Adoption of AI in Manufacturing: A look into trends, strategies and challenges

The adoption of Artificial Intelligence (AI) in manufacturing is opening up exciting opportunities to improve decision-making, predictive maintenance and quality control. AI-driven technologies empower manufacturers to harness vast amounts of data, gain valuable insights, automate routine tasks, and drive innovation at an unprecedented pace. While there are challenges to overcome, the potential benefits far outweigh the hurdles, making AI a game-changer for the industry.

Manufacturers are keen to adopt AI

A recent report on the Global Complex Manufacturing Outlook shows that 40% of manufacturers regard implementing AI and automation as their top digital transformation priority, followed by enhancing digital integration and real-time insights (29%) and managing costs while adopting new technologies (24%).

Already, 80% of manufacturers are either devoting resources to AI implementation or making near-term plans to do so. Twelve percent have already deployed AI or are actively in the process of doing so, while 57% are actively researching use cases and another 11% plan to deploy AI within the next 12 months.

This uptake indicates that AI will profoundly influence the manufacturing industry. By leveraging key AI-driven technologies and integrating them with their ERP solutions, manufacturers can completely change the way they work, removing the burden of manual tasks from employees while simultaneously making operations safer and more efficient.

Adopting AI in manufacturing calls for a clear, detailed strategy

Despite manufacturers’ enthusiasm for adopting AI, the survey indicates that nearly a third of manufacturers have difficulty integrating new technology, while 15% say outdated systems are creating inefficiencies and a further 15% suffer from limited scalability to meet future needs.

Small- to medium-sized manufacturers increasingly see the implementation of AI as a non-negotiable part of their strategies. However, rather than being driven by a business need, this is often in response to pressure from stakeholders or a need to keep pace with the competition. In reality, it’s critical for manufacturing CIOs to realize that the first step on a successful AI journey is to clearly identify and define the specific business objectives behind implementing AI. As with an ERP implementation, it’s advisable to select a small, manageable project from which lessons can be learnt for the next phase of the journey.

Another crucial success factor is the willingness to invest in AI implementation – not just in time and money, although both are critical, but in data collection and storage. ERP has a vital role to play here with its ability to generate accurate, real-time data as well as actionable insights. Manufacturers can obtain one unified, holistic view by integrating their AI systems with their ERP, Human Resource Management and Customer Relationship Management solutions.

Cobots and dark factories gain traction

Until now, implementations of technologies such as robots, cobots and dark factories have been the exclusive domain of large manufacturers that could accommodate substantial upfront investment. The initial cost has been prohibitive for small- to medium-sized manufacturers, but that is starting to change.

An emerging trend is seeing vendors of these technologies move from a capex model to one centered on operating expenditure. This will make it far easier for small- to medium-sized manufacturers to implement dark factories and warehouses, particularly as robots and cobots start to become cheaper. We may even see subscription models come into play, enabling manufacturers to pay for the use of robots and cobots monthly.

A cobot, or collaborative robot, is a type of robot designed to work alongside humans in a shared workspace. This new generation of intelligent robots can work safely and effectively alongside humans, apply themselves to different tasks, and learn to become more efficient at their jobs and navigate their environments. As robots move into the workforce, humans will develop new skills around leading and interacting with automated co-workers.

Integrating cobots with ERP enables seamless data exchange and co-ordination across different parts of the production process, once again contributing to more streamlined and efficient operations.

Smart supply chains

Manufacturers’ logistical challenges around sourcing components and managing complex inventories and production infrastructure are perfectly suited to automated, intelligent solutions. AI-powered tools which leverage real-time data analytics will enable more accurate demand forecasting and automated decision-making, helping manufacturers to build supply chains that are increasingly resilient and adaptive to changing market conditions. Going forward, AI will enable manufacturers to anticipate disruption more effectively and identify opportunities to improve efficiency, ultimately leading to improved customer experience and business performance.

Continuous learning will drive adoption

As manufacturers adopt AI, the greatest impact from an organizational perspective will be workforce upskilling and education. To successfully integrate AI into ERP systems and maximize their potential, manufacturers need to upskill and educate their workforce to create many AI innovators in the business. Manufacturers who invest in developing their employees’ AI skills will benefit from higher buy-in and smoother change management.

Manufacturers can also look forward to deriving more value from Agentic AI. When integrated with ERP systems, these agents can be used to automate workflows, solve problems and improve customer experience – all top priorities for manufacturers. The advantage of Agentic AI is that it goes beyond providing static information, offering summations and predictions based on historical data and flagging anomalies in situ so that manufacturers can take immediate action rather than discovering any discrepancies weeks later.

Leadership in the AI era

Positioning a business as a leader rather than a follower in the AI era will become a growing priority for many manufacturing companies. It’s no longer good enough to simply adopt new technologies. As the barriers to entry continue to fall, it has to be done in a way that’s more innovative, effective and efficient than the competition. Identifying opportunities will increasingly become a priority going into the future – and the key is a seamless integration between AI and ERP.

By Kevin Dherman, Chief Innovation Officer at SYSPRO