Smart Manufacturing

Leveraging embedded intelligence and new sources of

information to connect and optimize the enterprise

Manufacturing leaders are living through a period of profound change, opportunity, confusion –
and competitive pressures. The Internet of Things (IoT) is one of several technology disruptions
creating opportunity for transformation into Smart Manufacturing environments. Early adopters
have accepted the concept of Smart Manufacturing and are embracing technology to augment
their processes and their people for
higher performance and efficiency. The
IoT and other technology innovations,
combined with government initiatives
around the globe – the Advanced
Manufacturing Partnership 2.0,
Industrie 4.0, China Manufacturing 2025,
Manufacturing Innovation 3.0,
Usine du Futur to name a few – are
fundamentally reshaping the
industrial landscape.

Manufacturers must converge their Information Technology (IT) and Operations Technology
(OT ) systems into a single, unified network infrastructure and identify opportunities for using
IoT technologies that enable seamless connectivity and information sharing across people,
processes and things. They must be sure they can efficiently manage a greater abundance
of data in ways that help them make better, faster business decisions. This includes using IoT
device intelligence, cloud connectivity and data analytics together to help manage the large
data sets required for balancing production activities based on upstream inventories and
downstream demand.
2 | Smart Manufacturing

Smart Manufacturing
Smart Manufacturing offers nearly unlimited potential, and it all begins with establishing
what Rockwell Automation calls The Connected Enterprise as the foundation for achieving
greater connectivity and information sharing.
These and other programs frame the industrial
evolution of Smart Manufacturing – knowledge-
enabled enterprises in which devices and processes
are optimized to enhance productivity, safety, security,
sustainability and performance. Smart Manufacturing
offers new ways to create value and requires
action now.
Early adopters have embraced Smart Manufacturing
by investing in technology that drives efficiency. Yet
many leaders struggle to define exactly what Smart
Manufacturing means and the benefit they can
generate – for their organizations, their customers,
and their suppliers. To get started, these executives
need to review their operations objectives – and the
advantages that Smart Manufacturing can offer for each.
Smart Manufacturing represents the integration of three key productivity factors:
automation, operations information, and advanced analytics. These factors link machines
and equipment through open platforms and enable them to “think” – creating systems
that are able to interact with one another, analyze data to predict failure, configure
themselves and adapt to changes within the manufacturing process itself. The goal is to
improve productivity within an operation and ultimately across the entire value chain
by increasing visibility and access to contextual information connected to processes and
products, to get the right information to the right people at the right time.

Operations Smart Manufacturing

Benefits
objective advantages
Smart Manufacturing leverages embedded intelligence within
machinery and equipment, automating operations such as quality
• Decreased reject rate by 75%, yielding
Improve quality inspection in real time, triggering immediate reactions to defective
dramatic monthly savings
products/materials, and error-proofing processes in support of
internal production and external supplier quality improvement.
Monitoring production in real time provides managers with insight
into operations, including operators’ usage patterns, materials, • Increased overall equipment effectiveness
and equipment, which allows them to streamline the workflow to and productivity by 50%
Increase productivity reduce non-value added time and processes. Additionally, being
able to predict and help prevent equipment failures allows the right
resources to be deployed for predictive maintenance, which can • Increased production capacity by 65%
minimize unscheduled downtime.
Since Sakichi Toyoda invented a mechanism to detect broken
threads in an automated loom in the early-1900s, equipment has
been designed to enable quality and productivity yet minimize
human intervention (“jidoka”). Embedded intelligence expands and
digitizes jidoka by providing prescriptive work order instructions and • Improved production efficiency from
Mitigate skilled labor shortages increasing error-proofing capabilities to simplify the process. This 45% to 85%
requires less operator training, increasing the capacity of operators to
both safely monitor and operate multiple machines simultaneously,
enabling subject matter specialists the ability to remotely support
the operation if needed.
 Smart Manufacturing | 3

Operations Smart Manufacturing

Benefits
objective advantages
Smart Manufacturing allows industrial customers to monitor and
update operations in real time, track raw materials, work in progress
and finished goods, and coordinate faster deliveries – getting higher
Enhance customer satisfaction quality products in the hands of your customers when they need • Improved cycle times by 28%
it. It allows manufacturers to capture usage data that can enhance
innovation and drive quality and performance improvements for all
types of customers.

Best-in-class safety strategies move operations beyond compliance

to become part of a company’s culture; production environments
with embedded intelligence take environmental, health, and • Immediate increase in detection and
safety (EHS) compliance to levels of zero tolerance. As accidents resolution of incidents
Reduce business risks are prevented and near-miss incidents investigated; energy
and environmental concerns are tightly controlled; security • Reduced validation time from two weeks
vulnerabilities are addressed and track-and-traceability capabilities to two hours
are deployed, strengthening the systems in place that can help
mitigate issues.

