Digital Supply Networks and Smart Factories: The Future of Manufacturing

It’s pretty clear to most in the industry that digitization is the future of manufacturing. From the rapid adoption of advanced shop floor technologies and innovative regulatory pathway trends to the financial realities of a saturated 21st-century marketplace, all signs point in that direction. But how did we get to this point, and more importantly, how do we map the way forward from where we are now to where we need to be?

Vinod Nela and Andy Myers, managers with Deloitte’s Life Sciences Supply Chain & Network Operations, provided some insightful “directions” at MasterControl’s 2019 Masters Summit user conference in October in their presentation “Trends and Insights: The Road to Digital Manufacturing.”

Revolutions and Supply Networks

Nela and Myers began by outlining the various industrial revolutions the world has witnessed. In the late 18th century, power generation, in the form of steam and hydraulics, gave manufacturers the ability to optimize costs, innovate, and provide a baseline of quality and safety for products. In the 20th century, the main factor was mass industrialization, spurred on by electricity, assembly lines and improved infrastructure. The Third Industrial Revolution took place from the 1970s to the 2000s when electronic automation aided by computers and internet connectivity offered manufacturers greater access to information and improved decision-making capabilities.

Currently, we find ourselves at the beginning of the Fourth Industrial Revolution, in which digital supply networks will forever change the way we think about manufacturing, they said. Immense networks of cyber-physical systems — digital supply networks — will enable manufacturers to be linked to products, customers and the supply chain.

The increasing pace of technological advantages and internet of things (IoT) connectivity have forced us to think about the supply chain differently, Nela and Myers said.

A Smarter Factory

The smart factory model is based on the Industry 4.0 concept in which the shop floor is interconnected through the IoT and the industrial internet of things (IIoT). It simplifies improved communication, heightens quality assurance and ensures greater production efficiencies, which reduce costs and increase product time to market. Nela and Myers said the smart factory is a crucial component of the Fourth Industrial Revolution’s shift toward digital supply networks. Hence, it’s also a top priority for manufacturing and quality executives.

The challenge here is that many companies continue to use traditional supply networks that rely on outdated paper-based processes. Nela and Myers said the first steps along the road to smart factory solutions and digital supply networks are:

In a digital supply network, the smart factory is one of several key manufacturing processes that all operate off a digital core. They include intelligent supply, digital development, dynamic fulfilment, synchronized planning, and a connected customer. It’s no longer enough for a manufacturer to focus on one or two links in the supply chain because a change in one of the six nodes affects all the others, Nela and Myers said.

Foundations and Benefits

As a result of being digitally connected, a smart factory sets up a manufacturer to more easily mitigate production challenges as executives and facility managers are better equipped to make more informed decisions that improve the production process. Nela and Meyer identified five characteristics of a smart factory that make this possible:

  1. Transparency: Live metrics and tools support quick and consistent decision-making with real-time access to customer demand forecasts and transparent customer order tracking.
  2. Agility: Configurable factory layouts and equipment with flexible scheduling and changeovers.
  3. Connectivity: Continuously pulling traditional datasets and new sensor and location-based datasets enabling collaboration with suppliers and customers.
  4. Proactiveness: Real-time equipment monitoring with predictive anomaly identification and resolution capabilities.
  5. Optimization: Reliable, predictable production capacity planning and enhanced asset uptime modeling.

And because a smart factory allows companies to prioritize various areas and features most relevant to their specific needs, no two smart factories will look alike. The benefits of investing in a smart factory are multiple and include:

  • Asset efficiency, which should result in lower asset downtime, optimized capacity and reduced changeover time.
  • Safety and sustainability will also see improvements. Human workers will be freed up from mundane tasks to take on responsibilities that require greater levels of judgement and decision-making that will result in greater job satisfaction.
  • Cost savings will be realized as optimized processes lead to cost-efficient production by reducing variability and predictable inventory requirements.
  • Quality will be heightened as improved quality processes throughout the product life cycle will produce a finer product. A smart factory can predict and detect quality defect trends quicker and help identify the cause of quality events. For manufacturers, this could lower scrap rates, reduce lead times and increase fill rates yielding fewer defects and recalls.

Nela and Myers said the critical point here prior is that before companies go digital, they must first lay down the groundwork and understand the operational and cyber risks. Next, manufacturers can perform a risk assessment and make the appropriate investments. Companies that try to move into digitization too fast without establishing a foundation and doing their homework may experience a negative outcome.

Ultimately, the benefits of a smart factory will result in increased speed to market, improved ability to capture market share, and better profitability, Nela and Myers said.

Digital Disruption and Customers

Whether it be the cloud, the IoT and predictive analytics, cognitive automation, digital twin or other advanced technologies that impact manufacturing, we are in the midst of change. These new and rapidly evolving technological innovations are creating a path for new disruptive models in quality operations, Nela and Myers said.

As new digital tools are added to a manufacturer’s tool belt of digital quality one thing will remain constant — at the core of the smart factory is the enterprise quality management system (EQMS). A closed-loop EQMS allows a manufacturer to have complete connectivity with other systems, such as a manufacturing execution system (MES), customer relationship management (CRM) or product life cycle management. Thus, quality operations are attainable at each stage of a manufacturers’ supply management process. People, business processes, technology and data round out the basis of a digital supply network and its effective management, Nela and Myers said.

Connected customers are a featured focal point among the nodes of the digital supply network. Manufacturers can benefit by asking themselves what specifically their company is doing to transform the customer experience so that customers feel more valued, Nela and Myers said. As a fundamental shift in thinking in this new paradigm, better analysis and interpretation of manufacturing data through digital connectivity will help companies to more fully understand customers’ needs and pain points.


“Doing” digital is a stop along the way of the journey to digital manufacturing, Nela and Myers said. The more manufacturers think of digital transformation as a process — exploring, doing, becoming and being — the more successful the transition will be. Equally important in transforming your company digitally is the idea of simultaneously taking the mandatory step of a quality transformation.

Nela and Myers said many companies “swirl” in an endless loop of “doing” digital — the illusion of being digital — rather than “orchestrating” digital — making the requisite changes to business, operating and customer models. Instead, companies should build foundations of data and infrastructure standards, emphasize processes for end-to-end implementation, and “start small and scale fast,” they said.

Manufacturers can effectively navigate the road to digital manufacturing by, first, laying out a map of where they are and where they want to go, Nela and Myers said. Second, they should focus on their strategic choices and priorities. A platform strategy that pairs an EQMS and the MasterControl Manufacturing Excellence solution can help a company to bring their manufacturing and quality closer than ever, they said.

If you enjoyed reading about a Masters Summit session, you’ll like attending even more!

Mike Rigert is a content marketing specialist at MasterControl’s headquarters in Salt Lake City, Utah. He has nearly a decade and a half of experience creating marketing and journalism content for the tech industry, news media, and higher education. Rigert has written a wide gamut of content types from feature magazine articles to industry white papers and technical product documents to press releases and blog posts. A portion of his duties at MasterControl include serving as editor of the organization’s prospect blog, GxP Lifeline. Rigert holds a bachelor’s degree in political science with an emphasis in international relations from Brigham Young University.

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