AI in the Factory of the Future

By Daniel Küpper , Markus Lorenz , Kristian Kuhlmann , Olivier Bouffault , Yew Heng Lim , Jonathan Van Wyck , Sebastian Köcher , and Jan Schlageter (BCG),

Artificial intelligence (AI) is a hot topic in business technology, and industrial companies have taken notice. By deploying the right combination of AI technologies, producers can boost efficiency, improve flexibility, accelerate processes, and even enable self-optimizing operations. A BCG analysis found that use of AI can reduce producers’ conversion costs by up to 20%, with up to 70% of the cost reduction resulting from higher workforce productivity. Producers can generate additional sales by using AI to develop and produce innovative products tailored to specific customers and to deliver these with a much shorter lead-time. AI is thus integral to the factory of the future, in which technology will enhance the flexibility of plant structures and processes. (See The Factory of the Future, BCG Focus, December 2016.)

Not surprisingly, companies around the world and across industries are exploring the possibility of applying AI in their operations. Yet some executives remain skeptical that AI can deliver its promised benefits. To better understand the opportunities and challenges, The Boston Consulting Group recently examined expectations for AI and the status of AI adoption in industrial operations.

BCG’s study focused on the results of a global survey of more than 1,000 executives and managers from a multitude of producing industries. (See the sidebar.) Overall, we found that producers expect AI to become a crucial lever for improving productivity. But implementation has not kept pace with expectations, in large part because many companies lack the four key enablers of AI: a strategy (including a comprehensive roadmap), a governance model for implementation, relevant employee competencies, and a supporting IT infrastructure.

The survey revealed that transportation and logistics, automotive, and technology companies are at the forefront of AI adoption, while process industries (such as chemicals) lag behind. Companies in the US, China, and India have taken an impressive lead in adoption over their counterparts in such countries as Japan, France, and Germany. The differences in speed of AI adoption across countries reflect different expectations regarding AI’s benefits. 

While companies in emerging nations such as China tend to be enthusiastic about these benefits, those in many industrialized nations, such as Germany, have a more conservative view. Because German companies have also fallen behind in developing detailed plans for AI adoption, their status as laggards is likely to persist. Within Germany, the automotive industry is among the most advanced in its adoption of AI technology, while the process industries have considerably farther to go.

The survey results indicate that industrial producers must significantly ramp up their implementation efforts if they are to achieve their ambitions for AI. Technology alone will not make it happen. To tap into the full potential of AI, companies must consider at an organizational level all of the necessary enablers.

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