This paper presents a framework for implementing a smart factory under the Industrie 4.0 paradigm, focusing on vertical integration of factory systems. The framework integrates industrial wireless networks (IWN), cloud computing, and smart artifacts such as machines, products, and conveyors. The smart factory is designed to be flexible and reconfigurable, enabling efficient production of customized and small-lot products. The operational mechanism is based on a self-organized system, where smart artifacts communicate and negotiate through the IWN, and big data analytics provide feedback and coordination. The paper outlines the technical features and benefits of the smart factory, including flexibility, productivity, resource and energy efficiency, transparency, and profitability. It also discusses the challenges in implementing the smart factory, such as intelligent decision-making, high-speed IWN protocols, big data analytics, system modeling, and security. The paper concludes that the smart factory of Industrie 4.0 is achievable by applying existing technologies and addressing technical challenges. The authors also present a prototype design of the smart factory, demonstrating its application in a real-world scenario. The smart factory is expected to have a significant impact on industry, lifestyle, and social organization.This paper presents a framework for implementing a smart factory under the Industrie 4.0 paradigm, focusing on vertical integration of factory systems. The framework integrates industrial wireless networks (IWN), cloud computing, and smart artifacts such as machines, products, and conveyors. The smart factory is designed to be flexible and reconfigurable, enabling efficient production of customized and small-lot products. The operational mechanism is based on a self-organized system, where smart artifacts communicate and negotiate through the IWN, and big data analytics provide feedback and coordination. The paper outlines the technical features and benefits of the smart factory, including flexibility, productivity, resource and energy efficiency, transparency, and profitability. It also discusses the challenges in implementing the smart factory, such as intelligent decision-making, high-speed IWN protocols, big data analytics, system modeling, and security. The paper concludes that the smart factory of Industrie 4.0 is achievable by applying existing technologies and addressing technical challenges. The authors also present a prototype design of the smart factory, demonstrating its application in a real-world scenario. The smart factory is expected to have a significant impact on industry, lifestyle, and social organization.