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Production Management and Smart Manufacturing from a Systems

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Conference Paper · September 2018

DOI: 10.3233/978-1-61499-902-7-329

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Advances in Manufacturing Technology XXXII 329
P. Thorvald and K. Case (Eds.)
IOS Press, 2018
© 2018 The authors and IOS Press. All rights reserved.
doi:10.3233/978-1-61499-902-7-329

Production Management and Smart

Manufacturing from a Systems Perspective
Carla G. MACHADO1,a, Martin KURDVEa,b, Mats WINROTHa
and David BENNETTa,c
a
Chalmers University of Technology, Technology Management and Economics,
Division of Supply and Operations Management, Göteborg, Sweden.
b
Swerea IVF, Mölndal, SWEDEN
c
Aston Business School, Aston University, Birmingham, UK

Abstract. The traditional view of production systems relies on the organization of

physical and information flows enabling customer satisfaction with products or
services, following inputs from strategy, policies, rules and principles, supported
by tools, systems and methods, and improved through performance management
systems. Moving forward to new levels of industrialization, smart manufacturing
represents systems integration and automation supported by Cyber-Physical-
Systems (CPS) to enable more autonomous, agile and sustainable production
processes, which can at the same time be influenced by, as well as influencing the
organizational system in real time. As a new managerial topic, this research paper
intends to study and systematically organize the literature related to smart
manufacturing and production systems design in order to identify whether smart
manufacturing can be implemented through the production systems approach and,
if so, what are the requirements for implementation and integration of different
management systems (e.g. quality, and environment systems).

Keywords. Smart manufacturing, Production systems, Management systems.

1. Introduction

Manufacturing plays an important role globally, contributing to countries’ wealth,

development, and competitiveness [1, 2]. Besides some paradoxes, certain countries in
the European Union (EU) are achieving better results through accelerating
technological changes, in general following guidelines provided by programmes such
as ‘High Tech Strategy 2020’ and ‘Industry 4.0’, Factories of the Future’ and ‘Horizon
2020’; ‘Smart Industry’ and ‘Produktion 2030’ [3-6]. The Swedish government
emphasizes that digitalization is very important for future industrial competitiveness
with positive impacts on sustainability [5].
In this context, the ‘Smart Manufacturing System’ (SMS) emerges, defined as a
manufacturing system fully integrated, collaborative and able to respond in real time to
new conditions and demands in the factory, in the supply network and also concerning
customer needs. To achieve this end, a smart factory requires “real-time information
technologies”, across all manufacturing resources (e.g. sensors, machines, robots,

1
Corresponding Author. gcarla@chalmers.se
330 C.G. Machado et al. / Production Management and Smart Manufacturing

humans) that transform factories in an intelligent system, enabling a predictive

operational position with a higher level of control for the entire factory system, moving
from a centralized to a decentralized decision-system [2, 4, 7]. This new set-up
represents a complex system with different sub-systems that challenge the traditional
production system models, which are not flexible enough [8, 9].
During the Industry 1.0 period, the physical system design was probably
considered everything and there was no consideration of digital management or control
system design apart from designing the physical system (machine) to achieve the
desired output. Under Industry 2.0 (mass production/assembly lines), physical system
design still took priority, but control system design started to become a consideration
because of the need for materials scheduling and for achieving efficient operation of
the physical system (e.g. line balancing). With Industry 3.0 (computers & automation,
CNC etc.), physical and control system design are both important but undertaken
separately, with the control system supporting the physical system and designed
afterwards. However, Industry 4.0 (smart manufacturing/cyber physical systems)
involves "state of the art" technology that is sufficiently advanced for the physical
system and control system to be designed together in an integrated fashion.
In this context, the key research question arises: Can a completely integrated
approach to production system design be taken with SMS, in contrast to the modular
approach where designing the physical system precedes control system design? This
paper intends to systematically consider the literature related to smart manufacturing in
order to identify the SMS requirements for implementation and integration with
different management systems. Some studies are dedicating efforts to set requirements
for a production system in the context of smart factories (e.g. Srouf et al. [10] and
Wang et al. [8]), but in general they are more focused on the technological aspects.
Qin et al. [10 p.177] say the relevance of these studies is because the production system
“(…) is the core section of the industry, including the entire product’s value chain from
product design to services”.
The contribution of this paper derives from considering whether the traditional
elements of production systems design are sufficient to support the smart factories’
integration demands and, if not, by exploring which are the necessary elements to
configure a Smart Production System.

