Brief

Factory of the Future: A Systems Approach

How leading manufacturing CEOs, COOs, and CIOs are creating the roadmap to the factory of the future.

By Jörg Gnamm, Thomas Frost, Christian Ruehl, Mike Coxon, and Lokesh Payik

First published on enero 11, 2023
min read


What does “factory of the future” mean to you? For many executives, the discussion about the factory of the future often focuses entirely on technologies and how digitalization is changing the manufacturing plant. Some leaders focus on specific use cases and individual improvements such as how augmented reality (AR) glasses are used in assembly or how predictive maintenance can improve equipment uptime. Sustainability may enter the conversation, but it’s usually as a separate “bolt-on” priority for the C-suite when evaluating how to improve a company’s environmental, social, and corporate governance (ESG) strategy. Most people in operations, for instance, are not usually thinking about sustainability in every step of the supply chain. More Insights Factory of the Future Explore our holistic view of factories of the future—forward-thinking solutions to reach your factory’s full potential. Leading manufacturers can no longer afford to think of the factory of the future in such silos and narrow terms. The risk is that it will hobble them as they face several key challenges in the coming years. Already, increasing customer expectations, global political shifts, and supply chain shortages are adding pressure to increase flexibility and resiliency. In fact, manufacturing COOs ranked resiliency and flexibility as their two top investment goals in a recent Bain survey. Meanwhile, rising inflation and surging energy costs are forcing most manufacturers to make cost reduction a top priority. To compound matters, manufacturers are seeing an overall decrease in available talent. At the same time, markets and customers are demanding sustainable products with greater awareness of companies that focus on sustainable production, circularity, and reduced waste. As companies navigate the multiple demands in this new industrial revolution, many manufacturers are defining their specific vision for the factory of the future more broadly and working toward that ambition across their networks. Leading companies are going beyond the new technology that is part of Industry 4.0 and adopting an integrated approach. This integrated manufacturing strategy combines digital, lean, and sustainability in a future-oriented network and production system, which is enabled by the amalgamation of information technology systems with operational technology systems (“IT/OT”), manufacturing technologies, and new concepts for labor. The operating system functions as the base to bring this integrated strategy to life and sustain it over time. A system-wide perspective Companies that incorporate an integrated approach consider not only the four walls of the factory but also the entire network, supply, and factory production system. Executives evaluate how digital can be used to directly improve processes that have already been optimized through lean, TPM (Total Productive Maintenance), and other methodologies. Consequently, implementing Industry 4.0 is intertwined in the broader manufacturing strategy, routines, approaches, and processes rather than simply piloting individual use cases. With a system-wide perspective, it is possible to chart a clear development path. This would include steps to take now to design a factory of the future that can grow and be built upon over the next decade. To do so, leaders are adopting a “present-forward, future-back approach,” in which they understand how to shape the network and production system of the future and in which they work to take relevant steps now to integrate lean, digital, and sustainability in a cohesive way. The enablers Implementing the factory of the future does not, however, mean simply advancing the network and production system. The integration of information technology systems with operational technology systems (IT/OT), advanced manufacturing technologies, and operations labor enable this implementation. These three enablers are interconnected and cannot be optimized separately. In terms of IT/OT, the digital architecture for manufacturing plants and production networks becomes the backbone of future-oriented plants. IT/OT needs to provide the right reference structure, data architecture, databases, and interfaces that are in line with today’s manufacturing technologies and those of the future. Thoughtful adoption of new manufacturing technologies enables companies to increase in maturity. These manufacturing technologies need to align with IT/OT data architecture, the tools to generate insights, and the devices connecting operators. Finally, future-oriented operations labor is paramount. To anchor the factory of the future, COOs will need to make organizational adjustments, and a large part of that centers on talent. How do you attract and retain the right people for the roles that are needed in future factories? Does it mean hiring more software developers or data scientists, or people in roles that don’t yet exist? At the same time, companies will need to further develop their current employees to adopt new roles so they can create a self-learning and agile organization that works in a cross-functional way to actively create value in manufacturing. Companies that manage to combine these elements will have an advantage and are best equipped to seize the opportunities and cope with the risks on the journey toward creating a factory of the future.