Smart Manufacturing is rapidly and efficiently creating entirely new

markets, as manufacturers, industrial operators, and high-tech firms
converge and innovate, resulting in new service opportunities and • Reduced project development time
Expand market opportunities business models with enticing new margins. Some organizations by 50%
now sell machine uptime instead of the machine itself, while others
use embedded intelligence to create new value for customers.

Is Your Company Ready for Smart Manufacturing?

According to many industry surveys, most organizations aren’t yet ready for Smart
Manufacturing. Even after years of improved automation via sensors and controls,
companies are just getting started and are nowhere near being IoT-ready (i.e., having
their manufacturing and industrial “things” communicate directly with each other and
leveraging the data beyond real-time processing).
Why? Many simply don’t know how to get there: Only 11 percent have implemented a
strategy to apply IoT technologies to production processes, and just 12 percent have
implemented a strategy to embed IoT technologies
into their products. What’s getting in the way?
According to an IndustryWeek report, 76% of
manufacturers are concerned about network security
and 74% with data privacy.1
Half of manufacturers are still struggling with the
basics of defining and implementing IoT and Smart
Manufacturing strategies (Figure 1).2
An IoT strategy – where and how to apply and
leverage information from embedded intelligence for
optimal gains – requires increased connectivity and
is foundational for Smart Manufacturing strategies.
Companies can get started and reap returns on even
rudimentary IoT implementations that can fund the
4 | Smart Manufacturing

Applying IoT technologies Embedding IoT technologies

to processes in products
Strategy in place
10.9% 12.0%
– implemented
Strategy in place
22.7% 20.3%
– not yet implemented
Plan to develop strategy 32.5% 30.4%

No plans to develop strategy 33.9% 37.3%

Figure 1. Internet of Things Strategy Implementation (% of manufacturers)

next IoT step. Yet other obstacles loom and need to be considered to drive success with
IoT and Smart Manufacturing initiatives:.
• Antiquated technology: Older, fragmented automation and IT systems can prevent
the implementation of a Smart Manufacturing strategy. Many plants use automation
equipment purchased more than 20 years ago. Few manufacturers can replace all of
their equipment sensors or controls at the same time; managers must prioritize their
investments over a certain period. Unfortunately, many companies also face massive
information-technology gaps now; half of manufacturers will have to upgrade
network and security infrastructures or overhaul their networks to accommodate
machine-to-machine, and machine-to-business communications.3
Smart Manufacturing requires convergence between IT and OT, leveraging scalable
computing options to deliver value in different
stages of operations and drive increased visibility,
collaboration, and efficiency within plants and
facilities, across operations, and through the
value chains. Value can be gained from increasing
information sharing between the business systems
and the plant floor automation and information
systems. However, many firms encounter a roadblock
here due to homegrown, proprietary, and legacy
systems that lack standardization and open protocols,
preventing the adoption of common metrics among
multiple facilities. Even worse, the industry is facing a
skilled workforce challenge as those who understand
these proprietary systems retire. The World Bank
study highlights the need for 220,000 new engineers
every year until 2022 to connect the unconnected.4
• Corporate misalignment: Even where technologies have been applied, company
objectives, practices, and roles are frequently misaligned — especially in the case
of IT and OT staff. Barely half of manufacturing executives believe that their IT and OT
departments collaborate to resolve technical operations issues.5
The gap between IT and OT visions and objectives can cripple IoT initiatives before they
start. Who manages a connected IT/OT network infrastructure? Who defines working
data capital (i.e., new information that can be leveraged for the good of the
organization)? Who applies and maintains smart devices?
 Smart Manufacturing | 5

