Asian Manufacturers Becoming More Intelligent

Manufacturers who embrace AI will double their competitiveness in three years.

The conclusion comes from a recent report, entitled Future Ready Business: Assessing Asia Pacific’s Growth with AI, on the manufacturing sector by IDC Asia/Pacific and Microsoft Asia.

"Manufacturers in the Asia Pacific are slowly, but surely, seeing the importance of adopting a digital strategy and latest technologies. The study found that 76 percent of manufacturing business leaders agree that AI is instrumental to their organization's competitiveness in the next three years," said Scott Hunter, regional business lead, Manufacturing, Microsoft Asia.

Hunter saw AI becoming integral to manufacturing operations. "To achieve supply chain excellence, and even develop new business models to address changing customers' needs, integrating AI for their business is a must. Organizations which fail to adopt an AI-first strategy risk being left behind in today's competitive market landscape," added Hunter.

According to the report, AI-first manufacturers are already experiencing 17-24 percent of business improvements. In three years, AI is expected to accelerate innovation by 2.0 times and drive margins 1.9 times higher.

The report cited Piramal Glass, a leading glass packaging manufacturer in India, as an example. It employed AI, IoT and advanced data analytics on the cloud to drive operational efficiency, enhance customer experience and generate new revenue models. Advanced insights in real-time led to a 5-percent reduction in defects, 40-percent reduction in manual data gathering and a 25-percent improvement in employee productivity.

Dairy enterprise ACM's new high-tech milk processing and manufacturing facility in Australia is also using AI to manage costs better. Through machine learning, the company was able to reduce human errors from contaminating organic milk with conventional milk, which also minimizes wastage. CRM, AI and automation for production planning, logging and quality assurance, as well as factory maintenance, also helped ACM to save weekend overtime costs of AUD 100,000 annually.

"The identified business drivers are a clear sign of how technology such as AI can create improved value by helping organizations gain insights, and better manage their operations in a highly complex environment," said Stephanie Krishan, research director, IDC Manufacturing Insights.

"In fact, according to IDC FutureScape for Manufacturing and Implications for Asia Pacific (excluding Japan), half of the top 10 predictions are driven by data and AI-centric solutions or use cases, such as creating new ecosystems for automation, or even to put data at the center of their processes to drive speed, agility and efficiencies. This only points towards the fact that the future of manufacturing will be built upon data in order to deliver scalability and accelerate growth for the industry," he added.

Despite its advantage, manufacturers are still slow to embrace AI. "However, 59 percent of manufacturers have not adopted AI as part of their business today. This is a worrying sign for the industry that needs to thrive on innovation," said Hunter.