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As technology reshapes the manufacturing sector, companies are investing in new ways to improve efficiency, cut downtime and respond faster to demand. Smart manufacturing technologies are in particularly high demand and for good reason: They help plants track equipment, prevent breakdowns and make quicker decisions. They also take much of the manual lift out of routine tasks and free up workers to focus on more important projects.
By SAP’s definition, smart manufacturing uses advanced technologies like artificial intelligence (AI), robotics and the Industrial Internet of Things (IIoT) to increase the efficiency of traditional manufacturing processes. Sensors monitor equipment in real time, analytics flag potential problems before they cause downtime and connected systems help plants respond to demand shifts faster and more efficiently.
“Today’s smart manufacturing is not about tearing down traditional factories and replacing them with something else,” SAP points out. “It’s about smartening up existing factories step by step and augmenting them with the best tools and solutions to reach their manufacturing goals more efficiently and effectively.” In return, companies are realizing benefits like:
- Greater efficiency. Connected systems cut back on manual processes and improve overall workflow.
- Reduced downtime. Predictive tools help identify equipment issues before they turn into costly shutdowns.
- Quicker response. Real-time data allows managers to adjust production to shifting demand.
- Fewer manual tasks. Automation handles repetitive tasks so employees can concentrate on higher-value work.
Industrial Transformation Gains Momentum
This year’s State of Smart Manufacturing Report from Rockwell Automation shows how quickly smart manufacturing tools and other digital solutions are moving from pilot projects to everyday use on the plant floor. More than half of manufacturers are testing or scaling smart technologies, and many are turning to AI to tackle quality control, cybersecurity and persistent workforce challenges. The survey findings also highlight that while inflation and supply chain disruption remain top concerns, companies are responding by investing in efficiency, sustainability and skills that will make them more resilient in the long run.
“As industrial companies navigate a complex and changing landscape, technology advancements are creating new opportunities to improve speed, productivity and agility,” the company says in the report. More specifically, Rockwell says “industrial transformation” is gaining momentum, with 56% of manufacturers piloting smart manufacturing, 20% using it at scale, and 20% planning future investments. Other trends include:
- 12% growth in generative and casual AI investments
- 14% increase in efficiency-driven sustainability efforts
- 5% rise in the importance of analytical and AI skills for leaders
“AI is identified as a potential solution to labor shortages, skills gaps, quality control, and managing external pressures,” the company points out. Respondents also indicated that implementing this technology posed internal challenges. “People recognize the promise of AI and have successfully deployed it for quality assurance, but continue to look for ways to alleviate pressures like the labor shortage and skills gap.”
Smart Manufacturing to Offset a Challenging Economy
As 2025 begins to wind down, manufacturers continue to grapple with inflation, slow growth and supply chain disruption. They’re also dealing with a labor shortage, skills gaps and a volatile tariff environment. According to the report, 41% of them are using AI and automation to close skills gaps and address labor shortages; 34% list inflation and slow growth as their biggest obstacles in the next 12 months; and 83% rank analytical thinking and communication as the top traits for future hires.
Cybersecurity is also a growing focus for manufacturers, nearly half of which plan to apply AI to protect connected systems. More than one-third are fortressing their information technology (IT)/operational technology (OT) security and roughly half want to use AI to improve product safety and consistency. “Quality is a practical AI use case right now and key to business operations and strategy,” Rockwell says.
The Next Phase
Smart manufacturing technology transformations are increasing the demand for more people with AI and cybersecurity competencies, and the manufacturers that Rockwell surveyed point to AI as the technology that will have the biggest impact on workforce challenges. “Investing in technology allows decision makers to move talented workers to more value-added tasks, increasing production/productivity,” the company says.
Rockwell’s report concludes with the steps that manufacturers can take to get the most from smart technology, and that starts with proving value through targeted use cases and pursuing investments with a clear payback. Success also depends on planning for scale, fostering collaboration, staying flexible, sharing progress, applying governance and equipping people with the right skills. Together, these actions help manufacturers get quicker returns on their tech investments while strengthening their operations for the longer haul.