What does “factory of the future” mean to you? For many executives, the discussion about the factory of the future often focuses entirely on technologies and how digitalization is changing the manufacturing plant. Some leaders focus on specific use cases and individual improvements such as how augmented reality (AR) glasses are used in assembly or how predictive maintenance can improve equipment uptime. Sustainability may enter the conversation, but it’s usually as a separate “bolt-on” priority for the C-suite when evaluating how to improve a company’s environmental, social, and corporate governance (ESG) strategy. Most people in operations, for instance, are not usually thinking about sustainability in every step of the supply chain.

More Insights

Factory of the Future

Explore our holistic view of factories of the future—forward-thinking solutions to reach your factory’s full potential.

Leading manufacturers can no longer afford to think of the factory of the future in such silos and narrow terms. The risk is that it will hobble them as they face several key challenges in the coming years. Already, increasing customer expectations, global political shifts, and supply chain shortages are adding pressure to increase flexibility and resiliency. In fact, manufacturing COOs ranked resiliency and flexibility as their two top investment goals in a recent Bain survey.

Meanwhile, rising inflation and surging energy costs are forcing most manufacturers to make cost reduction a top priority. To compound matters, manufacturers are seeing an overall decrease in available talent. At the same time, markets and customers are demanding sustainable products with greater awareness of companies that focus on sustainable production, circularity, and reduced waste.

As companies navigate the multiple demands in this new industrial revolution, many manufacturers are defining their specific vision for the factory of the future more broadly and working toward that ambition across their networks. Leading companies are going beyond the new technology that is part of Industry 4.0 and adopting an integrated approach. This integrated manufacturing strategy combines digital, lean, and sustainability in a future-oriented network and production system, which is enabled by the amalgamation of information technology systems with operational technology systems (“IT/OT”), manufacturing technologies, and new concepts for labor. The operating system functions as the base to bring this integrated strategy to life and sustain it over time.

A system-wide perspective

Companies that incorporate an integrated approach consider not only the four walls of the factory but also the entire network, supply, and factory production system. Executives evaluate how digital can be used to directly improve processes that have already been optimized through lean, TPM (Total Productive Maintenance), and other methodologies. Consequently, implementing Industry 4.0 is intertwined in the broader manufacturing strategy, routines, approaches, and processes rather than simply piloting individual use cases.

With a system-wide perspective, it is possible to chart a clear development path. This would include steps to take now to design a factory of the future that can grow and be built upon over the next decade. To do so, leaders are adopting a “present-forward, future-back approach,” in which they understand how to shape the network and production system of the future and in which they work to take relevant steps now to integrate lean, digital, and sustainability in a cohesive way.

The enablers

Implementing the factory of the future does not, however, mean simply advancing the network and production system. The integration of information technology systems with operational technology systems (IT/OT), advanced manufacturing technologies, and operations labor enable this implementation. These three enablers are interconnected and cannot be optimized separately. In terms of IT/OT, the digital architecture for manufacturing plants and production networks becomes the backbone of future-oriented plants. IT/OT needs to provide the right reference structure, data architecture, databases, and interfaces that are in line with today’s manufacturing technologies and those of the future. Thoughtful adoption of new manufacturing technologies enables companies to increase in maturity. These manufacturing technologies need to align with IT/OT data architecture, the tools to generate insights, and the devices connecting operators.

Finally, future-oriented operations labor is paramount. To anchor the factory of the future, COOs will need to make organizational adjustments, and a large part of that centers on talent. How do you attract and retain the right people for the roles that are needed in future factories? Does it mean hiring more software developers or data scientists, or people in roles that don’t yet exist? At the same time, companies will need to further develop their current employees to adopt new roles so they can create a self-learning and agile organization that works in a cross-functional way to actively create value in manufacturing.

Companies that manage to combine these elements will have an advantage and are best equipped to seize the opportunities and cope with the risks on the journey toward creating a factory of the future.