A smart factory is an advanced cyber-physical production facility which leverages cutting-edge digital technologies to optimize manufacturing processes based on data and communicate information to stakeholders quickly. It encompasses both various technologies, such as artificial intelligence (AI), the Internet of Things (IoT), cloud computing, big data analytics, and robotics; and various practices, such as on-the-job training, continuous improvement, lean principles, and environmental sustainability consciousness.

Smart factories are not just about technology and efficiency. They also prioritize the well-being of workers by creating digital twins of various equipment, materials, procedures, and human resources in manufacturing environments and allowing workers to either automate ergonomically strenuous activities or access instructions at any time. This focus on safety and health supplements the concept of Industry 4.0, which emphasizes the integration of cyber-physical systems through IoT data collection, analysis, and feedback in manufacturing.