Skip to content

Smart Manufacturing for SMMs and OEMs: Top Benefits, Advice, and Critical Reasons to Start Digital Transformations Now

Author: Ashley Yarbrough, Auburn University | Industrial Engineering, Instructor & Graduate Research Assistant

Why is it critical for manufacturers to start embracing smart manufacturing now?

A digital transformation is coming, and it is moving quickly. Small and Medium-sized manufacturers (SMMs) to large Original Equipment Manufacturers (OEMs) are joining in on the Industry 4.0/Digitalization buzz. We are now in a digital age that will require digitizing and digitalizing (two different things) information processes and updating operations to remain viable. It is now becoming a matter of survival. Converting current processes to a digital format is simply not enough (digitizing). To truly embrace smart manufacturing, manufacturers must go further by optimizing their digital tools to take full advantage of these capabilities for process improvements and system connectivity (digitalizing). Achieving a paperless manufacturing environment is a good goal and first step, but you will lag behind if you do not continuously improve your operations.

It is good to be an early adopter of smart manufacturing technologies. You want to be ahead of the curve, not behind it. One of the greatest adoption barriers is believing that if you do not already have a digital transformation plan, then it is already too late [1]. This is not true, but continued inaction will make it hard to catch up. The time is now, and it is crucial that manufacturers act now before it is too late. OEMs need to invest time and resources into the smart manufacturing initiatives of their lower tier suppliers to ensure that they stay afloat with the ever-changing digital environment.

What are the top benefits that manufacturers are seeing by implementing smart technologies?

The costs of inefficient exchange of 3D models and technical data in a large DoD program was estimated to be more than $45M annually [2]. On a plant visit in 2018, a large ball bearing company in Germany said they had experienced an 8 to 1 return on investment in proactive maintenance by implementing an IIoT approach to determine machine state and status. The National Institute of Standards and Technology (NIST) found that the Automotive industry experienced costs of more than $5B as a result of inadequate supply chain integration issues [3].

These costs are hidden from most analyses and considered the cost of doing business in the form of the person who must manually interface between systems that are not interoperable or the engineer recreating a 3D model because the customer’s system will not work with the supplier’s system. If we saw these issues in the physical flow of the product, we would have teams working to improve them immediately.

The U.S. industrial base needs individuals that have the same fervor for identifying and eliminating non-physical waste and understanding the costs that are associated with inefficient processes and missed digitalization opportunities. Taking a deeper dive into the costs that are associated with the technical exchange of models and data or supply chain communications would be eye-opening for any manufacturer and would reveal significant return on investment (ROI) opportunities.

What advice can you give to manufacturers who are beginning to explore smart technologies?

Accelerating the breadth of adoption of digital technologies does not happen overnight, and that is okay. It begins with knowledge [4]. You must make yourself aware of the smart technologies that are available and begin exploring what the benefits can be for your company [5].

Secondly, you must foster a smart manufacturing culture. This means getting others on board and aligning your vision with new, innovative, and creative ways of thinking. Ask yourselves: Do our current information processes support information being in the right place, at the right time, in the right amount, and in the right form to make the best possible decision? Or is there a better way? Because there is always a better way… and the answer could be smart manufacturing technologies.

Understand your current state. Where are you currently? Where is industry headed and where do you want to be? Identify the benefits of the adoption of digital technologies and keep those benefits at the forefront. Identify the barriers that are slowing and hindering your adoption of smart technologies and find ways that others have already passed those specific barriers. Take the next step. This next step could be as simple as digitizing data that is currently in a paper-based format and making that a permanent change or something more complex, such as installing sensors to your equipment for big data analytics and cloud computing.

What role do you see SME playing to accelerate the adoption of smart manufacturing solutions?

I envision SME to be an agent of change and a reliable resource for both SMMs and OEMs. Accelerating the adoption of smart manufacturing solutions will require a focus on the technologies themselves as opposed to promoting one vendor’s solution over another. The first step in the adoption of new technologies is awareness. SME has the opportunity to raise awareness of smart manufacturing solutions, provide compelling business cases that show the benefits of adopting digital capabilities, and supply a wealth of knowledge through training and certificates.

SME can play a role in showcasing the true current state of the U.S. manufacturing industry. Several recent articles claim that manufacturing is on the brink of adopting or implementing digital capabilities [6 - 7]. However, when diving deeper into these studies, you will notice that the data was largely collected from OEM research participants. This is not a true reflection of the U.S. industrial base because approximately 90% of U.S. manufacturers are SMMs. There is a smart technology gap that is widening between OEMs and SMMs that needs to be addressed by the manufacturing community [8 – 10]. SME can be a voice for these SMMs and provide them with the necessary resources to begin their digital journeys.

What is Auburn University doing to assist SMMs in their digital transformations?

Auburn University has established the Interdisciplinary Center for Advanced Manufacturing Systems (ICAMS). The purpose of ICAMS is to investigate research opportunities in the adoption of technologies associated with Industry 4.0 and Digitalization with an emphasis on assistance to Small- and Medium-sized Manufacturers (SMMs).  ICAMS features a functioning advanced manufacturing factory and uses engagement with SMMs to educate and train the next generation of engineers and skilled technicians needed to ensure a successful digital transformation of the industrial supply network.  ICAMS employs an interdisciplinary approach by bringing together various engineering and business disciplines to engage with industrial partners to overcome technology adoption issues and develop solutions to improve manufacturing competitiveness.  ICAMS is an Industry 4.0 demonstration site for regional and national SMMs, a teaching lab for undergraduate and graduate engineering courses, a research environment for interdisciplinary project teams, and a technology proving grounds for distributed manufacturing. The expertise within ICAMS provides a resource for the development of manufacturing plans for government scientist and commercial partners, and the ability to perform low rate initial production and prototype production.

Supporting Sources:

[1] “Finding the Confidence to Embrace New Technologies,”, 2018. [Online]. Available:

[2] Customer Supplier Interoperability Final Presentation, August 22, 2012, ITI, Milford, OH.

[3] Planning Report 04-2, Economic Impact of Inadequate Infrastructure for Supply Chain Integration, RTI International for the National Institute of Standards & Technology, June 2004.

[4] E. M. Rogers, Diffusion of Innovations, 5th ed. New York: Free Press, 2003.

[5] “Digital Transformation in Supply Chain Planning: One Pace or at Risk?”. ToolsGroup, 2019. Available:

[6] Jean-Pierre Petit et al., “Smart factories @ scale: Seizing the trillion-dollar prize through efficiency by design and closed-loop operations.” Capgemini Research Institute. Available:

[7] “Industry 4.0 Technology Reaches Its Tipping Point.” IndustryWeek State of the Market, 2019. Available:

[8] A. Yarbrough, G. Harris, C. Peters, and G. Purdy, “The Digital Transformation Gap Widens Between OEMs and SMMs,” [Presentation]. 11th model-based enterprise summit (MBE 2020), Gaithersburg, MD, 2020. Available:

[9] A. Yarbrough, G. Harris, C. Peters, and G. Purdy, “The Digital Transformation Gap Widens Between OEMs and SMMs,” in Proceedings of the 11th model-based enterprise summit (MBE 2020), Gaithersburg, MD, 2020, pp. 195 – 204, doi:

[10] G. Harris, A. Yarbrough, D. Abernathy, and C. Peters, “Manufacturing Readiness for Digital Manufacturing,” Manufacturing Letters, vol. 22, pp. 16–18, Oct. 2019, doi: 10.1016/j.mfglet.2019.10.002.