Smart manufacturing is delivering measurable value, with manufacturers reporting productivity gains of up to 20 percent in both production output and workforce efficiency, according to a new report from Deloitte.
The findings come from Deloitte’s latest Smart Manufacturing and Operations study, Navigating Challenges to Implementation, which shows that while many companies are beginning to reap the rewards of digital transformation, they still face major hurdles related to operational complexity, labor shortages, and cybersecurity.
Transformation brings results – and risks
The report highlights that smart manufacturing technologies have helped unlock up to 15 percent additional capacity for some organizations.
However, the transition is far from complete. Despite the growing adoption of Industry 4.0 technologies, the study finds that many companies still show low maturity in key areas such as workforce development, material management, and equipment maintenance.
Tim Gaus, principal at Deloitte Consulting and leader of the firm’s smart manufacturing practice, says: “The smart manufacturing journey is still emerging, but its value is undeniable.
“Our survey shows that most responding manufacturers agree with the need to invest in smart manufacturing but require help navigating operational complexities to see meaningful results.
“Smart manufacturing prepares enterprises to be ready for increased demands and, in an era where increased capacity can set companies apart, organizations that have already invested in smart manufacturing solutions will likely have an advantage – those who haven’t, may not be able to defer much longer.”
Automation and data take center stage
Investment trends suggest manufacturers are laying the groundwork for more advanced capabilities, particularly automation and AI.
Nearly eight in 10 (78 percent) of survey respondents say they are dedicating over 20 percent of their operational improvement budgets to smart manufacturing.
Top investment priorities for the next two years include:
- Process automation (ranked first or second by 46 percent)
- Physical automation (37 percent)
- Factory synchronization (24 percent)
In terms of specific systems, respondents are focusing on:
- Advanced production scheduling (35 percent)
- Manufacturing execution systems (33 percent)
- Quality management tools (28 percent)
These investments aim to improve resilience in the face of workforce shortages, material constraints, and equipment inefficiencies.
Addressing the talent gap
Deloitte’s findings confirm that labor shortages continue to weigh heavily on the industry. Nearly half of respondents report difficulty filling production and operations roles (48 percent), and an equal share say the same for planning and scheduling positions.
Although 48 percent of manufacturers say they’ve implemented smart manufacturing training programs, human capital remains the least mature category of transformation.
Additionally, more than a third (35 percent) express concern about upskilling their workforce to operate advanced technologies, including AI systems.
AI adoption is growing – but slowly
Despite significant interest in technologies like AI, robotics, digital twins, and virtual PLCs, many organizations still say their capabilities in automation, data integration, and system connectivity are just average by industry standards.
Near-term investment plans remain data-driven:
- Data analytics: 40 percent
- Cloud computing: 29 percent
- Artificial intelligence: 29 percent
- Industrial Internet of Things (IIoT): 27 percent
Currently, 29 percent of manufacturers report using AI or machine learning at the facility or network level, while 24 percent have deployed Generative AI.
Ongoing experimentation is also evident, with 23 percent piloting AI/ML and 38 percent piloting GenAI tools.
Managing operational and cybersecurity risks
The transition to smart manufacturing carries inherent risks, especially around operations and cybersecurity. Two-thirds of respondents (65 percent) rank operational risk – including disruption due to failed initiatives – as one of their top concerns.
Cybersecurity remains another pressing issue. According to Deloitte’s 2024 Global Future of Cyber survey, 40 percent of manufacturers reported experiencing six to ten cybersecurity breaches in the past year.
Technology readiness – including safeguarding connected systems – ranks just behind human capital as the most significant transformational challenge identified by leaders.
Fully capitalize on potential
Smart manufacturing is no longer just a vision – it’s a reality delivering tangible benefits. Yet, companies must address foundational issues in workforce development, risk management, and system integration if they want to fully capitalize on its potential.
As Deloitte’s study shows, those who invest wisely today will be better positioned to compete tomorrow.