A smart factory is a next-generation manufacturing system that combines information and communication technology (ICT) with advanced manufacturing technologies to automate and intelligently manage the entire production process. Beyond simple equipment automation, the core of a smart factory lies in the organic connection of people, machines, equipment, products, and systems within the factory through the Internet of Things (IoT), enabling real-time data exchange and analysis to maximize productivity and quality.

One of the key features of a smart factory is the use of technologies such as sensors, artificial intelligence (AI), big data, and cloud computing to collect and analyze process data in real time. This allows for early detection of abnormalities and efficient adjustment of production plans, reducing waste and defect rates while enabling flexible responses to high-mix, low-volume production and customized manufacturing.

This digital transformation overcomes the limitations of traditional manufacturing methods that relied on skilled labor, enabling precise and rapid decision-making based on data. It provides a foundation for companies to enhance productivity and competitiveness, and to respond swiftly to the rapidly changing global market environment.

Smart factories and automated factories may seem similar, but there are clear differences between them.
The core of a smart factory lies in pursuing digitalization beyond simple automation, focusing on machines that can make decisions and perform tasks intelligently on their own.

In contrast, automated factories focus on machines repetitively performing predefined tasks in place of humans, using robots, conveyor belts, and control systems to carry out consistent operations with minimal human intervention.

< The Difference Between a Smart Factory and an Automated Factory >

While automated factories are often limited to automating individual processes, smart factories stand out by interconnecting the entire facility and operating based on data. Smart factories integrate not only production but also logistics, quality control, and equipment maintenance, forming a system that can predict issues and respond immediately using real-time data. In short, while automated factories perform repetitive tasks based on pre-programmed instructions, smart factories can recognize real-time situations, make their own decisions, and adapt flexibly—making them truly intelligent manufacturing systems.

< The 5 Levels of a Smart Factory >

Smart factories are classified into five stages based on the maturity level of digital transformation.

Stage 1 is the initial assessment phase, where partial standardization and basic data management are implemented. Stage 2 is the monitoring phase, where production data is collected and checked in real time. Stage 3 is the control phase, in which the collected data is analyzed to identify issues and take responsive actions. Stage 4 is the optimization phase, where simulation and predictive analytics enable proactive responses. The final Stage 5 is the autonomous operation phase, where the factory operates independently, making decisions and taking actions without human intervention.

In this way, smart factories can evolve step by step according to each company’s and product’s characteristics, establishing themselves as a key technology for enhancing competitiveness in the manufacturing field.

Smart factories go beyond simple production automation, aiming to create an intelligent manufacturing environment where the entire factory is organically connected and operates based on data-driven decision making.

However, for this smart system to function reliably, various behind-the-scenes technological elements must also evolve in tandem.

A truly smart factory can only be realized when the underlying infrastructure—such as inter-process data integration, real-time monitoring systems, and quality control frameworks—is fully advanced.

SGO is also embracing this trend by building a smart factory that enables a more efficient and reliable production environment.

Based on a one-stop process, we manage the entire production cycle—from raw material procurement to finished goods—in an integrated manner.

As a result, we have implemented process streamlining and systemization across the manufacturing workflow, including production metrics management, on-site monitoring, and quality inspections (incoming, in-process, shipment, and nonconforming items). This has led to improved operational efficiency, reduced defect rates, and the establishment of a system that enables real-time tracking of production progress and historical records.

Curious how SGO’s smart technology is being applied in the field?
Watch the video below to see it in action!