Artificial Industrial in Manufacturing Market Analysis

Artificial Intelligence (AI) in Manufacturing (Global, 2024)

Introduction

Artificial intelligence (AI) is revolutionizing the manufacturing industry, bringing about efficiency, and boosting productivity at all stages of the manufacturing process. Artificial intelligence is becoming increasingly used in the manufacturing industry. It enables manufacturers to optimize their production and reduce costs, and improve product quality. This transformation is not only changing the way we manufacture, but also transforming the way we manage supply chains, perform preventive maintenance, and monitor product quality. Artificial intelligence is a powerful tool that helps companies to meet the challenges of Industry 4.0 and smart manufacturing. It is therefore essential for all those who want to understand the functioning of this industry to be able to adapt to the changing environment.

PESTLE Analysis

Political

In 2024, the political background to the field of manufacturing and the use of robots was largely determined by the government’s initiatives in the field of technological innovation. For example, the United States had allocated approximately $ 1 billion to the development of artificial intelligence in the field of manufacturing, in order to strengthen the country's national competitiveness. Likewise, the European Union was preparing regulations for the use of artificial intelligence in manufacturing. This proposal included a framework for the ethical use of artificial intelligence, which could affect up to 70% of the manufacturing companies in its territory.

Economic

The economic environment for A.I. in manufacturing is characterized by large investments and cost-saving opportunities. It is estimated that in 2024, companies deploying A.I. in manufacturing will be able to save up to 20 percent of their operating costs, which will result in a savings of around $300 billion for the manufacturing industry as a whole. In addition, the labor market is changing. It is expected that by 2025 there will be a net increase of 1.2 million jobs in A.I.-related fields in manufacturing, which is a clear indication of a shift towards a higher-skilled workforce that can effectively use A.I.

Social

Social acceptance of the use of artificial intelligence in industry is growing. A recent survey showed that 65 per cent of workers think that artificial intelligence will make them more productive and increase their safety. This change is partly due to the many educational initiatives, which will lead to 500,000 training programmes in 2024, in order to prepare the workforce for the integration of artificial intelligence. However, 40 per cent of workers are still afraid that automation will take their jobs. It is therefore important for employers to provide balanced and reassuring information.

Technological

Artificial intelligence is rapidly transforming the manufacturing landscape. By 2024, it is estimated that over 80 percent of all manufacturers will be using AI technology, with $200 billion being spent on AI hardware and software. Machine learning, deep learning, and robots are already becoming commonplace. And by 2021, over 50 percent of manufacturers will be using AI-driven predictive maintenance to reduce downtime and increase productivity. Also contributing to this technological revolution is the growing availability of cloud-based computing power. By 2025, cloud use in manufacturing is expected to grow by 25 percent.

Legal

Legal frameworks for the use of artificial intelligence in industry are still in the process of development, with new regulations to address the question of data privacy and ethical considerations. By 2024, it is estimated that the total costs of compliance with the General Data Protection Regulation (GDPR) for manufacturers using artificial intelligence will amount to one billion dollars across Europe. Furthermore, various countries are preparing regulations on the use of artificial intelligence. The United States, for example, is preparing to fine companies up to ten million dollars for each violation of the safety standards for artificial intelligence, thus highlighting the importance of legal conformity in the implementation of artificial intelligence.

Environmental

The effect of artificial intelligence on the environment in the manufacture of goods is a focus of attention, and companies are increasingly deploying AI to promote the sustainable development of production. It is estimated that by 2024, the use of AI in the manufacture of goods will reduce energy consumption by up to 15 per cent, resulting in an annual reduction in carbon dioxide emissions of 200 million tons. And circular economy has also become a focus, and more than 30 per cent of manufacturers have adopted AI solutions to optimize the use of resources and reduce waste.

Porter's Five Forces

Threat of New Entrants

The market for artificial intelligence in the manufacturing industry has a moderate barrier to entry because of the need for a substantial investment in technology and personnel. The growing availability of AI makes it easier for newcomers to enter the market, but the presence of established companies with a strong brand and loyal customers is a challenge for new entrants. In addition, the regulatory framework and the need to comply with industry standards may discourage new entrants.

Bargaining Power of Suppliers

The bargaining power of the suppliers in the manufacturing market is relatively low. There are many suppliers of the hardware and software components needed for the AI system, which creates a competitive environment. Moreover, the manufacturers can easily change suppliers if they find better quality or lower prices, reducing the bargaining power of the suppliers. However, the suppliers of the special AI technology may have slightly higher bargaining power, because their products are unique.

Bargaining Power of Buyers

High - The buyers of the artificial intelligence in the manufacturing industry have high bargaining power because of the availability of multiple solutions and the increasing competition among the suppliers of artificial intelligence solutions. In order to optimize the operation and reduce costs, companies can negotiate favorable conditions and prices. Also, with the growing awareness of the capabilities of artificial intelligence among manufacturers, they can demand more individualized solutions, which further strengthens their position.

Threat of Substitutes

The threat of substitutes in the manufacturing sector is moderate. Artificial intelligence has some advantages in automation and efficiency, but it is also a substitute for traditional manufacturing processes and other new technologies, such as robotics and the Internet of Things. However, the unique features of artificial intelligence, such as data mining and machine learning, will make it difficult for substitutes to fully meet the needs of the industry, so the demand for artificial intelligence will not be reduced.

Competitive Rivalry

Competition is intense in the AI-in-manufacturing market, driven by the rapid pace of technological advancement and the increasing number of companies entering the field. The competition is fierce, with established companies and new entrants vying for market share. This is resulting in aggressive marketing strategies and continuous innovation. Competition is intense, and this will only increase further.

SWOT Analysis

Strengths

• Increased efficiency and productivity through automation and optimization.
• Enhanced data analytics capabilities leading to better decision-making.
• Reduction in operational costs due to minimized human error and waste.

Weaknesses

• High initial investment costs for AI technology implementation.
• Potential job displacement leading to workforce resistance.
• Dependence on data quality and availability for effective AI performance.

Opportunities

• Growing demand for smart manufacturing solutions and Industry 4.0 adoption.
• Expansion into emerging markets with increasing manufacturing capabilities.
• Advancements in AI technology, such as machine learning and robotics, creating new applications.

Threats

• Rapid technological changes leading to obsolescence of current systems.
• Cybersecurity risks associated with increased connectivity and data sharing.
• Regulatory challenges and ethical concerns surrounding AI deployment.

Summary

In 2024, the market for AI in manufacturing will be characterized by many strengths, such as increased efficiency and data analysis, and also by many weaknesses, such as high costs and workforce challenges. The opportunities that exist in the form of smart manufacturing and technological development will be accompanied by threats such as rapid change and cyber-security risks. Strategic investments in technology and in the workforce will be crucial for those who want to be able to take advantage of the development.