Irish manufacturing companies strongly believe in AI's potential to increase profitability, but not as much as their EMEA counterparts, research from PwC shows.
Nearly three-quarters (73%) of Irish manufacturing operations expect AI to increase profitability by 2030 compared to 84% of EMEA companies, and a quarter (26%) expect AI to increase profit margins by at least 6% by 2030 against 40% in EMEA.
PwC's 'AI in Operations - Revolutionising the manufacturing industry' report explores how far manufacturing companies have progressed with AI adoption, identify challenges and the benefits to be expected.
The study includes respondents from over 400 manufacturing operations executives in more than 30 countries across Europe, the Middle East and Africa, including Ireland.
In Ireland, 43% of respondents are pharma/life science and med-tech multinational operations with the balance being retail & consumer and industrial products.
Just 4% of Irish and EMEA manufacturing companies have already realised significant financial benefits and return on investment from AI, reflecting a relatively low level of AI maturity.
A further 11% report that they have received measurable financial benefits (EMEA: 13%), and more than a quarter of Irish survey respondents (29%) reported no business benefits as yet from AI (14%).
The top areas of benefit from AI are reduced operational costs including energy, buildings and administration, which was given by 60% of Irish and 44% of EMEA respondents; improved decision-making (53% and 43%); improved operational productivity (50% and 40%); and reduced personnel costs (43% and 41%).
The survey suggests that Irish manufacturing operations are investing less in AI initiatives compared to their EMEA counterparts.
Scaling AI requires moving beyond experimentation and proof of concept and requires investment. As companies move beyond a focus on piloting, they can expect to invest more substantially to scale.
In the last five years, 32% of Irish manufacturing operations invested less than €1m in AI-related initiatives compared to 29% in EMEA, and 15% invested have excess of €6m compared to 41% for their EMEA counterparts.
In both Ireland and EMEA generally, progress on AI implementation is slow, with Irish manufacturing firms being less advanced than their EMEA peers in terms of fully integrating AI across their businesses.
Just 3% of Irish manufacturing companies have fully integrated AI into their operations compared to 8% for EMEA companies.
At the same time there is a lot of AI innovation and piloting going on with many Irish firms clearly looking to catch up: 70% of Irish respondents are piloting and scaling up their AI projects compared to 55% for EMEA counterparts.
“The survey highlights that a majority of Irish manufacturing operations, consisting largely of pharma, life sciences and med-tech multinational companies, are piloting AI initiatives rather than having moved to scaling and integrating the technology right across their business operations while EMEA companies are more advanced in their implementation journey," said Gary Hanniffy, director of manufacturing at PwC Ireland.
"At the same time, they do have high expectations for realising the benefits from AI in terms of profitability and other financial benefits.
“Getting to the next level requires investment and results here are mixed, with some companies planning significant investment levels, others are not yet ready to commit. In Ireland, in particular, more investment in AI is also needed to keep up with EMEA peers.”
The survey highlights a number of key challenges for successful AI implementation, including data quality, IT & data security, and reliability of AI-generated content and data availability.
It also shows that 100% of manufacturing organisations in Ireland that have integrated and scaled up their AI projects (and 71% in EMEA) are using an organisational governance model that involves a central AI team.
On the other hand, the majority of those organisations (76% in Ireland; 58% in EMEA) that have just started piloting AI lack coordinated governance and are using non centralised organisational structures.
“While the initial focus regarding AI implementation is on operational and productivity improvements, the real interest lies in the potential to disrupt and fundamentally reinvent existing business models," said Áine Brassill, operations transformation partner at PwC Ireland.
"AI Agents will make the ability for AI systems to autonomously perform tasks a reality, enabling decision making and delivering real competitive differentiation.”
“However, building trust in AI will be critical for customers, regulators and employees. Companies need to be confident in the integrity of solutions that will drive safe and secure AI outcomes.
"Taking a responsible approach, including upskilling employees, will be critical to getting the most from AI alongside confirming future compliance with regulators and the EU AI Act.”
(Pic: Getty Images)
