2025/5/1309:192025smartmanufacturingsurveyDeloitteInsights

2025smart

Manufacturingandoperationssurvey:

Navigating

chalengesto

implementation

Deloitte'ssurveyof600executivessbowsthatas

factoriesandoperationsgetsmarter;manufacturers

worktoovercomeobstaclesintalentacquisition,

managecomplextransformations,andmitigate

operationalrisk

ARTICLE12-MINREAD.01MAY2025

withitsabilitytocaptureandintegratedatafromacrossfacilitiesfueledby

automationandanalytics,smartmanufacturingandoperations(alsocalled"smartfactories")cananswerthemanystubbornchallengesrelatedtocapacityand

competitivenesseventhoseposedbytoday'smarketvolatility."Industry4.0"hasbeenmakingambitiouspromisesforyears,butthemomentofvaluerealizationisfnallyarriving·

Deloittesurveyed600executivesfromlargemanufacturingcompanieswith

headquartersoroperationsintheunitedstates,fromAugusttoseptember2024

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(seemethodology).withrespondentsfromindustrialproducts,energyand

chemicals,biopharma,automotive,consumerproducts,andothersectors,it'sclearthesmartmanufacturingtideisshifting·

Thesurveyresultsshowthatcompaniesembracingthetrendaremoreagile,moreattractivetotalent,andmoreproductive.Theresultsalsorevealkeychallengesinimplementingsmartmanufacturingsystems,suchasmanagingcomplex

transformationsandmitigatingoperationalrisks.Toovercomethesehurdles,executivesareinvestingincoretechnologiesanddataanalytics,allocating

signifcantresourcestocybersecurityprocessesandcontrols,andfocusingon

workforceupskilling.Additionally,organizationsareformingdedicatedinternalteamstomanagechangeanddriveorganizationaltransformation.

smartmanufacturingandoperationstransformationsareincreasing

Thereiswidespreadandgrowingconfdencethatsmartmanufacturingand

operationswillbeanindispensablefactorinproductivityandenterprisegrowth.Ninety-twopercentofmanufacturerssurveyedsaidtheybelievesmart

manufacturingwillbethemaindriverforcompetitivenessoverthenextthree

years,asix-percentage-pointincreasefromasurveyweconductedin2019.

similarly,85%ofrespondentsbelievetheirsmartmanufacturinginitiativeswill

transformhowproductsaremade,improveagility,andattractnewmanufacturingtalent.

Theinterestandinvestmentinsmartmanufacturingisfueledbywhat

manufacturersseeasitsprimarybenefts:Almosthalf(49%)ofrespondents

reportedoperationalbeneftsastheprimaryvaluesoughtwithsmart

manufacturing,while44%notedfnancialbeneftsasthesecondmost-sought

value.

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smartmanufacturingsvalueisemerging

Interestandinvestmentinsmartmanufacturingandoperationsareencouragedbygrowingreturns.Respondentswereaskedwhichbusinessmetricshavebeen

impactedbytheimplementationofsmartmanufacturinginitiatives.Intermsofnetimpactsinceimplementation,respondentssaw,onaverage,a10%to20%

improvementinproductionoutput,a7%to20%improvementinemployeeproductivity,and10%to15%inunlockedcapacity.

Respondentscitedimprovementsderivedfromsmartmanufacturinginitiativesas

encouragingsimilarinvestmentsinsupportingfunctions.whilerespondentsrankedtheirorganizationsasmostmatureintheareasofqualitymanagement,operations,continuousimprovement,andtechnology,theyreportedrelativelylowmaturityinhumancapitalandmaintenance.BYanalyzingthegapbetweencompanies'currentandaspirationalmaturitylevels,threefunctionsseemripeforinvestment:human

capital,materialmanagement,andmaintenance.

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withgrowingmaturity,investmentisalsoontherise

Lookingahead,manufacturersaretargetinghumancapitalforthelargest

improvement,withaspirationsforinformationtechnology,datacapture,analytics,andapplicationdevelopmentinfrastructurematurityclosebehind.AStriking78%

ofrespondentsallocatemorethan20%oftheiroverallimprovementbudget

towardsmartmanufacturinginitiatives.Eighty-eightpercentexpectinvestmentstocontinueorincreaseinthenextscalyear.Asexpected,thescaleofinvestment

roughlytrackswithenterprisesize,withsmallercompaniesinvestingmodestlyandmuchlargercompaniesinvestinganorderofmagnitudemore.