Achieving organizational alignment and setting the right priority is critical to the success
of a Smart Manufacturing implementation. Such a wide-reaching and culture changing
program must be sponsored from the top of the organization and driven by a cross
functional collection of change agents. In the words
of Peter Drucker, “Culture eats strategy for breakfast.”6
A brittle culture can easily doom even the best, most
flexible, analytic-based architectures.
• Talent shortages: The adoption of Smart
Manufacturing often outpaces the ability of many
companies to embrace, apply, and leverage
scalable computing (i.e., mobile, edge, cloud,
wireless, cellular, remote access, security) and
analytics technologies. Nearly a third of
manufacturers cite lack of talent as their biggest
challenge related to IoT capabilities. It doesn’t help
that many manufacturers don’t yet have a solid
understanding of the IoT; 42% have only a limited
understanding, and 24% have no understanding.7
• Perceived lack of ROI: Many companies are still trying to understand the business
value to be realized from investing in IoT and Smart Manufacturing initiatives. They stall
IoT initiatives because of concerns about data security, paralyzed by fear of the unknown.
They should worry more about unauthorized access to old equipment, PLCs, and
controllers, as well as a lack of security standards and programs.
Both the fearful and frugal should focus instead on a vision of their own Smart
Manufacturing (and their potential returns on investment), build a roadmap to the vision
and identify areas to get started. For example, by leveraging sensor data to predict when
equipment is wearing down, manufacturers can reduce maintenance costs, in some cases
achieving as much as 40% improvement. Unplanned downtime can also be decreased
with predictive and preventative maintenance plans. Companies are enjoying major
productivity improvements and reductions in operating costs with early IoT investments.
Improve product quality 57.9%
Increase speed of operations 57.3%
Decrease manufacturing costs 57.0%
Improve maintenance/uptime 46.5%
Improve information for business analytics 41.6%
Improve agility and responsiveness 41.0%
Improve information for production decisions 40.7%
Improve coordination with customers 39.5%
Improve coordination with suppliers 34.9%
Develop remote monitoring capabilities 33.7%
Lower energy costs 29.1%
Improve safety 27.9%
Improve compliance (customer specifications or regulatory) 24.7%
Develop visualization capabilities 18.9%
Other 1.2%
None of the above 5.5%
Figure 2. Smart Manufacturing objectives (% of manufacturers)
6 | Smart Manufacturing

Establish operations stability

A Connected Enterprise helps manufacturers to more reliably create high-quality products,
better, faster, and more economically than ever before. Start by identifying requirements
and top areas of focus based on past performance (e.g., customer rejects, production
yields, injuries, downtime, and work stoppages). Assess where obsolete, unreliable, and
hard-to-connect equipment and automation systems are out of date, and where IT
systems are hindering productivity, agility, and innovation.
Second, prioritize processes and equipment for
redesign (e.g., reduce idle time, build in error-proofing,
improve worker safety and ergonomics, and implement
automated alerts and tasks). Ask your line workers
about idle time, how they would make the process
easier to understand, where they spend non-value-
added time looking for things like drawings, work-order
instructions, etc. Ask your production managers
where smarter machine assets can provide more
visibility and control of complex production processes.
Take advantage of embedded intelligence to gather
data – equipment status, exception-based reporting
– and offer real-time insights into quality, safety,
compliance, energy usage, and downtime issues.
Third, make it happen. Do something Smart, even
if it is applied to just one part of your operation (a
single line or a cell). Implement the production systems you’ve designed; use the projected
return on these investments (e.g., improved product yields, lowered warranty costs,
decreased insurance premiums, increased plant capacity) to budget for
the capital spending, or, consider projects that can initially be managed through
operating expense.

Secure your infrastructure

Businesses can barely stay ahead of the myriad security threats to their networks and
information. It is true that risks from both internal and external sources expand with
each new connection of smart things, creating threats capable of disrupting control-
system operation, safety, productivity, and the ability to help protect assets, machinery
and information. These threats have the potential to strike at the heart of a company’s
reputation and its long-term viability. Unless companies make ongoing investments in
secure industrial control systems, they are likely to expose themselves to unnecessary risks
as they capitalize on the opportunities presented by The Connected Enterprise.
Your company’s networking specialists need to be looking for threats while updating
automation technologies to current industry standards for interoperability and
commonality. A robust and secure network infrastructure will allow technicians to securely
manage software installations, patches, and upgrades for years to come. Strengthen
security procedures for other technologies, too, including machine operations and BYOD
(bring your own device) policies. This approach helps companies establish a sustainable
security culture, conduct comprehensive security assessments, and deploy a robust
security infrastructure across both automation and industrial IT assets.
 Smart Manufacturing | 7

Improve production
Equipment that delivers the highest standards in quality, safety and security is merely the
foundation for a Connected Enterprise. It’s what you do with the equipment that grows
sales and profits. State-of-the-art technologies and smart devices can monitor every
product specification — customer or regulatory — in real time. Use that information to
rapidly address defects and variations, speed the flow of goods and material, enhance
on-time performance, and delight customers. For example, if you deliver to customers
in two weeks with 100% on-time status, why not
achieve the same benchmark in half the time – and
free up a week of production capacity?
Better control and transparency of manufacturing
processes offers opportunities for improved
productivity and profitability, too. Identify where
real-time information and analytics can help to reduce
costs (e.g., lower inventories, better labor and asset
utilization). Extend intelligence to all functions in the
enterprise – finance, human resources, R&D – and
out to the supply chain as well, delivering critical
information to suppliers (e.g., end-customer demand,
forecasts, schedules) and customers (e.g., order status,
product prototype data) while monitoring inbound
quality and delivery performances.

