Smart Manufacturing ROI & Metrics

smart manufacturing roi and metrics

Smart Manufacturing ROI & Metrics

How do you know if smart manufacturing will really work for your manufacturing company? Here’s an overview of the key metrics impacted by smart manufacturing, real ROI examples, and how you can embrace your own digital transformation.

Profitability Comes In A Smart Manufacturing Package


Today’s manufacturing companies face almost continual pressure to expand their margins and be more profitable. They also must increase the overall value of their company, build brand equity, meet customer demands and introduce new products in response to ever-changing market conditions. With all these pressures, there are no easy solutions. Manufacturers must simply make do with their existing resources.

To help ease the pressure and stay competitive, some manufacturers are starting to leverage smart manufacturing tools, devices and new technology platforms, such as the industrial internet of things (IIoT) and Industry 4.0. They are using smart manufacturing to increase operational efficiencies, reduce operating costs and improve quality control, while also reducing quality control and regulatory compliance costs.

What manufacturers are discovering is that smart manufacturing can bring real, tangible bottom-line dollar value to their business. It can help them do more with less and help them manufacture to profit.

Bottom-Line Impact

For many manufacturers, simply implementing technology for the sake of technology will not produce their desired business outcomes. Manufacturers who leverage smart manufacturing technology and align it with their strategic business goals and objectives will gain a much stronger return on investment (ROI). In doing so, manufacturers will see a real impact on their bottom line with significant new capabilities, such as increased agility, flexibility and responsiveness. Research by the MPI Group found that 69% of manufacturers credit their use of internet of things (IoT) technologies for increasing their profitability.

Manufacturers can also leverage smart manufacturing to make data-driven decisions that help increase product quality and time to market for their customers. With improved data capabilities, they can also create new business models and develop better production capabilities for improved consistency, predictability and customer service. Finally, they can also prepare to meet regulatory compliance requirements and open new doors to future customers.

Smart manufacturing can also reduce and avoid capital and operating costs. How? Manufacturers can leverage the technology to reduce labor, material usages and material waste, energy usage and rework and loss.

Smart manufacturing improves team decision making, as it helps companies democratize data, making it available to everyone who needs it — when they need it. It also helps companies streamline and automate communications throughout the manufacturing operation. And, maybe the most important of all, it helps people in the manufacturing company collaborate better with their customers and suppliers.

Another important aspect of smart manufacturing is its ability to help reduce risk. People can quickly see, communicate and address the risks associated with the economic climate, with demand trends, with fluctuations and with disruptions in the supply chain, just to name a few.

What About The Metrics?

To justify a smart manufacturing investment, companies want metrics. So, what are the manufacturing metrics that smart manufacturing really impacts? How do you know smart manufacturing really works? To answer these questions, look at these specific areas where smart manufacturing can, and does, have a direct impact:

  • Labor reduction
  • Improved targeting on controllable characteristics
  • Faulty manufacture reduction
  • First pass yield improvement
  • Raw material variance reduction
  • Throughput increases
  • Testing supplies reduction
  • Finished goods and inventory reduction
  • Process variation reduction and improved targeting
  • Work practices
  • Capital reduction
  • Percentage of overpack

A Profitable Balancing Act

To stay competitive and in business, companies must be profitable. Today’s consumers expect high-quality products on demand, along with quick response times and service. Manufacturers must come up with a reasonable balance between the customers who want higher-quality products for less cost, the employees who want higher salaries and the shareholders who want a greater return on their investment. At the same time, they need to be environmentally sustainable, socially responsible and able to take care of their people and customers. They can’t do any of this without being profitable.

Since the connected enterprise and big data were introduced to the industry more than a decade ago, smart manufacturing technology builds on the benefits gleaned from the past and helps companies move forward to do great things. But how do you know whether smart manufacturing is right for your business? Ask yourself a series of questions, such as:

  • What are the steps you need to take to align your existing infrastructure to your business goals, objectives and strategies?
  • How do you select the right technology, justify the costs and ensure a strong return on investment (ROI)?
  • Do you need to make data accessible and usable enterprise-wide to ensure a deeper understanding of facility operations and product life cycles?
  • Do you require faster connectivity to equipment to capture, collect and store real-time mission-critical data to make data-driven business decisions?
  • Do you require faster time-to-market, improved production processes and reduced risk?

Of course, each answer is dependent on your facility requirements. All questions, however, require one key element to solve: data. Data is a strategic asset and extremely valuable as a differentiator in the marketplace. That’s what smart manufacturing is all about. It helps improve business efficiency and enhance operational process capabilities.

Several industries jumped on the new data technology bandwagon years ago, as they were the least regulated and they understood the value of process data. Other industries, however, have been slower to adopt new technology as they must meet strict regulatory compliance standards and best practices. Many manufacturers in these industries have already started to identify smarter systems and devices that will help them improve their competitive edge, while also maintaining the integrity of their strict regulatory compliance requirements. In some cases, those tools include smart manufacturing solutions.

Whether your company is getting started with smart manufacturing to take advantage of all the bottom-line benefits or using these tools for other reasons, smart manufacturing should ultimately be about quickly and easily moving manufacturing capabilities to where and when they’re needed, based on market needs and the competition.

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Real World Smart Manufacturing ROI Examples

In the first year, on average, Nubik manufacturing clients who have invested in a digital transformation have seen the following return-on-investment:

  • +12% revenue increase
  • +18% cost reductions
  • +8% market share increase

Embrace your own digital transformation. Learn more about digital solutions for manufacturing companies today.