2. Method

The smart manufacturing literature originating from academic research, consultant

companies and government guidelines was organized using a lean production system
approach [11]. In manufacturing, many operations management (OM) approaches
involve introducing a company X Production System (XPS – where “X” stands for the
company, with the most famous being the Toyota Production System), often with a
Lean production focus [12]. To Kurdve et al. [13], a XPS is a conceptual model of the
physical production system (containing all functions and resources required to design,
manufacture, distribute, and service a product). As a Lean System, a Smart XPS model
(SXPS) (Figure 1) needs to include some key elements on different management levels,
i.e.
• Vision and Values – the company’s core values, long-term vision, policies, and
regulatory elements, regarded as essential for every company.
• Principles - or rules that are often visualized as a temple, supporting a holistic
 C.G. Machado et al. / Production Management and Smart Manufacturing 331

system view and maintenance of the XPS [14].

• Tools, methods and techniques - used to implement the system driving towards
best practice, often focusing on continuous improvement (CI), activities and
behavior (e.g. operational procedures, technologies).
• Business Performance Management System (BPMS) - used to manage and
control operations often given as a balanced scorecard signalling values and
principles importance (e.g. prioritization, goal/targets, monitoring).
• Organization – the management of roles and responsibilities establishing the
patterns of behaviour and intercommunication between people, systems and
machines, internally and externally.
• Auditing - and revision, being used to improve the content of the elements in the
model and incorporating organizational learning.

Figure 1. XPS key elements, Source: [13]

From one perspective, OM involves both daily operations and systems design and,
taking the Lean System as an example, lean vision and values need to be translated into
principles that support the vision/values in the management of operations and guide a
set of tools, methods and techniques necessary to sustain the operations. People,
machines and systems need to be organized internally and externally, and finally, the
performance of the production system needs to be monitored and improved [13].
Several factors influence the manufacturing system and, considering SMS, for the
smart topic, focusing on technology alone is not enough to understand the effectiveness
of a solution, since it encompasses not only the production system, but also the factory,
customers, logistics, and resource systems. By incorporating topic specific
management systems, e.g. environmental (EMS) or quality management systems
(QMS), it has been shown that these include much of the same key elements as XPS
and that there are advantages of combining these systems together in coherent or
symbiotic integration into general operations management systems [2, 15].
According to Qin et al. [2], the production system is the core section of the SMS
and can evolve from a hardware connection to intelligent production in a sequence of
developments based on (1) control, (2) integration, and (3) intelligence, applied in three
engineering levels starting with machines, process and the factory system.

3. Smart Manufacturing

A Smart Factory can be considered as a representation of a Cyber-Physical-System

(CPS) supported by data, predictive maintenance, sustainability, resource sharing and
332 C.G. Machado et al. / Production Management and Smart Manufacturing

networking, manufacturing technologies and processes, and materials [3, 16]. It is

perceived as being a convergence of the desirable features related to a manufacturing
system that has the ability to be flexible and reconfigurable, low cost, adaptive or
transformable, agile and lean [17, 18].
A smart factory demands a comprehensive system and planning and control tools
enabling the integration of “(…) planning, simulation, operation and even MES and
ERP functions supporting the complete product lifecycle” [18 p.136]. This also implies
that issues in plant engineering can be caused by planning methods commonly
associated with a top-down approach (defining structures, components, production
methods and products’ parameters), followed by bottom-up planning (machine
parts/components, schemes, hardware and software controls). Factory planners need to
embrace the vision where smart objects will interact based on semantic services, with
no hierarchy (in the traditional sense) and objects capable of self-organizing for a
specific task, supported by principles of IoT or “Internet of Things” [18].
An infrastructure is also needed, and Wang et al. [8] presented four layers, which
can contribute to a closed-loop system: (1) a resource layer (self-organized and
autonomous manufacturing system based on industrial network and intelligent
negotiation mechanism); (2) an industrial network layer (infrastructure enabling inter-
artifact communication) and which connects the physical resource layer with the cloud
layer; (3) a cloud layer (network of servers providing layered services); and (4)
supervision and control terminal layer (linking people to the smart factory). In addition,
Monostori [20] states that cyber-physical production systems do not follow the
traditional automation model since higher levels of the hierarchy are decentralized.
Burke et al. [17] claim that manufacturers can take small steps towards a SMS,
starting from a single asset (e.g. improving performance on machinery, inventory, etc.),
extending to the production line, to the factory, and finally to the factory networking.

