June 17, 2020

The Connected Factory (part 3/3)

The connected factory is a manifestation of the shift toward a service-oriented society, in which the services and relationships connected with a product are more important to customers than the product itself. In their book “The Connected Company”, Dave Gray and Thomas Vander Wal write: “The product-driven economy is giving way to a new, customer-centered world in which companies will prosper by developing relationships with customers – by listening to them, adapting, and responding to their wants and needs.”
Ralf Keuper

Manufacturing in the era of the connected factory

The concept of the connected factory has been the subject of research and publications as early as in the 1970s and 80s (e.g. the fractal factory or computer-integrated manufacturing, CIM). It wasn’t until the end of the 2010s, however, that the necessary processing capacities and bandwidths were available to turn this vision into reality. It is now possible to redeem the promise of “mass customization”.

This development entails a vast increase in the number of product variants. At Wilo Smart Factory, for example, product variance amounts to 1,6. In the case of the pump system manufacturer, the smart factory concept mainly aims at coping with the degree of complexity and variance in production. To be able to do so, data from production (i.e. MES data) and logistics must be made available in real time. For the future, Wilo aims at intensifying interaction with customers with the help of apps and/or on the basis of new business models (e.g. “rent-a-pump”, “pay-as-you-use”).

The future in manufacturing will be dominated by 3D printing and additive manufacturing, allowing manufacturers to produce even complex products in low quantity. Thereby, it will be possible for manufacturers to switch production programs very quickly (i.e. without a considerable amount of setup time). Instructions for the manufacture of a certain product can be provided via software, representing a new level of automation.

Unfortunately, there are still obstacles and problems that are impeding efficient implementation of the concept of the connected factory. NextGenAM is a project that investigates these obstacles and problems – and how they can be overcome. The ambitious goal is to enable manufacturers to produce products for which they actually have no expertise at all (e.g. a car manufacturer switching production toward the manufacture of prescription drugs). This would have a huge effect on entire national economies, as they would become more sovereign and independent – an important aspect in view of growing digital protectionism.

As service orientation will increasingly be the new paradigm, the connected factory stands for a shift away from mere process orientation. Unlike processes, services are continuously developed by manufacturing companies in collaboration with their customers. Gray and Vander Wal in „The Connected Company“: “While processes are designed to be consistent and uniform, services are co-created with customers each and every time a service is rendered. This difference is not superficial but fundamental.“


The connected factory represents a paradigm shift in manufacturing. Connected factories are embedded in value creating networks, in which data and information is exchanged and shared between companies and across industries. Such interconnection is necessary to meet increasingly complex customer needs in real time. Once isolated production sites thereby not only get more tightly connected to partners/suppliers, but also intensify interaction with customers. The new paradigm becomes apparent in multiple, different scenarios, such as predictive maintenance, windparks, or harvesting (smart farming).

Quite (un-)surprisingly, the biggest challenge in the implementation of the connected factory is not a predominantly technological one, but one that relates to aspects such as trust, integrity, or responsibility. How can the identity and trustworthiness of suppliers be verified across the entire data supply chain? How can data integrity be guaranteed? How can the identity of machines exchanging data with a connected factory be verified? To make the connected factory a success story on a broad scale, trusted networks are required – like the one made possible by IDS. IDS provides an accepted, international standard to verify digital identities (of humans, organizations, and things), ensure data integrity, provide certification (of participants and technical components), and trace data provenance.

Being able to establish trusted virtual networks is critical for new business ecosystems to emerge – both domain-specific and cross-industry. This will lead to the dissemination of new, digital business models, many of which are still rudimentarily implemented today. The question as to which technology is deemed to be most supportive in this endeavor, is rather of secondary importance. From today’s perspective, it can be stated that blockchain technology (combined with solutions for self-management of digital identities of humans, organizations, and machines) appears to be (most) suitable to establish trusted virtual business ecosystems.

The connected factory will be at the core of this development. Being a central element of the data economy, it will help promote the principle of data sovereignty guaranteed for all parties across the data value chain. Furthermore, connected factories will contribute to the increase of organizational intelligence – i.e. the capability of organizations to capture and process external information.

If you want to follow our journey subscribe to our IDSA newsletter, follow #IDSgoLive on Twitter and LinkedIn, and come back to this blog frequently.

Author: Ralf Keuper
With his blog bankstil, Ralf Keuper is one of Germany's top 10 bloggers in the FinTech sector.

Stay updated with us