In basic research projects the Stuttgart model of adaptive, changeable and virtual enterprises has been formulated. Regarding to this model a new perspective with the usage of ubiquitous computing is discussed, which allows the collection and distribution of information and knowledge at all places of work in manufacturing. The approach is a dynamic system that manages production fluctuations using decentralised communication and information support. Using a meta-model of the smart factory location, sensor integration and communication structures are developed. This provides a decentralized system, which uses intelligent manufacturing equipment in order to accomplish a highly flexible production. As a result a minimum in complexity, costs and time consumption is created. In this paper, the potential and architecture of smart factories based on wireless communication and location technologies will be presented with a focus on management of mobile objects in the production environment.