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The growing conversation around AI has many manufacturers wondering if they are moving quickly enough.
A study by the US-based Manufacturing Leadership Council found more than 70% of manufacturers are already using generative AI (such as ChatGPT and Copilot) – with 90% expecting their use to increase over the next two years.
For manufacturers in Australia operating in a challenging environment with margin pressure and ongoing workforce shortages, any opportunity to drive productivity and lower costs is compelling.
Yet technology investments need to make sense, otherwise businesses risk wasting the very resources they’re trying to save: time and money. AI is no exception.
Where AI delivers the most value
How can manufacturers assess which AI use cases are worth pursuing and which are not?
The first step is to understand what AI really is and how it differs from other technologies such as automation and robotics. In manufacturing, the vast majority of what happens across the business is a repeatable process. Repeatable processes are the domain of robotics and automation, as is all the data that stems from them.
Once you move beyond repeatable processes, AI comes into play. This is where you can learn from the data that robotics and automation produce, and use it to make informed decisions.
Here are four areas where existing AI capability delivers value in manufacturing:
You may know exactly how many units your business produces each day, but do you know how that compares to industry standards and competitors?
AI can help to:
- analyse production data
- identify performance gaps
- highlight opportunities for improvement.
By benchmarking your performance, you can gain a clearer picture of where your business stands and where it can go next.
Manufacturing environments generate vast amounts of data which AI can translate into more accurate forecasts for:
- production capacity
- inventory requirements
- demand planning
- workforce allocation
- maintenance scheduling.
This allows manufacturers to improve planning accuracy and align resources more effectively with what the business needs.
One of AI's strongest capabilities is connecting information across different parts of the business. For example, a late customer delivery may appear to be a production issue when the root cause actually sits in maintenance or scheduling.
AI can analyse these interconnected factors faster than traditional reporting, so manufacturers can understand why problems occur rather than simply reporting that they did.
By analysing production metrics, maintenance records, quality outcomes and business performance, AI can uncover trends and opportunities that may otherwise go unnoticed.
This is where the real value of AI lies. Instead of looking to replace those who oversee manufacturing systems, AI can equip teams with the information they need to think more strategically and drive improvements.
Focus on automation before AI
For organisations in all sectors, the quickest wins usually come from improving processes that rely heavily on manual administration. For example:
- Production figures written on whiteboards
- Paper-based reporting
- Disconnected spreadsheets
Artificial intelligence can only play a role once these legacy processes are replaced. This is why the best first step in AI adoption is establishing a strong digital foundation.
As the business matures in its AI capability, it will then be in a position to adopt more advanced tools such as agentic AI. While agentic AI is still in its relatively early stages, it is able to coordinate actions across multiple systems, and make and execute decisions on its own within defined parameters.
Remember to keep the focus on fit, not AI hype. Do proper due diligence on any solutions you plan to implement – from checking where data that AI can access will be stored, to thoroughly reviewing the provider's security and privacy credentials. You need to understand how information is protected, how AI-generated outputs are checked for accuracy, and what level of human review is needed before they are used in practice. All of these considerations should sit alongside cost and return on investment when assessing a solution.
With a practical plan for AI implementation grounded in the realities of our local manufacturing environment, any manufacturer can realise the benefits of this exciting technology.
FOR MORE INFORMATION
To start a conversation about AI implementation in your manufacturing business, please contact our Manufacturing Advisory team.
This article was developed in collaboration with Poornima L Nathan, CEO of Exaptec.
This article was originally posted in Australian Manufacturing News.
