The Bottom Line

How Can Small Manufacturers Tap Into the AI Revolution?

Posted by Lawrence Pruss on Aug 22, 2018 10:00:00 AM

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Artificial Intelligence (AI) is on everyone’s mind in the manufacturing industry. The nation’s largest companies are investing in this technology, and countless startups are working feverishly to stake their claim to various use cases. While AI is often positioned as a threat to human jobs, it can actually enhance how humans serve customers in many ways.

The big corporations have an inherent advantage in harnessing AI to their benefit. AI runs on data, and they simply have more of it. They have hundreds of thousands of customers. They also have more resources – both dollars and full-time employees – to utilize and monitor AI. This doesn’t mean there’s no hope for smaller businesses, though. Data can be pooled and anonymized across groups of smaller manufacturers, generating many of the same powerful insights.

The New Reality of Know Your Customer

Production has rapidly changed over the course of just a few generations. Manufacturers used to be localized and very familiar with their customers. Today’s producers have far more data but a lot less familiarity. Advances in infrastructure and technology have enabled business to happen from hundreds, even thousands of miles away. Staffing is prone to higher turnover, and thanks to industry consolidation each employee has to support more customers than ever before. The systematic application of customer data can close this knowledge gap and bring back the feeling of a customized buyer experience.

Ideally, producers have retained their strengths in customer service, maintaining a key competitive advantage in this area. Even where this is true, the selective use of data analytics can sharpen sales and service opportunities. More likely, smaller manufacturers suffer from blind spots around the products their partners are buying elsewhere. Business losses can easily slip through the cracks in the bustling industry. Again, data and AI can help address this shortcoming.

The Data Says Otherwise….

AI is particularly good at optimizing complex decisions involving a lot of data. This does not mean removing humans from the equation. On the contrary, AI enhances human interaction. It can equip a customer service rep with the information needed to negotiate an issue quickly and easily. Product recommendations can be generated through mathematical algorithms, then teed up for a personal touch to seal the deal. Perhaps most critically, AI models excel at flagging attrition risks. It’s common for manufacturing staff to believe a customer interaction has averted a potential loss, while the data may say otherwise. Proper follow-ups in these situations can preserve relationships.

AI can serve many purposes – many early applications have focused on cost reduction. Revenue-enhancement services are understandably more exciting, though, and this is where much of the energy is being targeted.

Even manufacturers not yet ready to implement AI should engage with partners that are investing in the future. Their plans to utilize AI could impact the terms of contracts that are being negotiated right now, no matter how distant. Pay close attention to pricing structures as well, since an attractive rate per call for customer support may not be relevant in 3-5 years if inquiries are handled by robots rather than human employees. 

There’s no time like the present, and now is also a great time for small producers to get educated on AI. Reaching out to suppliers and other service providers is a great starting point. These firms are making meaningful investments in AI and should be happy to share their strategies with existing and potential partners. Remember – in a few years the use of AI for everyday manufacturing tasks may be as much second nature as iPhones are today.

Topics: Manufacturing, Vendors & Contracts