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Howareorganizationsinvestinginsmartmanufacturing?

Adopting,connecting,andoptimizingtechnologies(suchassensors,edgeandcloudcomputingpower,cybersecurity,andanalytics)clearsthewayfor

manufacturerstomovefartherandfasterdowntheroadtosmartmanufacturingoperations.Thefocustodayisonestablishingthesmartmanufacturingtechnologyanddatafoundations.Manufacturerinvestmentspaintapictureoftheirpriorities.

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Doinvestmentsinautomationsignalaresponsetotalentshortages?

Intermsofpriorityfocusareasforinvestmentwithinthenexttwoyears,almosthalf(46%)ofrespondentsrankedprocessautomationasthefrstorsecond

priority.ASomewhatsmallerproportion(37%)rankedphysicalautomationfrst

orsecond,while24%rankedfactorysynchronizationfrstorsecond.Investmentinautomationmaybeseenasanimportantelementinalleviatingskilledlabor

shortagesandmaximizingproductivity,whilefactorysynchronizationmaymitigatetheimpactoflabor,asset,andmaterialsconstraints.

Forty-eightpercent(48%)ofrespondentssaidtheyhavemoderatetosignifcantchallengesinfllingproductionandoperationsmanagementroles,and46%

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human

reportedthesameforplanningandschedulingroles.Themostcommonhumanschedulingroles.Themostcommon

capitalconcernwasnotenterprisecultureorevenhealthandsafety.Instead,morethanathird(35%)ofrespondentscitedadaptingworkerstothe"FactoryoftheFuture"asatopconcern,includingbyequippingthemwiththeskillsandtools

theyneedtoharnessthefullpotentialofsmartmanufacturingandoperations.Thechallengeofaddressingtheskillsgapcomesalongsideagapinapplicationsfor

openpositions,asfoundinthe2024DeloitteandTheManufacturingInstituteTalentstudy·

Investmentsindatareadinessandconnectivityaresettingthestageforincreasedautomation

Reportedsmartmanufacturingtechnologyadoptionisfocusedonsensors,data,

physicalautomation,andAI.Intermsofrespondents'firstandsecondprioritiesfor

thenext24months,41%saidtheywillprioritizeinvestinginfactoryautomationhardware,34%saidtheywillfocusonactivesensors,and28%reportedvisionsystems.Theinvestmentsenablethecapacitytomonitorandsensethe

manufacturingenvironment,aswellastheabilitytodriveincreasedautomation.sensing,datacapture,andautomationareprerequisitesformoreadvancedsmartmanufacturingvalue,includingthoroughanalytics,deeperoperationalinsights,andproductioneffciency.someofthisvalueisalreadycomingtofruition.

Atthefacilityornetworklevel,57%ofmanufacturersareusingcloudcomputing,thesameproportionareleveragingdataanalytics,almosthalf(46%)areusing

industrialIOT(IOT)solutions,and42%areleveraging5G.Tomanagescaled

deploymentsandgovernance,manufacturersareadoptingenterprisestandards:

Forty-fvepercent(45%)reportleveraginganarchitecturestandard;54%reportadatastandard(throughaunifeddatamodel;and48%reportatrainingand

adoptionstandard.Adoptionofanarchitecturalstrategyandstandardscanhelpsimplifydatamanagementandenhanceoperationalagility,asarticulatedinthisIndustrialDataopsanduniedNamespacecasestudy·

RespondentsarestillestablishingAlfoundationsforsmartmanufacturingandoperations

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SurveyrespondentsreportedmoderateadoptionofAIforsmartmanufacturinga,teadoptionofAIforsmartmanufacturing

althoughmanyarestillearlyinexploringAICapabilities.Twenty-ninepercentareusingAI/machinelearning(AI/ML)atthefacilityornetworklevel,and24%havedeployedgenerativeAIatthesamescale.Moderateinvestmentsarealsobeing

madeinexperimentsandproofsofconcept.Twenty-threepercent(23%)of

respondentsarepilotingAI/ML,and38%arepilotinggenerativeAI.withgenAIspecically,technologyandusecasesarestillmaturinginmanufacturing,but

acrossenterprisesandindustries,experiments,proofsofconcept,andscaled

deploymentsarepickingup,accordingtoDeloitte'sstateofGenerativeAIintheEnterpriseQ4survey.

