How Innovation is Changing the Manufacturing Industry

May 17, 2023
Catherine Kucharski

The manufacturing industry is wildly competitive, companies must comply with necessary safety regulations, environmental factors affecting costs, and supply chain stressors mucking up processes. Smart Manufacturing is a revolutionary approach to modernizing the industry and overcoming challenges within the business landscape. Smart Manufacturing and innovation are closely linked and have a tremendous impact on the industry. As a result, manufacturing companies are quicker, more efficient, and nimble. They have access to new technologies that have never been seen before enabling companies to operate smarter factories. By operationalizing innovation, companies are able to remain competitive, meet evolving demands, and honor the need for sustainable practices in today’s world. 

Industry 4.0 & Smart Manufacturing 

The next phase[Industry 4.0] in the digitization of the manufacturing sector, driven by disruptive trends including the rise of data and connectivity, analytics, human-machine interaction, and improvements in robotics’. McKinsey 

Industry 4.0 is the fourth industrial revolution that revolves around integrating digital innovation or technological advancements into the workflow and processes of manufacturing. It’s an agile approach to completely transform legacy production into a more seamless process. This is achieved through the introduction of technology and forms of innovation. 

  1. IoT
  2. Automation 
  3. AI & Machine Learning 
  4. Big Data Analytics
  5. Robotics 
  6. Augmented Reality (AR) & Virtual Reality (VR)
  7. Blockchain technology 

Industry 4.0 is the future of manufacturing, in 2022  72% of manufacturing companies reported are in the process of implementing Industry 4.0 or have already adopted it. 

A subset of Industry 4.0 is Smart Manufacturing or Smart Factories, the two concepts are closely related and can be used interchangeably. Smart Manufacturing is implementing these innovations to optimize the production process and increase efficiency. By adopting Smart Manufacturing and integrating advanced technologies into their digital infrastructure, companies access real-time data for analysis and decision-making, as well as implement preemptive maintenance and autonomous operations. It enables a cycle of information and communication through development. Manufacturing companies that adopt this new wave of innovation see an increase in efficiency, reduction of costs, and the introduction of new business models that result in a highly sophisticated competitive edge. 

The Marriage of Smart Manufacturing and Innovation

Technological advancements have completely changed the game but they hyperbolize the competitive nature of the industry. Being innovative is equally crucial in the industry as being the pioneer in introducing new ideas. Smart Manufacturing and innovation are interconnected as well as catalysts for each other. Innovation is a key driver of Smart Manufacturing, it motivates companies to ideate and implement new processes and technologies that transform methodology. In the same vein, Smart Manufacturing is a driver of innovation, as it provides companies with an opportunity to experiment and open new doors of growth. For example, the concept of digital twin technology which leverages the abilities of IoT, explores how, ‘entire systems will interact— not just individual devices, but how each device will influence the performance of an entire production floor’. It allows companies to simulate and test new products and processes in a virtual environment, reducing the time and cost of prototyping.

Innovation and Smart Manufacturing are crucial in helping manufacturers meet the evolving demands of the industry landscape. Ford released a new system for their commercial fleet vehicles called Ford Pro Telematics. It uses advanced sensors and connectivity technologies to help fleet operators manage their vehicles and drivers more efficiently. The IoT collects data on both vehicles and the driver’s performance. It uses geofencing to track vehicles, and Big Data technologies to collect data to translate into actionable insights. This new line of vehicles catapults Ford into the future and far past competitors. Ford Pro Telematics uses innovations to create a more connected and efficient process. 

Why Smart Manufacturing Matters to You 

For every $1 spent on manufacturing, the overall US economy has a total impact of $2.60.  The manufacturing industry plays a vital role in the global economy, it’s responsible for generating jobs, and revenue and is a pinnacle player in technological advancement. It is often thought of as the backbone of our economy, it is responsible for producing a gamut of products. It’s necessary to explore how innovative practices can revolutionize the industry. Smart Manufacturing is a vital way for companies to unlock the potential of technological advancements and understand how to harness them. 


One massive hurdle within the manufacturing industry is interoperability, which refers to the communication between different machines, devices, and systems in order to complete a task. Smart Manufacturing protects the seamless communication and exchange of information and data from one machine to another. IoT impacts interoperability greatly, as it’s the shared connection between devices. The communication between devices identifies cogs in the process or areas of improvement through data collection. Companies that utilize this technology are ensured increased efficiency and reduction of potential errors causing delays in the production process. 

Data Analytics  

With the abilities unlocked through Smart Manufacturing and innovative practices, companies have a plethora of data at their disposal. Machine learning and AI are useful tools that collect large sets of data, organize or categorize them and make inferences based on patterns. Edge computing, described by Azure Microsoft, “allows devices in remote locations to process data at the "edge" of the network, either by the device or a local server. And when data needs to be processed in the central data center, only the most important data is transmitted, thereby minimizing latency”.  For manufacturing companies to have a wide range of data collection capabilities that can be visualized and analyzed, allows them to make data-driven decisions about enhancing processes or streamlining networks. Companies that are enabled to track and trace highlights areas of improvement and production quality wins. With how many moving parts are involved in manufacturing, it’s important companies use innovations, such as data analytics, to optimize their operations and enhance decision-making processes.


Recently, as a  result of the initiatives passed in the Inflation Reduction Act(IRA) and Chips Act by President Biden, the manufacturing industry will see more than $200 billion dollars funneled for clean technology like solar panels and wind turbines, and semiconductors to power computers and technology to increase clean energy production, addressing environmental concerns. The manufacturing industry is a significant contributor to greenhouse gas emissions and resource depletion. Smart Manufacturing directly impacts energy consumption by reducing waste and overconsumption. Predictive maintenance applied to the manufacturing processes reduces the likelihood of machine failures that lead to wasted materials and lost production time.

The circular economy is an innovative application to production that targets waste and promotes sustainable practices. It explores how products or processes can be reused or recycled, extending their lifetime usage and reducing environmental footprints. It calls for manufacturing companies to find new and innovative ways to stretch the lifecycle of their products or processes. Accenture found utilizing a circular economy could bring $4.5 trillion in economic growth. Not only is it great for the environment and economy, but it helps companies build their brand image as environmentally conscious companies. 


The inclusion of technological advancements and innovative practices into the manufacturing industry enables companies to make smarter factories and streamline processes. Smart Manufacturing is a necessary approach companies must take to remain competitive in their respective industries. Smart Manufacturing allows companies to combine old processes with new technologies to improve interoperability, data analytics, and sustainable practices. As a result, companies are more equipped to operate in the challenging and changing landscape of the manufacturing industry.

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