Many manufacturers recognise the need for automation and digital transformation but struggle with the first step. Common questions arise. Where should we start? What impact will it have? How do we secure budget approval? Without clear answers, companies often revert to labour-intensive operations, relying on manual workarounds to sustain production. Even when companies begin digitalisation, they typically focus on isolated improvements, automating a single process or upgrading specific equipment, without a holistic optimisation plan. This leads to limited efficiency gains and prevents businesses from unlocking the full potential of a smart factory.

Additionally, meeting evolving customer demands adds pressure to manufacturing processes. Companies are increasingly tasked with multi-variety, small-lot production and short lead times, all while maintaining high customer satisfaction. These demands create complexities in production environments, increasing the burden on employees and making production management more difficult. As production complexity grows, so does the challenge of transferring critical skills as experienced workers retire, making it harder to modernise operations. Manufacturers also face sustainability pressures, from circular economy compliance to environmental regulations, further complicating digital transformation efforts.

Beyond selecting the right technology, factory leaders often struggle to justify digital investments due to unclear return on investment projections. Without a structured and strategic approach, transformation efforts lack direction, making it difficult to gain leadership approval. This uncertainty can lead to budget rejections, causing companies to continue relying on labour-intensive processes and delaying necessary modernisation.

Yoshihiro Wake

“A smart factory is no longer a luxury or strategic option, it’s essential to remain competitive in today’s fast-evolving market. Companies that resist embracing automation risk falling behind in meeting customer demands and industry standards,” said Yoshihiro Wake, lead of transglobal expansion frontier at ABeam Consulting Vietnam. The choice is straightforward: take proactive steps to modernise now, or face increasing challenges that could undermine long-term success.

ABeam Consulting’s approach to smart factory transformation is structured to help companies assess their current operations, define a vision for the future, and implement technologies that improve efficiency and productivity.

The first phase of the approach is assessing the current state of operations. ABeam begins by reviewing existing documentation, such as floor plans, production layouts, and work instructions. An on-site assessment helps identify real-world inefficiencies and provides a clear baseline for transformation. Process Mining is one option in this phase, offering data-driven insights into operational inefficiencies by analysing real-time process data. This technology is particularly effective in Vietnam’s manufacturing sector, where companies can gain a more in-depth understanding of process bottlenecks and inefficiencies.

Following the assessment, the next step focuses on defining a clear smart factory vision. This vision should reflect the company’s specific needs, industry challenges, and long-term objectives. ABeam works closely with key stakeholders to build a Grand Design that outlines the desired future state of the factory. It’s essential for the company to establish its key goal indicators (KGI), such as overall production goals, market expansion targets, and operational stability. These goals serve as the foundation for the transformation. Once the KGIs are defined, key performance indicators (KPI) should be set to track progress towards those goals. KPIs might include production efficiency, defect rates, or lead times, providing measurable checkpoints to track success.

Once the vision and grand design are established, ABeam Consulting works to create a clear roadmap. This step involves identifying key initiatives aligned with the vision and structuring them into actionable themes. It’s important to account for potential constraints, such as space limitations, infrastructure readiness, or workforce adaptability, which could impact the feasibility of specific initiatives. These constraints are addressed during the transformation process. Additionally, ROI projections are made at this stage. If process mining was used in the assessment, it allows for more accurate ROI calculations, grounded in real-time operational data and visible process bottlenecks. In this context, some may view these initiatives not just as costs, but as investments in growth, positioning the company for long-term success.

With a roadmap in place, ABeam guides companies through the execution phase of transformation. However, the process is not a one-time event but a continuous journey. It’s critical to begin with small, impactful initiatives that yield early wins, building trust and momentum. These initial successes set the stage for ongoing improvements and a continuous cycle of transformation. ABeam supports clients in maintaining momentum by collaborating with the right partners, such as the Internet of Things and AI system vendors, and engaging key stakeholders across the organisation. By fostering collaboration, ABeam ensures that the smart factory journey stays on track and delivers lasting results.

Case study

An apparel manufacturer located in southern Vietnam has adopted a pull-based production model, supported by an automated warehouse system that ensures the timely delivery of parts in response to customer orders, improving the efficiency of the production line. The facility has also advanced its factory automation (FA) initiatives, reducing the need for manual labour in production processes.

Looking ahead, the company envisions leveraging IoT and AI to enable data-driven control and optimisation. The goal is to use accumulated knowledge and established models to make optimal decisions, while driving continuous improvement through an autonomous plan-do-check-act cycle. Another key objective is to develop a local management structure independent of expatriate staff. However, the specific actions required to achieve these goals are still being defined.

In the initial phase of the project, the company aims to:

• Diagnose the current level of smart factory implementation at the facility.
• Identify challenges that hinder the realisation of the desired future state and evaluate potential high-impact, feasible solutions.
• Select proof of concept (PoC) themes that address these challenges effectively.

To achieve this, a comprehensive assessment of the current state was conducted, combining smart factory objectives with process evaluations to generate a heat map of performance. This was followed by discussions with key stakeholders to align on the desired future state of the factory and prioritise initiatives. Finally, based on the monetary impact and implementation speed, the most promising PoC themes were selected to drive the transformation forward.

This approach provides a strategic roadmap for evolving the factory into a fully integrated smart manufacturing environment, focusing on maximising efficiency, automation, and data-driven decision-making, while maintaining the flexibility to adapt to future needs.

Strategic importance

A smart factory is essential for manufacturers striving to stay competitive in an evolving industrial landscape. By integrating digital technologies, companies can enhance efficiency, reduce costs, improve quality, and future-proof operations against workforce and market challenges.

“When realising a smart factory, it’s crucial to recognise that its ultimate goal varies for each company. Rather than simply following the latest factory trends, businesses must develop a tailored Grand Design that aligns with their specific needs and long-term vision. The transition to a smart factory is not just an upgrade, it is a strategic necessity for sustainable growth and long-term success,” said Yoshihiro Wake.

As Vietnam continues to solidify its position as a global manufacturing hub, companies that embrace smart factory transformation will gain a significant competitive advantage. Looking ahead, the integration of AI, IoT, and data-driven automation will be instrumental in shaping the next generation of manufacturing excellence in Vietnam.