In the manufacturing industry, the smart factory is considered the final stage of the Fourth Industrial Revolution. Manufacturing companies are pursuing breakthroughs by introducing various advanced technologies to ensure their competitiveness. However, it is difficult for small and medium-sized enterprises (SMEs) to adopt smart-factory technologies, owing to financial and technical burdens. This paper proposes a smart factory that can be applied technically and strategically to the introduction of a smart factory for SMEs. The concept of an ‘appropriate smart factory’ involves applying appropriate measures in terms of cost and scale with consideration of the situations faced by SMEs. The goal is to build a smart factory that has necessary functions (Essential) but can be easily operated (Simple) at a low cost (Affordable) and has compatibility (Interoperable). This paper presents technical application measures such as appropriate smart sensors, appropriate IoT (Internet of Things), and small data processing, along with the definition of an appropriate smart factory. In addition, a case study was examined where the quality inspection equipment for garment manufacturing SMEs was developed by applying the appropriate smart factory concept.