4. XPS elements for a Smart Manufacturing System

Based on the literature, the aim of this paper is to identify whether a SMS presents the
key elements of a production system. The results from various previous papers can be
classified into the elements that are listed on Table 1. Thus, it is possible to identify the
elements related to an XPS, allowing us to infer that it can be integrated with other
management systems. As mentioned in Section 2, the vision and principles represent
the strategic and operational management to develop and run the SXPS, while
tools/methods/techniques represent the practices that need to be adopted by the
organization, and finally, the BPMS and the auditing support response and
improvement.
In this matter, the SXPS fits with the findings from Kurdve et al. [13] which means
that the SXPS is based simultaneously on a top-down approach driven by values and on
a bottom-up approach driven by the operations intelligence, thus answering the
challenge stated by Zuehlke [19]. The architecture developed by Wang et al. [8] and
the framework presented by Qin et al. [2] can be cited as examples. However, in most
of the reviewed papers the implementation of SMS is technology driven and adapting
the XPS, i.e. implementing the technology ad hoc rather than implementing it as an
answer to the development needs of the XPS. One digitalization/automation risk is to
institutionalize waste/losses in a rigid non-flexible system. Even if the development is
made in small steps it is important that the technology being implemented follows the
 C.G. Machado et al. / Production Management and Smart Manufacturing 333

same principles as the rest of the system, e.g. it should be easy to do continuous
improvement, and teamwork etc. [17].
Thus, the technology needs flexibility to be built-in and should be reconfigurable
to maximize its usefulness. Consequently, there is a need for further operation
management research on SMS implementation and management support, considering
the organization of the elements in decentralized hierarchy network.
Table 1. Key elements of a production system of a Smart Production System

XPS Smart XPS Reference *

Vision Interoperable, Conscious, Transparent, Intelligent, Efficient, [2][3][5][7][8][9]
Flexible, Agile, Collaborative, Responsive, and Sustainable [17][18][19][20]
[21][22]
Principles Horizontal integration through value networks (company, its [8][3][19]
and rules suppliers and partners creating an efficient ecosystem); Vertical
integration connecting physical and informational subsystems inside
a factory to create flexible and reconfigurable manufacturing
systems (the “smart factory” connecting marketing, design,
engineering, production, and sales); End-to-end engineering
integration across the entire value chain (machine-to-machine
integration, intelligent products enabling to obtain feedback from
customers, product-to-service integration, and recycling,
remanufacturing or reuse).
Tools, Industrial Internet (IoT), and cyber-physical systems (CPSs), three- [16][17][20][22]
methods and dimensional (3D) printing or additive manufacturing, autonomous [24]
techniques robots, advanced materials, virtual or augmented reality, big data
analytics, cloud computing, mobile devices, advance statistics
analysis; modelling and computer simulation, service-oriented
technology.
BPMS Real-time, multi-level, integrated (overall planning and operational [7][23][24]
systems) and dynamic performance measures (control level,
integration level, and intelligence level considering process,
machines, and facility); performance objectives (agility,
customization, flexibility, responsiveness, resource efficiency
(energy, water materials, labour, time, overall equipment
effectiveness, environmental health & safe); ISA-95 standard; ISO
22400 standard; data protocols, interfaces and communication
standards
Organization Digital supply network (interconnected, open system of supply [17][20][23]
operations); multiple talent-related (Enhance education and training,
investing in their own talent); closed-loop control strategy;
collaborative and no hierarchical leadership; digital culture; cross-
functional teams; integrate product and manufacturing process
models; cybersecurity systems; integration of PLM/
MES/ERP/SCM/CRM.
Auditing Real-time Analytics - sensors, identifiable components, and [19][23][25]
processors which carry information and knowledge to convey
transmitting the uses feedback to the manufacturing system;
simulation validation also supports feedback control mechanisms.
* A complete list of references used to compile the elements is available from the authors

5. XPS elements for a Smart Manufacturing System

Based on this conceptual review of literature it is possible to have a management

system or XPS perspective on SMS, however many initiatives seem to be technology
driven rather than strategy driven, when better results can be reach by a combined
approach. Further empirical and literature studies are needed on how management in a
 334 C.G. Machado et al. / Production Management and Smart Manufacturing

strategic and systematic way can incorporate SMS in the overall management of
operations.

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