Nowadays, small and medium sized enterprises (SMEs) are becoming increasingly competitive. In order to fulfill the rapidly changing market and diversified demands of customers, the SMEs need to achieve and maintain high productivity and quality, with fast response, sufficient flexibility, and short lead times. Therefore, Industry 4.0 offers various manufacturing paradigms that might be a solution in order to increase the productivity of SMEs such as intelligent and flexible manufacturing. Furthermore, in the last decade, the emphasis on adopting eco-friendly practices, implementing sustainability measures, and protecting the environment has continued to grow, to gain traction across SMEs. In fact, because of this need, many SMEs are now adopting sustainable manufacturing practices in response to this increased focus on sustainability and environmental stewardship. The main purpose of this paper is to design and study the implementation of a sustainable, intelligent material handling system for material distribution with utilizing an agent-based algorithm as control architecture. A time study-based methodology has been implemented to evaluate the overall equipment effectiveness (OEE) to identify the matters that need to be resolved and optimized to increase the OEE percentage with consideration of the sustainability of the system. An exhaustive analytical trend applied to the generated time study data. Accordingly, further hardware, software, and layout design limitation and problems detected, and the proper solutions were anticipated. The observed time study results were presented, a fundamental set of analytical observation and information with associated histograms was reviewed. In addition, the study aims to recognize and analyze effective factors on the sustainability of improved processes, using a simple model. To do this, using experts’ viewpoints, affective factors on the sustainability of process improvement activities are determined.

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The properties of small- and medium-sized enterprises (SMEs) make them one of the most important categories of enterprises for the economics of challenging world. SMEs, in most countries, are still enterprises with marketing and financial challenges. In addition, most of these challenges are related to their production and product characteristics. On the other hand, SMEs should fulfil the costumer’s demands. In order to reach these goals, SMEs must reach the highest level of production quality and quantity and successfully sustain them. Consequently, various manufacturing paradigms have been offered by an Industry 4.0 concept, which offers a variety of solutions to increase the productivity and enhance the performance of SMEs. It should be noted that implementation of these manufacturing paradigms for SMEs is quite difficult and sometimes risky for several reasons. Still, amidst all these difficulties and challenges, the benefits and idealism of the Industry 4.0 paradigms prevail. From productivity to market, it is difficult to deny that SMEs are frightened by the challenges they face and fleeing from the potential of overcoming them. This paper is an extended version of the research by Ghafoorpoor Yazdi et al. (2018) and conducts a hybrid methodology to satisfy the SMEs by validating and verifying any optimization idea before implementing the Industry 4.0 concept. To reach the study goals, an intelligent Material Handling System (MHS) with agent-based control architecture has been developed. The developed MHS has been utilized for auto parts distribution. The system performance has been evaluated, and some solutions have been provided to optimize the performance of system. To evaluate the target system’s performance, an analytical time study method has been utilized. The time study has an Overall Equipment Effectiveness (OEE) standard approach to identifying the matters that need to be resolved and optimized to increase system performance. The other part of the methodology is generating a simulation model of the real system by use of ARENA® software to evaluate the system’s performance before implementing the optimization idea and modifying the real system. Furthermore, as the sustainability strategies create many synergistic effects for SMEs, after evaluating the effects of the optimization ideas on OEE percentage, the influence of the OEE changes on manufacturing sustainability has been investigated. The results show that optimizing the OEE in SMEs with sustainability approaches can create competitive advantages, rather than simply focusing on reducing unsustainability.