Manufacturers slow to adopt AI, report finds

As advancements in generative AI attract attention across industries, the manufacturing industry is slow to adopt AI technologies, according to the latest Sikich Industry Pulse report. It found that one-fifth of manufacturing executives have no plans to incorporate AI into their operations, and more than 60% of executives are unsure if AI will add any benefit to their companies or have researched AI but have not found an appropriate use case. Less than 20% of manufacturers have begun to implement AI technologies.

At the same time, manufacturers are still struggling to attract and retain labor. Of executives surveyed who said they are not optimistic about business prospects over the next six months, 45% cited labor shortages and 43% cited increasing labor costs as concerns. Both labor shortages and labor costs were more frequently listed as concerns of respondents compared to Sikich’s previous Industry Pulse report, which was released in June.

Only 7% are actively looking into or have already filled open roles with AI technology. But while adoption of AI technologies is low, 24% of manufacturers are interested in using AI to supplement the workforce.

“Faced with recruitment and retention challenges, manufacturers have a unique opportunity to improve efficiencies and automate back-office functions with technologies like AI,” said Jerry Murphy, partner-in-charge of manufacturing and distribution services at Sikich. “AI is a lot more than ChatGPT, and when deployed properly, AI tools can help manufacturers reduce costs, generate demand, improve customer relations, and more quickly bring products to market. It’s important that manufacturers proceed thoughtfully though, assessing the risks and challenges associated with AI alongside its exciting potential.”

Just as manufacturers are slow to adopt AI technologies, most also have a limited security infrastructure. While manufacturing executives are confident in their cybersecurity preparedness—ranking their confidence a seven on a scale of one to 10—cyberattacks are still prevalent in the industry. More than one-third (34%) of respondents experienced a cyberattack in the past five years.

Cybersecurity preparedness involves putting a number of measures in place to prevent attacks, including system controls, network controls, and employee training. Yet 58% of survey respondents have only three or fewer cybersecurity measures in place.

“Manufacturers are a prime target for hackers and vulnerable to ransomware in particular because of their need to avoid factory shutdowns,” said Thomas Freeman, a director in Sikich’s cybersecurity practice. “Hackers have many ways they can break into a company’s systems, from phishing scams to DNS attacks. A thorough defense that includes firewalls, regular security audits, penetration testing, security training, and threat intelligence is necessary to thwart attacks and protect company data.”

The report is based on an August 2023 survey of more than 100 executives from manufacturing and distribution companies across sectors including industrial equipment, wholesale and distribution, metal fabrication, food and beverage, apparel, footwear and textiles, and transportation.