BOSTON—According to a new report from Bain & Co., machinery and equipment manufacturers have the potential to increase their productivity by 30% to 50% by adopting artificial intelligence, lean, digital, and sustainability innovations. Additionally, 75% of executives in the advanced manufacturing industry see adopting emerging technologies like AI as their top priority in engineering and R&D. 

These are some of the findings from the report, titled the Global Machinery & Equipment Report 2024, which highlights the opportunities for manufacturers to transform their operations by implementing the technologies that will define the “factory of the future.”

The report cites that machinery and equipment manufacturers often still rely heavily on traditional lean manufacturing approaches. Michael Staebe, head of Bain's global machinery, paper and metals sector, notes that while many manufacturers explore digital tools or Industry 4.0 and sustainability measures, they do so in separate organizational silos.

The report also highlights the increasing importance of artificial intelligence for machinery executives. Bain’s research found that 75% of executives in the advanced manufacturing industry identified AI adoption as their top priority in engineering and R&D. Companies are using AI to address challenges in procurement, assembly, maintenance, quality control, and warehouse logistics. In particular, AI is seen as a way to build supply chain resilience and sustainability in the face of ongoing macroeconomic and geopolitical disruptions.

While many machinery companies are already embracing digital solutions, Bain’s analysis suggests that there is still significant room for growth. The report notes that the industrial sector is now the largest consumer of chips and Internet of Things (IoT) technology, indicating a rapid adoption of digital solutions. According to Bain, machinery companies that are leaders in digital solutions see double the shareholder returns compared to the industry average.

As a prediction of sorts, Bain suggests that the next frontier for machinery companies will be the development of customer solutions tailored to specific industries. This approach involves focusing on a smaller number of customers in specific vertical industry segments while expanding the scope of offerings to those customers and streamlining supply chains.

In terms of sustainability, Bain sees an opportunity for machinery companies to expand their circularity initiatives. While nearly half of large machinery companies have made circularity commitments, Bain notes that many of these initiatives remain narrow in scope, focusing primarily on recycling and waste reduction. However, the firm sees strong potential for companies that can pair circularity with IoT capabilities to drive efficiency and sustainability gains.

Bain concludes that in the future, machinery companies will design products for greater longevity, sell more products as a service, and tap into circular marketplaces. All three approaches can underpin a circular business model. To read the report, visit Bain & Company.