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AI Could Create EUR 60 bn in Incremental Value for German Industry

A study by BCG suggests that nine out of ten executives worldwide plan to apply artificial intelligence (AI) in manufacturing in the next three years. It further found that Germany is in danger of lacking behind because, while Germany still plans to integrate AI, China is already optimizing it. The study has revealed that approximately 70 percent of executives worldwide admit to not knowing enough about AI

AI Could

The application of artificial intelligence (AI) in manufacturing could create EUR 60 bn in additional value for German industry. According to the new study, “The Ghost in the Machine: Artificial Intelligence in the Factory of the Future”, for which the Boston Consulting Group (BCG) surveyed manufacturing and technology managers from about 1100 industrial companies worldwide about their applications of and willingness to invest in AI. Almost 90 percent of executives say they aim to integrate AI in their processes in the next three years. Nonetheless, so far only 28 percent have created a clear strategy for AI in manufacturing. In Germany, only 23 percent, or one in four German industrial companies, have developed an AI strategy.

“When it comes to AI, Germany only ranks around the middle of the pack internationally and is in danger of falling further behind. If German industrial companies want to maintain their leading international position, they must greatly increase the scale and speed of their commitment to new technologies and intelligent automation”, says Markus Lorenz, partner and head in machinery and automation at BCG. While Germany is still planning, China is already optimizing

As the study shows, companies that already use AI in manufacturing, employ more agile working methods: they test prototypes at an earlier stage and are quicker to readjust their work processes.

The proportion of pioneers is highest in the USA (25 percent), China (23 percent) and India (19 percent). In Germany, only about 15 percent of companies currently use AI to any significant extent in manufacturing.

“While most German executives are still wrestling with the basic question of whether and how to apply AI, businesses in China and India are already optimizing their smart factories”, observes the study’s author Daniel Küpper, a BCG partner and global head of the firm’s Innovation Center for Operations (ICO). “Emerging market players show more courage when it comes to AI and they keep identifying opportunities to apply the new technologies and improve them on an ongoing basis.”

Ranking of the leading countries in terms of AI implementation

RankCountryProportion of AI pioneers
in the respective country (in %)
8United Kingdom13

 AI as a lever to increase productivity

The global sector comparison shows that the automotive and technology industries are at the forefront in applying artificial intelligence. One company in five has already integrated AI in their business in those sectors. At the other end of the scale are the pharmaceutical, medical technology, machine construction and process industry sectors. There, only about one in seven companies use intelligent manufacturing systems.

“German machine construction, in particular, stands to gain a lot from artificial intelligence. It enables companies to harness the enormous amounts of data generated by manufacturing machines. This lays the foundation for new business models, making use of predictive maintenance and optimized operations”, says Markus Lorenz, partner and global head of consulting in machinery and automation at BCG.

 Ranking of the leading sectors in terms of AI implementation

RankSectorImplementation of AI (in %)
1Transportation and Logistics21
4Consumer Goods18
5Pharmaceuticals and
Medical Technology
7Process Industry13

No artificial intelligence without human competence

Almost 70 percent of executives surveyed admit that their company lacks the AI skills to speed up the introduction of new technologies. That applies particularly to data management, analytics and programming. “Companies can no longer advance purely on the basis of their engineering knowledge. Employees have to know how to use AI”, says BCG partner Küpper. All the more reason for industrial companies to upgrade their employees’ skills in the basics of AI in manufacturing systems. “The opportunity for companies now lies in training their employees and attracting AI experts, for example in the field of Deep Learning“, says the study’s author Küpper. “You need both to successfully integrate AI in your company: experts who know artificial intelligence and experienced staff who can identify beneficial avenues for its application.”

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Jyoti Gazmer

A Mass Comm. graduate believes strongly in the power of words. A book lover who dreams to own a library some day. An introvert but will become your closest friend if you share mutual feelings about COFFEE. I prefer having more puppies over humans.

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