The evolution of intelligent manufacturing has had a profound and lasting effect on the future of global manufacturing. Industry 4.0 based smart factories merge physical and cyber technologies, making the involved technologies more intricate and accurate; improving the performance, quality, controllability, management, and transparency of manufacturing processes in the era of the internet-of-things (IoT). Advanced low-cost sensor technologies are essential for gathering data and utilizing it for effective performance by manufacturing companies and supply chains. Different types of low power/low cost sensors allow for greatly expanded data collection on different devices across the manufacturing processes. While a lot of research has been carried out with a focus on analyzing the performance, processes, and implementation of smart factories, most firms still lack in-depth insight into the difference between traditional and smart factory systems, as well as the wide set of different sensor technologies associated with Industry 4.0. This paper identifies the different available sensor technologies of Industry 4.0, and identifies the differences between traditional and smart factories. In addition, this paper reviews existing research that has been done on the smart factory; and therefore provides a broad overview of the extant literature on smart factories, summarizes the variations between traditional and smart factories, outlines different types of sensors used in a smart factory, and creates an agenda for future research that encompasses the vigorous evolution of Industry 4.0 based smart factories.