Thatreport'sfndingstrackwithsurveydataonsmartmanufacturingpriority

investmentsforthenext24months.Lookingahead,reportedinvestmentprioritiesremaindatafocused,with40%investingindataanalytics,29%incloud

computing,29%inAI,and27%inIloT.Byinvestinginthefoundational

technologyneededtocapture,connect,andanalyzeoperationalandenterprisedata,manufacturersareadvancingonthesmartmanufacturingmaturitycurve.

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Encounteringchallengesandrisksinsmartmanufacturingtransitions

Thevalueofsmartmanufacturingmaybecomingintofocus,butSotooarethechallengesthataccompanycomplextransformations.whileorchestratingchangeandaccessingtheskilledhumancapitaltodoSo,manufacturersarecontendingwithstrategicrisk,talentshortfalls,andcybersecuritypreparedness.

Thepotentialriskofbusinessdisruptionincomplextransformations

Theprimaryheadwindstosuccessfulsmartmanufacturingprogramsincludeleadershipbuy-in,technologyinvestment,resourceconstraints,change

managementandadoption,andvaluetrackingandrealization.secondary

headwindsarelabormanagement,collaborationacrossbusinessfunctions,andmacroeconomicexternalities.

Riskmanagementisalsoapriority.Almosttwo-thirds(65%)ofrespondentsrankedoperationalriskasthefrstorsecondconcernrelatedtosmart

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manufacturinginitiatives.Therisksincludebusinessdisruptionandlosses

stemmingfromfailedinitiatives.Lookingmorecloselyatrisksintheoperationaltechnology(OT)environmentspecically,55%stronglyagreedthatunauthorizedaccesswasahighconcern,47%citedintellectualpropertytheft,and46%notedoperationaldisruption.Mitigatingstrategicriskisnearthetopoftheprioritylist,withsomewhatlowerreportedattentiontocomplianceandfnancialrisks.

workforceexpansionandupskiing

Manufacturersfaceasignicanttalentgap.withasmanyas3.8millionnetnew

employeesrequiredby2033tosatisfylabordemands,accordingtoa2024Deloittemanulfactulringstuldy,smartmanufacturingmaybepartofthesolution.The

majority(85%)ofsurveyrespondentsagreedorstronglyagreedthatsmart

manufacturinginitiativeswillattractnewtalenttotheindustryasavibrantandviablecareerpath.

yet,thereremainsaneedtodaytoequiptheexistingworkforcewiththedigital

skillsforsmartmanufacturingandoperations.whilenearlyhalf(48%)of

respondentsreportedhavingasmartmanufacturingtrainingandadoption

standardinplace,humancapitalwasatthelowestmaturitylevelofallsmart

manufacturingcategoriessurveyed.perhapsforthisreason,humancapitalisthecategoryinwhichmanufacturersexpresssomeofthehighestaspirationsfor

improvement.

cybersecrityandsmartmanfactringtechn。

preparedness

Thechallengeofcybersecuritybecomesallthemorepressingasenterprisespursuesmartmanufacturinginitiativestocaptureandusedataforoperationalandprocessimprovements.cybertoolsareinsomecasessharedbetweenmanufacturingand

enterpriseenvironments,and44%ofrespondentssaidtheirmanufacturing

cybersecuritysolutionsareamixofbothdedicatedandsharedtools.withSomuchattentiontocybersecurity,ittracksthatsomemanufacturersarededicating,on

average,15.74%oftheirITbudget.

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Despitetheallureofcutting-edgetechnologies,suchasAI,virtualprogrammablelogiccontrollers,andevendigitaltwins,respondents'average(self-assessed)

technologymaturityreflectsthattheyaremeetingindustrystandardsfor

technology,data,andautomationbutnotexceedingthem.Inthis,thereisstill

signifcantroomforimprovement.Asitrelatestosmartmanufacturingmaturity,thesecondlargestaspirationalchange(behindhumancapitalisintechnology

readiness,whichincludestheneedtoprotecttechnologiesanddatafromcyberadversaries.

