Transforming North American Manufacturing: The Impact of AI and ML

Published On: January 30, 2025 12:01 pm

Manufacturers Innovate to Meet Changing Market Conditions, Says ISG Report

A recent report from Information Services Group (ISG) III reveals that North American manufacturing companies are rapidly adapting to technological advancements and changing consumer demands.

According to the 2024 ISG Provider Lens™ Manufacturing Industry Services and Solutions report, economic changes and heightened customer expectations are prompting these companies to rethink traditional product design and production strategies. Manufacturers are reworking factory operations, optimizing supply chains, enhancing sustainability efforts, and incorporating after-sales services into their offerings.

“North American manufacturers have embraced the factory of the future,” remarks Bob Krohn, partner at ISG. “Many are collaborating with service providers to utilize AI and cloud technologies, improving the efficiency and resilience of production systems.”

ISG highlights that companies are heavily investing in digital technologies like artificial intelligence (AI) and machine learning (ML) to boost product design and manufacturing processes. The demand for quicker market entry is driving manufacturers to adopt AI-driven tools for more efficient design and rapid prototyping, with some already using generative AI platforms to streamline these stages.

To enhance revenue and customer satisfaction, manufacturers are diversifying by adding services alongside, or instead of, traditional products. This shift includes creating subscription models, pay-per-use services, and asset-as-a-service offerings. Emphasis on after-sales support, repairs, and condition monitoring is also growing, helping to extend product life cycles.

With rising cybersecurity threats and stringent data privacy regulations, securing operations has become a top priority for manufacturers in North America. Many are focusing on securing critical infrastructure, as much of their operational technology (OT) systems are outdated and increasingly complex.

The manufacturing sector has faced numerous disruptions in recent years, including the effects of COVID-19 and geopolitical tensions, prompting North American manufacturers to invest in technologies and methods for gaining resilience. Strategies now include cloud-based supply chain management, advanced analytics, real-time IoT tracking, and AI-driven optimization, as some companies move production closer to home, like Mexico.

“The last few years have compelled manufacturers to act,” states Jan Erik Aase, partner and global leader at ISG Provider Lens Research. “Embracing digital transformation and fostering a culture of continuous improvement can lead to long-term success.”

The report further discusses trends such as the increased adoption of AI for employee training and heightened commitment to sustainability in response to regulatory and investor demands.

For additional insights on the challenges that North American manufacturers face—like effectively utilizing AI and attracting talent drawn to the IT sector—read the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Manufacturing Industry Services and Solutions report evaluates the performance of 35 providers across five categories: Product Design and Development Services, Smart/Digital Factory Solutions, Manufacturing Supply Chain and Procurement Services, Aftermarket Services, and Industry Transformation Services.

Leaders recognized in all five categories include Accenture, Capgemini, Cognizant, HCLTech, IBM Consulting, Infosys, TCS, and Wipro. Deloitte, NTT DATA, and Tech Mahindra are noted as leaders in three categories each, while Akkodis, EY, HARMAN, LTIMindtree, and LTTS lead in two categories. Genpact and PwC are acknowledged as leaders in one category each.

Moreover, Akkodis, Cyient, Hexaware, Hitachi Digital Services, Kyndryl, and NTT DATA are named Rising Stars for their potential in one category each.

In customer experience, Capgemini stands out as the global ISG CX Star Performer for 2024 in the Manufacturing Industry Services and Solutions sector, achieving the highest customer satisfaction scores in the ISG Voice of the Customer survey, which is part of the ISG Star of Excellence™ program.

A customized version of the report is available from LTTS.

The 2024 ISG Provider Lens™ Manufacturing Industry Services and Solutions report is accessible to subscribers or can be purchased as a one-time download via this webpage.

About ISG Provider Lens™ Research

ISG Provider Lens™ research effectively combines empirical analysis with insights from ISG’s global advisory team. This unique evaluation helps enterprises select suitable sourcing partners, while ISG advisors leverage the findings to support their recommendations to clients across North America and Europe, with plans to expand to additional regions.

About ISG

ISG (Information Services Group) III is a global technology research and advisory firm. Trusting more than 900 clients, including over 75 of the top 100 enterprises, ISG focuses on helping organizations achieve operational brilliance and rapid growth. Established in 2006 and headquartered in Stamford, Connecticut, ISG’s team of over 1,600 professionals operates across more than 20 countries, known for their innovative approach and extensive industry knowledge. For additional information, visit www.isg-one.com.