Digital transformation of the production process or the entire value chain, from component to system and from supplier to customer, is the key to hidden value that can contribute to the company's productivity, compliance, profitability, and quality of the finished product. Connected production processes in the company are realized by converging information technology (IT) and operational technology into a single one, which results in the introduction of flexible industrial automation of production processes. These technologies connect the physical and virtual worlds with the Internet of Things (IoT) in order to better collect and analyze data, turning it into information that reach the decision-makers. All of the above cannot be achieved without the implementation of smart sensors that provide information at all times. Industry 4.0 can be implemented in production processes only by using smart sensors, and they, along with other technologies, are responsible for fully flexible automation of production processes, which brings a number of advantages such as shortening product development time and reducing manufacturing costs. The application of smart sensors makes production processes more efficient, and we have the ability to optimize them. The paper presents the basics of smart sensors, their role in Industry 4.0 as well as examples of their implementation in production processes.