This helps them make better decisions and move from concept to completion faster and with fewer costs.

Perhaps, Microsoft Dynamics also will become the “glue” that unifies relationships, processes and data across not only the shop floor but the entire organization. Dynamics’ Common Data Service enables manufacturers to 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. This will make the overall operations much more intelligent.

The smart factory has smart benefits

Interest in smart factory applications continues to grow and, consequently, spending on smart factory initiatives is expected to climb. According to Modor Intelligence, the global smart factory market is projected to grow from just under $212 billion in 2017 to $358 billion by 2023 — a CAGR of 9.17 percent2.

Such momentum is justified by the significant operational benefits that the smart factory can generate for the manufacturers that embrace it. 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 also can improve workforce productivity and morale, and substantially reduce operational costs.

Consider some of the real-world results that manufacturers have experienced while working with EY on smart factory initiatives. On an average, these companies have seen a:

  • 15 percent increase in overall OEE
  • 20 percent boost in manufacturing throughput
  • 35 percent reduction in unplanned downtime
  • 45 to 80 percent improvement in employee engagement
  • 25 to 40 percent cut in costs, primarily in energy consumption, maintenance, logistics, and material loss

The point is, the smart factory is not a futuristic vision — it is here today, and most manufacturers have a smart factory in their sights.

How the EY-Microsoft alliance can help

The EY and Microsoft alliance can help make the smart factory a reality. Together, we innovate to create solutions that help our clients to digitally transform more quickly with less risk by providing the technologies and insights that manufacturers need to remove barriers to digital adoption.

We also help manufacturers increase the return on their investments in digital technology, which is key to more intelligent, connected technologies and processes. This makes the shop floor the high-performance machine that manufacturers want and need it to be.


Fast-paced digital disruption is posing a threat to the manufacturers who have invested in improvement initiatives that lack staying power. The good news is that the smart factory is here to help. The smart factory, which is the heart of the Fourth Industrial Revolution, combines traditional manufacturing and industrial practices with digital technologies to transform the shop floor into the high-performance machine that is needed to lead the transformative age.

About this article

By Craig Lyjak

EY Global Smart Factory Leader

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

Related topics Alliances