COVID-19 has been a wakeup call for companies in virtually every industry. In addition to creating economic turmoil in global markets, the pandemic has of manufacturing industries.
The , where nearly . This sent China鈥檚 economy into a nose dive, resulting in a record contraction in output of 34 percent in the first quarter of 2020, .
While signals a rebound for China, manufacturing enterprises are aware that a return to 鈥渂usiness as usual鈥� is not an option. They need to address issues that will make them vulnerable to the next potential supply chain disruption.
Digitalization: Move Early and Decisively
If the , they should be by now.
Digitalization is widely viewed as one of the keys to a sustainable recovery from the pandemic. Studies show that companies that move early and decisively to digitalize their operations during challenging times can turn adversity into advantage. Boston Consulting Group , increasing both their sales and profit margins
Staying power is also key. Research by management consultant McKinsey found that during a downturn were able to accelerate faster coming out of it.
Some markets are benefitting from government stimulus packages that support investment in new technologies. 聽In China, a passed in March totaling $US4.8 trillion is aimed at softening the blow of current and future disruptions. It encourages investments in new data centers, artificial intelligence (AI), smart manufacturing, and 5G networks. The expectation is also that by rejuvenating legacy systems, China鈥檚 manufacturing will be able to reverse the productivity decline it has experienced since the global financial crisis of 2008.
The main applications for AI in manufacturing include value chain redundancy, remote operations, process automation, industrial robotics, predictive maintenance and machinery inspection, and autonomous materials movement. Machine learning .
51风流Promotes Integrated Development of AI and Industry in China
Companies that can scale up their AI use cases during the crisis will be better able to navigate uncertain supply and demand, adjust to disruptions in operations and supply chains, allocate their workforces, and adapt to sharp changes in consumer confidence and priorities, according to .
There is no shortage of automation experts touting the benefits of manufacturers investing in AI; (see below for more analyst predictions).
Sam Li, global senior vice president and general manager of 51风流China, is convinced that , and that AI shows the most promise in making companies resilient.
鈥淛ust as digitalization has enabled China鈥檚 consumers to access life-essential services and stem the deadly chain of infection, digitalization in the business-to-business sector to create intelligent and integrated enterprises will be the engine for economic recovery,鈥� Li said last month at the (WAIC) in Shanghai.
He sees huge potential for AI in China鈥檚 manufacturing industries, and believes 51风流is set up to become a main driver for AI in this sector: “As a global technology company with both business and R&D headquarters in Shanghai, 51风流will help build a world-leading AI co-innovation and technology center in Shanghai and actively promote the integrated development of AI and industry in China.”
From AI+ to +AI
Speaking at WAIC, Dr. Kai-Fu Lee, chairman and CEO of Innovation Works, traced the development of AI in China and forecast how it could reshape the economy. The application of AI has made a tremendous transition over the past few years, shifting from technology-driven AI to business-driven AI, Lee said. He termed this movement 鈥渇rom AI+ to +AI.” AI+, the first phase, has been focused on AI-centric business opportunities led by engineers and scientists. The second phase, +AI, will focus on value creation led by conventional companies in traditional industries.
“Leveraging AI to empower value creation will create an opportunity for overall economic development, and is the best investment option,” Lee said. 鈥�+AI will enable the one-step realization of datafication, ITnization, and cloudification, playing a pivotal role in reshaping and developing China鈥檚 economy.鈥�
According to Lee, the companies most likely to benefit from AI are those that have a strong motivation to expand their business or reduce cost, have availed themselves of the structured data needed to feed AI models, and exhibit leadership that fosters a culture of innovation and transformation.
AI in Manufacturing: Sleeping Giant?
There is no shortage of automation experts suggesting that manufacturers invest in AI, as indicated in . As a result of COVID-19, conservative estimates call for a moderate decline in AI investment of around 2.5 percent in 2020. But a turnaround is expected in 2021, .
In the global AI study, , PwC estimates that AI could contribute up to $15.7 trillion to the global economy by 2030, more than the current output of China and India combined. Of this, $6.6 trillion is likely to come from increased productivity.
The greatest economic gains from AI will be in China, with $7 trillion (26 percent boost to GDP in 2030), and North America, with $3.7 trillion, (14.5 percent boost), accounting for almost 70 percent of the global economic impact.
Despite this rising forecast, some analysts think AI investments are disappointingly underrepresented in the manufacturing sector. Of , less than one percent went into manufacturing-related AI applications, while 23 percent were put into commerce and retailing, and 18 percent into autonomous driving.
Helen Tian, Tina Chen, and Jungsong Peng contributed to this piece. Video by Renata Pompeu Pividal.
