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Manufacturing AI and Automation Outlook 2026

A recent report from Redwood Software sheds light on the current state and future potential of AI in the manufacturing sector. This comprehensive study surveys over 300 professionals in the industry and indicates a critical gap in automation readiness. Despite the majority of manufacturers assessing or actively planning to incorporate AI-driven automation into their operations, only a small fraction feels adequately prepared to scale these implementations.

Key Findings

• - Widespread Interest in AI: The survey reveals that an overwhelming 98% of manufacturers are considering or actively exploring AI-powered automation solutions. However, only 20% believe they are fully equipped to deploy these systems at scale.
• - Incomplete Automation: About 70% of respondents reported that they have automated 50% or less of their core business processes. This suggests that, while investment in automation technologies has grown, there remains a significant number of operations that still rely on manual intervention.
• - Impact of Automation on Downtime: A notable 60% of manufacturers have achieved at least a 26% reduction in unplanned downtime due to automation initiatives, showcasing the benefits of adopting these new technologies.
• - Challenges in Data Automation: Despite advancements, 78% of manufacturers have automated less than half of their critical data transmissions. This limitation hampers their ability to make timely, data-driven decisions.
• - Fragmented Operations: A major bottleneck identified is the lack of automated exception handling processes, which only 40% of manufacturers have in place. This reveals a substantial opportunity for improvement in operational resilience and efficiency.

Understanding the Automation Gap

The study indicates a widening automation gap in manufacturing, as many companies face challenges coordinating workflows across multiple systems. While significant investments have been made in operational technology (OT), engineering technology (ET), and information technology (IT), the fragmentation of tasks often leads to inefficiencies. Manufacturers tend to automate portions of their processes in isolation rather than adopting an integrated, holistic approach.

Systemic Limitations

Kevin Greene, CEO of Redwood Software, highlights that manufacturers do not lack automation capability; rather, they struggle with operational silos. Through fragmented workflows, businesses encounter friction during handoffs and inefficiencies due to uncontrolled exceptions, all of which contribute to less reliable data flows. This complexity can stifle even the best AI models, limiting their effectiveness.

The Path Forward

For manufacturers aiming to elevate their automation maturity, it's essential to focus on improved coordination across various systems. By successfully linking workflows, data flows, and exception handling capabilities, companies will be better equipped to transition into more advanced stages of automation maturity, preparing them for AI-driven operations.

Conclusion

As the industry gears up for the future, it's clear that while the interest in AI and automation is substantial, realizing their full potential will require overcoming significant obstacles. The findings from Redwood Software's report highlight critical areas for manufacturers to address to harness the power of AI effectively. By leveraging automated solutions holistically, manufacturers can enhance operational efficiency, reduce downtime, and ultimately achieve autonomy in their processes.

Access the Complete Report

For a deep dive into the insights and detailed benchmarks of automation readiness and operational challenges in the manufacturing sector, access the full report here.

About Redwood Software

Redwood Software stands as a leader in orchestrating business transformations through intelligent automation across various environments. With over 30 years of experience, the company serves organizations, including more than 50% of Fortune 50 companies, enabling them to focus on innovation and growth while optimizing costs and processes. For more information, visit Redwood Software.