Manufacturers are increasingly adopting artificial intelligence beyond cost-cutting goals, using AI to improve productivity, quality control, operational efficiency, predictive maintenance, and innovation as industrial transformation accelerates globally. The survey found that connecting machines for real-time data (36%) was rated the foremost prerequisite for AI in manufacturing, followed by strengthening data security and privacy (30%), hiring AI and data talent (30%), and embedding AI into processes (29%).
Manufacturers are using AI as an engine for growth and faster decision-making rather than a tool for slashing costs, according to the AI Readiness & Adoption survey, in collaboration with Cisco, where 70 CXOs from manufacturing firms were surveyed.
The survey found meeting customer expectations (49%) and boosting operational efficiency (47%) were the primary forces driving AI adoption among manufacturers. However, cost reduction, often touted as a top reason for AI adoption in enterprises, ranked last at just 23%.
"Rather than isolated automation investments, manufacturers are building intelligent systems where data flows seamlessly between machines, operators, and enterprise applications, enabling real-time decisions, improving worker safety, and driving more sustainable operations at scale," said Himani Agrawal, chief operating officer, Microsoft India and South Asia, as mentioned in The Economic Times.
Instead of slashing the workforce, manufacturers are chasing real-time data insights (46%) and improving product quality/defect detections (36%) to speed up factory-floor decision-making and overall efficiency. Sustainability and safety were also major winners, with 39% of manufacturers leveraging AI to optimise energy use and 36% saying protection of workers was a top AI impact area.
"Industry 4.0/AI-enabled production lines are delivering 15-20% higher productivity," Ravichandran Purushothaman, president of Danfoss India, said. "In the supply chain environment, an operator on a machine without digitalisation was a bit blindfolded. Today, they have got a lot of meaningful data that can help them take actions. So, AI is improving the human interface to machines with quality, which brings a lot of safety improvements as well in the factory leading to higher productivity for blue collar workers too," he added.
German luxury carmaker Mercedes-Benz said it was using AI and future technologies in every aspect, from product development to production to internal processes. The company has been using industrial robotics technology for decades to perform particularly monotonous and physically demanding tasks. However, Santosh Iyer, managing director, Mercedes-Benz India, highlighted the transformative impact that AI has had on these functions.
"AI is directly getting deployed into production making it intuitive, accessible, and usable for everyone," Iyer said. "AI-supported virtual assistants analyse complex data in real time and instead of laborious, manual root-cause analysis, the engineers now rely on AI agents from a virtual data-science team. These AI agents quickly and reliably analyse available data, identify patterns, and offer comprehensive analysis and solutions resulting in higher efficiency in production," he added.
The AI Readiness & Adoption survey also found that the human-machine relationship can create significant value in manufacturing with faster onboarding and skill transfer through AI (57%) being the top collaboration opportunity. Other important avenues included improving shop floor safety (46%), AI-assisted decision-making for operators (50%), and automating repetitive tasks (47%).
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While the potential was immense, the survey found that most manufacturers are at a transitional security stage, where it is visible but not yet automated. Only 3% have security fully embedded into their operational architecture; automated, continuous, and AI-augmented.
Industrial AI is steadily evolving into one of the world’s largest technology opportunities as manufacturers invest in automation, predictive analytics, and smart operations. With rising demand for efficiency and resilience, AI-driven industrial systems could reshape global production, supply chains, and factory management over the next decade.