Capgemini Research Institute

Smart Factories @ Scale

Seizing the trillion-dollar prize through efficiency by design and closed-loop operations

Scale your way to the peak of smart factory potential

Capgemini’s vision of Intelligent industry incorporates the convergence of the physical and digital worlds, along with the convergence of IT (Information Technology) and OT (Operational Technology) and “smart factories” are a critical part of this intelligent industry. Smart factories harbor enormous potential and the size of the prize is bigger than ever. The market for smart manufacturing platforms alone has reached $4.4bn in 2019 and is expected to grow steadily over the next five years. And most organizations understand what’s at stake – in 2017, 43% of manufacturers already had smart factory initiatives underway, which further increased to 68% in 2019. But these initiatives can only succeed if they are scaled properly.

Any smart factory initiative can only succeed if it is scaled properly

To understand the progress of initiatives, the adoption of digital technologies, and the challenges faced by manufacturers in achieving scale, the Capgemini Research Institute surveyed 1,000 manufacturers, focusing primarily on organizations that had a smart factory initiative underway. We also conducted nearly twenty in-depth discussions with executives overseeing a smart factory initiative or a smart factory. The findings of this study form our new report, Smart factories @ scale: Seizing the trillion-dollar prize through efficiency by design and closed-loop operations. We found that:

  • Organizations understand that smart factories are the way of the future – the number of initiatives is on the rise, and both efficiency by design and closed-loop operations are driving the benefits
  • The size of the prize is bigger than ever – at $2 trillion on average, two-thirds are still to be realized
  • The secret lies in scaled initiatives – but only 14% think they are succeeding
  • High performers can lead the way – their best practices balance efficiency by design with effective operations.

IT-OT convergence, virtual and loopback operations, and transformation mastery are key to success

To drive scaled success, organizations need to put in place strong governance, as well as metrics and methodologies to assess progress. They must develop a program for deploying and integrating digital platforms across manufacturing operations as well as a culture of data-driven operations. Finally, they must develop hybrid and soft skills through cross-functional career paths, upskilling, and recruitment. These are the best practices that help front runners stay ahead of the pack. To keep pace, novices should think big, but start small while experimenters should invest in their foundations before they scale up.

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Report – Smart Factor...

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Sound Bites

Dr. Seshu Bhagavatula, President, New Technologies and Business Initiatives at Ashok Leyland

There are three primary reasons why we took up the smart factory initiative. The first is to improve the productivity of our old factories through modernizing and digitizing their operations. The second is to deal with the quality issues that are difficult for human beings to detect. And the third is to incorporate made-to-order or mass- customization capabilities.

Martin Widsing, Senior Manager, Virtual Methods and IT at Volvo Cars

The biggest struggle is that there are no products and platforms available, ready to use, that we can simply purchase, implement, and then start using. They do need a lot of customization and configuration before they are actually ready to be used.

Key Insights


The share of production processes that are digitally optimized on average at a manufacturing organization


The share of organizations who would consider their smart factory deployment so far, a success


The share of organizations who find the deployment and integration of digital platforms and technologies a major challenge to scale up smart factory initiatives

About the Capgemini Research Institute

Capgemini Research Institute

Capgemini’s #1 ranked in-house think tank on all things digital


Jerome Buvat

Expert in Digital Transformation & Strategy, Strategy & Transformation

Ramya Krishna Puttur

Expert in Digital Transformation, Innovation, Analytics, Strategy