Manufacturing Companies Fully Integrating AI Will Gain Significant Competitive Edge: KPMG Report

KPMG International has unveiled a new report titled “Intelligent Manufacturing — A Blueprint for creating value through AI driven transformation” to better understand how manufacturing leaders can leverage AI as a transformative force. It elucidates on how the future belongs to those who recognize that AI is no longer just about automation. It’s about autonomy, intelligence, integration and a new more effective way of working. For production and supply chains, AI enables real-time decision-making, predictive analytics and self-optimizing workflows.

For example, AI can combine external and internal data points, such as client consumption patterns and global indices, to provide a meaningful decision support system around cost optimization and intelligent commodity forecasting. Agentic AI can act centrally understanding demand and supply to suggest an optimal inventory and enhanced customer delivery compliance. In the workforce, AI and augmented reality help train employees on best practices while automating routine tasks, supporting predictive maintenance and enabling dynamic scheduling. Finally, in the back office, AI streamlines finance, procurement and HR functions — areas that remain largely under-digitized in traditional manufacturing. The survey has contributions from 183 senior manufacturing AI leaders across 8 countries including India.

S Sathish, Partner & National Sector Leader, Industrial Manufacturing, KPMG India, says “AI is no longer a choice but a strategic necessity. As organizations embrace intelligent technologies, they’re not only enhancing efficiencies but redefining the existing industry operating models. With sustainability, data-driven insights, and structured AI adoption at the core, manufacturers have a unique opportunity to unlock lasting value and competitive advantage in an ever-evolving landscape.”

The key findings from the report include:

• 93 per centbelieve that manufacturing organisations that fully integrate AI will gain a significant competitive edge over those that do not
• 96 per centhave experienced operational and efficiency improvements and 62 per cent experiencing an ROI of greater than 10 per cent
• 80 per centof organisations have invested in AI knowledge and skills training, while 72 per cent have focused on building a comprehensive business
• 74 per cent are using machine learning, 72 per cent predictive analytics, 67 per cent are using agentic AI
• AI adoption is having the greatest impact on R&D and IT functions, according to 77 per centof industry leaders. However, its influence extends across the value chain, with 70 per cent citing significant operational improvements as AI becomes embedded into core business functions
• 89 per centbelieve employees are quickly adapting to AI tools and technologies, supporting widespread adoption across the workforce
• 78 per centbelieve meeting sustainability targets is more important than AI
• 56 per cent of manufacturers have faced data-related issues when implementing AI solutions.

According to the report, in order to maximize value creation, manufacturers should align AI efforts with core operational strengths in a way that fosters trust, builds sustainable infrastructure and empowers the workforce. Moreover, they should design an AI strategy that aligns with core competencies and unlocks value; build trust into the AI transformation roadmap; create sustainable technology and data infrastructure for AI adoption and build a workforce culture that uses AI to augment human potential.

Lastly, the manufacturing sector stands at the cusp of an AI-powered transformation that will redefine how value is created from product design and production to supply chains, maintenance and customer relationships. What was once a primarily physical industry is now becoming deeply digital, driven by intelligent automation, predictive analytics and increasingly autonomous systems.