Introduction

The advent of the Fourth Industrial Revolution (4IR) has ushered in a new era of manufacturing, driven by artificial intelligence (AI). The integration of AI into production processes, supply chains, and factory operations is not just a futuristic concept but a present-day reality for leading manufacturers. This case study explores the transformative impact of AI at the forefront of manufacturing, examining the significant strides made by industry leaders known as Lighthouses. These pioneers demonstrate the profound benefits of AI implementation, showcasing unprecedented improvements in productivity, quality, and efficiency.

The Challenge

Manufacturers worldwide face the challenge of staying competitive in an increasingly complex and demanding market. Traditional methods of production and supply chain management are no longer sufficient to meet the high standards of efficiency, quality, and responsiveness required today. The need for real-time data analysis, predictive maintenance, and optimized resource allocation has become paramount. To address these challenges, leading manufacturers have turned to AI as a solution capable of revolutionizing their operations and delivering substantial competitive advantages.

The Solution: AI Integration in Manufacturing

AI in Production Processes

Lighthouses, recognized as the standard-bearers of manufacturing excellence, have rapidly adopted AI technologies. Initially, less than 20% of top use cases in the Global Lighthouse Network relied on AI. However, as of December 2023, nearly 60% of the top use cases implemented by the 21 newest Lighthouses utilize AI, reflecting its growing significance.

Key Outcomes:

• Productivity: AI-driven use cases have resulted in a two to three times increase in productivity.

• Service Levels: A 50% improvement in service levels has been observed.

• Quality: Defect rates have been reduced by 99%.

• Energy Consumption: Energy consumption has decreased by 30%.

AI Across the Value Chain

AI’s impact extends across various stages of the manufacturing process, including planning, asset management, quality control, and delivery.

Notable Examples:

• CITIC Pacific Special Steel: Utilized AI to optimize blast furnace operations, increasing throughput by 15% and reducing energy consumption by 11%.

• Agilent: Deployed computer vision technology, reducing defect rates by 49% in just four months.

Scaling AI Implementations

Lighthouses have demonstrated how to scale AI solutions effectively through a strategic focus on “assetization.” This involves packaging use cases for speed and scale of deployment, leveraging modular design principles, and using low-code or no-code platforms for rapid development.

Case Study: Agilent

• Built an in-house AI solution library for detecting anomalies.

• Deployed five new applications across 57 work centers and 16 product lines.

• Achieved a 49% reduction in defect rates within four months.

Advanced AI Capabilities

The integration of advanced AI capabilities, including generative AI, has further extended the impact of AI in manufacturing. Generative AI applications, such as design advisors and SOP-instructing chatbots, have enhanced productivity and accelerated digital transformations.

Example: ACG Capsules

• Developed an SOP- and policy-interfacing gen AI assistant in two weeks.

• Achieved a 40% reduction in mean time to repair (MTTR) and unplanned downtime within five weeks.

Leadership Perspectives

Industry leaders emphasize the critical role of AI in shaping the future of manufacturing. They highlight the need for responsible AI implementation, ensuring that AI models are trusted and integrated safely.

Ni Jun, Chief Manufacturing Officer, CATL:

“We are trying to use generative AI to help fresh engineers quickly learn those basic rules. Can we help engineers and college graduates, after half a year learning the [gen AI] tool, to become an independent designer?”

Conclusion

AI is defining the Fourth Industrial Revolution by transforming manufacturing processes, enhancing productivity, and improving quality and efficiency across the value chain. Lighthouses have set a benchmark for the industry, demonstrating the significant benefits of AI integration. As AI technologies continue to evolve, manufacturers must focus on responsible implementation, leveraging the lessons learned by Lighthouses to achieve rapid and scalable digital transformations.

About QuantumBlack, AI by McKinsey

QuantumBlack, AI by McKinsey, is at the forefront of AI innovation, providing strategic guidance and advanced AI solutions to help organizations unlock the full potential of AI. By partnering with industry leaders, QuantumBlack enables transformative changes in manufacturing and beyond, driving the Fourth Industrial Revolution forward.

For more information, visit McKinsey’s Manufacturing & Supply Chain page.