Make better decisions

Information moving within The Connected Enterprise – within supplier plants, internal
operations, and at customer sites – provides strategic insights to:
• Identify operational strengths and weaknesses
• Analyze processes and plan improvement initiatives
• Design and implement better production systems
• Develop targeted training programs
• Establish performance management systems.
New working data capital and scalable analytics allow you to optimize assets within plants
and across your entire business enterprise. For example, improved productivity creates
extra capacity, which in turn leads to capital avoidance. You’ll also allocate capex spending
within a context of plant performance data (which processes and facilities deliver the
highest returns on new assets?) and core competencies (should this be produced
internally or outsourced?), enabling the transition from a capex constraint climate to an
opex flexible environment. Don’t forget to involve your customers: business intelligence
shared with them increases the value of the services and products they buy – and builds
stronger relationships.
8 | Smart Manufacturing

Get Started with Rockwell Automation

Business intelligence can improve processes, products, and business performances
now – and your competitors are already on the move. Three-quarters of manufacturing
executives say their company’s application of smart devices and/or embedded intelligence
will increase in the next two years (Figure 3), and more than half expect that their efforts
will improve quality, increase operations speed, and lower costs.

Application of smart devices Application of smart devices/

and/or embedded intelligence embedded intelligence to
in production equipment non-production equipment
and processes and processes

Increase significantly 13.5% 9.8%

Increase somewhat 62.5% 56.2%

No change 23.2% 33.7%

Decrease somewhat 0.3% 0.0%

Decrease significantly 0.6% 0.3%

Rockwell Automation has successfully operated its own Connected Enterprise to support
Smart Manufacturing strategies for years. Through first-hand experience and close
collaboration with other companies, we are actively engaged with industry consortia and
standards groups and continue to demonstrate the true value of interoperability. We’ve
supported Connected Enterprise initiatives around the globe, helping companies to
systematically and successfully move into the Smart Manufacturing era by asking four
key questions:
1. How smart are your operations today? Conducting a baseline assessment is a critical
first step. The journey toward a Connected Enterprise starts by evaluating all facets of
an organization’s IT/OT capabilities – information infrastructure (hardware and software),
controls and devices that process data, networks that transmit information – as well as
security policies and procedures. Be mindful of your operations’ current and future
states. Consider your goals regarding quality, downtime, productivity, and overall
equipment effectiveness (OEE), among other things. Identify key objectives, problems,
and metrics you’re trying to impact, and consider where you’re seeking greater
efficiencies. We can help guide you through this assessment and help you to identify
and catalog issues.
2. Where should your operations be smarter today? A challenge for many organizations
is the sheer volume and variety of outdated controls and networks in place that need
upgraded or replaced. We help you:
• Identify areas of first priority (operations safety, data security).
• Develop a roadmap focused on replacements and upgrades, highlighting how the
evolution can positively affect people, processes, and technology and enhance
IT/OT convergence.
• Build cross-functional teams that include representation by location, function, etc., to
establish priorities and build consensus throughout the organization.
 Smart Manufacturing | 9

3. How much smarter should your operations be tomorrow? An effective IoT strategy
incorporates data from devices, assets, and applications and turns that data into
information to enable improved decision-making, improved performance, and more
productive operations. We help you understand the new, accessible data and identify
actions to take to generate new working data capital. With an effective plan that takes
advantage of data from devices across the enterprise, performance-critical information is
used for real-time, critical decision-making.
4. How can you optimize returns on Connected
Enterprise capabilities? We help you transform data
into strategic decisions that grow sales and boost
the bottom line. We also extend The Connected
Enterprise to your suppliers and customers,
creating an environment that anticipates activities,
enabling responsiveness to not only existing
operations but to external events, supplier and
customer activities, business trends, and changing
market conditions. Within the enterprise emerge
predictive capabilities that make for more efficient
production planning and asset management;
timely and leveled order execution; improved
quality; and streamlined site-to-site performances.

We’ve helped others along their journeys and we’re ready to help you get started, as well.
What are you waiting for?
Visit www.rockwellautomation.com/connectedenterprise to learn more.

1
IndustryWeek Manufacturing Connectivity
and Data Integration report (2015)
2
MPI Internet of Things Study, The MPI Group,
December 2015.
3
Ibid.
4
ICT For Greater Development Impact,” World Bank (June 2012);
European Commission Global Economic Outlook
5
Ibid.
6
Peter Drucker
7
Ibid.

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www.rockwellautomation.com/connectedenterprise

Publication CIE-WP007A-EN-P – July 2016 Copyright © 2016 Rockwell Automation, Inc. All Rights Reserved. Printed in USA.