Howthesurveyedexecutivesare

transformingpeople,processes,andtechnologies

ontheroadtovalueandtransformation,manufacturersarepursuingwinning

approachesthatacceleratechangeacrossthetechnologyecosystem,theworkforce,andenterpriseprocesses.

coreandemergingtechnologyadoption

Manymanufacturersareintheprocessofadoptingcoretechnologieslikesensors,cloudandedgecomputing,andAI,aswellasemergingtechnologiessuchasvirtualprogrammablelogiccontrollers,robotics,andsimulations.yetrespondents

indicatedthatthestrategicapproachtodayislessaboutdeployingthelatest

innovationthanitisaboutinvestinginandadoptingcoresystemstoenablesmartmanufacturingandoperations.surveyrespondentsreportedthat,intermsof

systemsprioritizedforinvestmentinthenexttwoyears,thefrstorsecondhighest

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investmentprioritiesareadvancedproductionscheduling(35%),executionsystems(33%),andqualitymanagement(28%).

coresysteminvestmentscomealongsidesolutioninvestments,with40%ofsurveyrespondentsrankingdataanalyticsasthefrstorsecondhighestpriorityfor

investmentwithinthenext24months.solutionsofthiskindarenecessary,asmostoftheothersmartmanufacturingtechnologiesbeingadoptedgenerateorconsumedata,suchasvisionsystems,factoryautomationhardware,andactivesensors.

withanalytics-drivenvisibilityintooperationsandcyber-physicalsystems,

manufacturersenjoyafoundationuponwhichtopursuebroadertransformation.

Thevolumeofdataandconnectedsystemscreatecybersecurityrisk,aswellas

value.Fortunately,surveyrespondentsindicatedpersistentattentionto

cybersecuritytactics.sixty-eightpercent(68%)ofsurveyrespondentsreported

performingacybersecurityriskormaturityassessmentoftheirsmart

manufacturingtechnologystackinthelastyear.Inaddition,asconnectedsystemscreatenewcybersecurityrisks,91%ofrespondentssurveyedforDeloitte's2024

GlobalFutureofcybersulrvey,reportedoneormorecybersecuritybreachesinthelastyear:.Inthissurvey,72%to74%ofrespondentscitedinternalandexternal

penetrationtestingandvulnerabilityassessmentsasafocusinenterprise-wide

cybersecurityefforts.Interestingly,whenrespondentswereaskedwhethertheir

organizationenforcesorincorporatessecuredesignwhenimplementingnew

technologysolutions,26%saidtheydo"whenitdoesnotdelaydeployment."Theinsightisthatproductivityisaconsistentpriority,evenintherealmof

cybersecurity.

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workforceexpansionandupskilling

Themostreportedmethodforbuildingdigitalskillsetsandcapabilitiesintothe

workforcewashiringnewtalent(68%).Therewasalsoarecognitionoftheneedtoupskillemployees,includingleadership.Morethanhalfofsurveyrespondents

(53%)reportedusingin-housetrainingforexecutives,and43%leveragedtrainingcoursesdevelopedbyvendorsorthirdparties.Tosupplementcapabilitiesinthe

nearterm,40%ofmanufacturersreportedusingcontractorcontingentlabor·

whiletalentinvestmentandupskillinghappenedin-house,manufacturersalso

soughttooutsourceaspectsoftheirsmartmanufacturingtransformationand

operation,particularlyinareaswheremanufacturersarelesslikelytoholdacorecompetency.Between69%and72%ofrespondentsreportedmoderateto

signihcantchallengesinhiringskilledworkersforIT,OT,datascienceand

engineering,applicationdevelopment,andcybersecurity—alltechnology-focuseddomains.Assuch,between65%and70%ofmanufacturersarecurrently

outsourcingmanyrolesacrosstechnology,data,andcybersecurity,includingthosefocusedonimplementingOT,IT,cybersecurity,analyticsandAI,andautomation.

Incybersecurityspecifcally,69%ofrespondentssaidtheyrelyonthirdpartiesforcybersecuritydetectioncapabilities(forexample,asecurityoperationscenter),and73%saidtheyusethird-partysupportforcybersecurityeventresponse.

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whenconsideringwhetheroutsourcingisexpectedtochangeinthenexttwoyears,onetrendthatemergedisthatmanufacturersthatdonotcurrentlyoutsourcemanyroleswilltendtostayonthattrajectoryandllrolesinternally.conversely,

manufacturersthatdooutsourcesignicantlyreporttheywillcontinuetodoSo.Bothapproachesareviableoptionsforsatisfyingsmartmanufacturingworkforceneeds.Formanufacturersthatelecttofllrolesinternallytoretaindedicated

support,theywillneedtocompeteacrossindustriesfortalentandattract

applicantswheretherearegaps.Formanufacturersthatoutsourceroles,beneftsmayincludefractionalizedresources,task-andtime-basedemployment,and

broaderdomainexpertisepotentiallyatahigherperhourcostbutlowercost

overallcomparedtoin-houselabor.

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