Deloitte's study reveals critical insights on automation, workforce gaps, and cybersecurity risks in smart manufacturing.
Deloitte has released its smart manufacturing and operations study, “Navigating Challenges to Implementation.” The study indicates that while many companies report measurable benefits from earlier smart manufacturing initiatives, they still face challenges related to operational risks, workforce gaps and cybersecurity readiness.
Why this matters
Over the past decade, the manufacturing sector has faced significant challenges, including business disruptions, a shrinking workforce and shifting global conditions. These factors have prompted companies to accelerate smart factory initiatives to better manage change. While many organizations have adopted Industry 4.0 technologies and report some benefits, the study notes low technological maturity in the areas of human capital and workforce, material management and maintenance.
“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.” says Tim Gaus, Smart Manufacturing business leader and principal, Deloitte Consulting LLP.
Investments in automation
As organizations increase their investments in smart manufacturing, many are working to integrate technologies that support automation and improve operations. According to the report, 78% of surveyed leaders are allocating over 20% of their improvement budgets to initiatives involving data analytics, sensors, cloud and AI. Looking ahead two years, 46% of respondents identified process automation as a top investment priority, followed by physical automation (37%) and factory synchronization (24%). Systems receiving the highest investment focus include advanced production scheduling (35%), execution systems (33%) and quality management tools (28%). These investments are viewed as ways to address skilled labor shortages, increase efficiency, and better manage constraints across the production environment.
Human capital initiatives are a priority
This increased attention to automation aligns with ongoing labor shortages noted in a 2024 Deloitte manufacturing study. About 48% of respondents reported moderate to significant difficulty in filling production and operations management roles, and 46% reported similar challenges in planning and scheduling. Although nearly half (48%) said they have a training and adoption standard for smart manufacturing, workforce development remains the least developed area among the categories assessed. As job roles evolve with the integration of AI, 35% of respondents expressed concern about the need to upskill employees to effectively use advanced technologies in manufacturing.
Adoption of advanced technologies and AI
Despite growing interest in technologies such as robotics, virtual programmable logic controllers (vPLCs) and digital twins, survey indicate that their organizations’ capabilities in technology, data and automation are generally aligned with current industry benchmarks, with opportunities for improvement. Over the next two years, reported investment priorities remain focused on data, with 40% planning to invest in data analytics, 29% in cloud computing, 29% in artificial intelligence (AI) and 27% in the Industrial Internet of Things (IIoT). Regarding AI adoption, 29% respondents report using AI or machine learning (ML) at the facility or network level, and 24% have implemented generative AI (GenAI) at the same scale. Moderate investments are also being directed toward pilot projects and proofs of concept (POC) initiatives, with 23% piloting AI/ML, and 38% piloting GenAI.
Top risks: Operational and cybersecurity
Implementing smart manufacturing technologies often requires significant adjustments to existing processes and operations. Nearly two-thirds (65%) of respondents identified operational risk as a top concern when pursuing these initiatives, including potential disruptions or losses from implementation challenges. Organizations can better achieve the benefits of smart manufacturing by ensuring implementation is closely aligned with their business strategy. Establishing dedicated teams to manage processes and operational changes may also support more effective adoption.
As connected systems expand, they can introduce additional cybersecurity concerns. In Deloitte Global’s 2024 Global Future of Cyber survey, 40% of respondents reported publicly disclosing between six and ten cybersecurity breaches in the past year. In the smart manufacturing and operations study, participants ranked technology readiness – including the need to secure systems and data from cyber threats – as the second most important area for improvement, following workforce-related challenges.
Deloitte’s Smart Manufacturing study
The survey collected responses from 600 executives at companies with annual revenues of $500M or more and more than 1,000 employees. Participating companies operate in the United States and span industries such as consumer products, industrial products and construction, energy and chemicals, mining and metals, automotive, transportation, aviation, life sciences, and technology. The study was conducted between August and September 2024.
Learn more about Deloitte smart manufacturing and operations.
Edited by Puja Mitra, WTWH Media, for Control Engineering, from a Deloitte news release.
