Mitigating market disruption with AI in manufacturing

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In recent years, the manufacturing industry has faced myriad challenges and disruptions, from Brexit to a global pandemic, supply chain issues and inflation. These bouts of volatility have prompted significant investment in digital transformation within the industry to enable manufacturers to remain agile and survive.

Manufacturing is rich in data, it is becoming increasingly important to use this data as an intelligent resource for decision-making in order to optimize costs, sales and margins. This is where artificial intelligence (AI) comes into play. Deep and far-reaching digital transformation can only happen when manufacturers harness the power of AI to drive decision making. Without this, the effectiveness, profitability and long-term success of digital transformation will be compromised.

AI can leverage real-time data points from every department and every touchpoint of a manufacturing company. By intelligently analyzing these data sources in conjunction with each other, AI enables manufacturers to make more effective decisions related to operations, supply and demand, pricing, and product offerings. AI can respond to disruptions faster and more accurately than a human, instantly adjusting prices across an entire product portfolio to account for supply chain issues, inflation, and other external factors. It can also predict how demand will respond to price changes during these volatile times, helping manufacturers ensure that price movements do not result in demand that ultimately cannot be satisfied.

A key benefit of AI for manufacturing is the technology’s ability to help manufacturers deliver more personalized shopping experiences for customers, where companies are proactive in addressing customer needs, responding with agility to changing market conditions, and staying ahead of the competition based on real-time analytics. For example, AI can offer:

  • Optimized recommendations around pricing
  • Offer specialized, tailored and consistent offers to buyers, identifying the right price point at the right time.

Wacker Chemie leverages PROS platform technology in their pricing and quoting process, leveraging AI-powered tools to streamline every shopping and selling experience. Dirk Ramhorst, CIO (Chief Information Officer) and CDO (Chief Data Officer) of Wacker Chemie, said: “Anything we can learn from other offers and what is happening in the market automatically translates into a better price that we offer our customers.” The buying experience is also enhanced by AI, which streamlines sales and ordering processes to make them more efficient and immediate for the customer.

AI-enabled flexibility, in turn, enables manufacturers to introduce new, modern business models that optimize revenue streams. For example, data-driven insights from AI have already encouraged some manufacturers to rent out heavy machinery instead of selling it and generate additional revenue from subscriptions and add-ons. This is part of an AI-powered shift from manufacturing as a traditional industry to a service industry where products-as-a-service are more lucrative and profitable. AI has thus facilitated the emergence of new business models for the manufacturing industry.

It’s no secret that manufacturers operate in a much more challenging environment than ever before. You have to deal with:

  • Volatile input costs
  • supply problems
  • fluctuating demand
  • Go from one price change per year to many per year.

At the same time, in times of high price transparency, their customers want to get in touch with them via various channels. With huge expectations for personalization, speed, and consistency across channels, AI enables manufacturers to rise to the challenge.

Nick Boyer is Director of Strategic Advisory at PROS.

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