by Ian Kormos
With AI growing in popularity and power, the manufacturing industry is rapidly adapting to utilize this powerful technology to reduce its costs and enhance productivity. Common issues such as unplanned equipment downtime, which can cost up to $260,000 an hour, or quality control issues in production that typically cost 17.5% of sales revenue, can be reduced through new AI implementations. Not only will these changes improve what manufacturers do, but also how insurers in this industry underwrite their policies due to the reduced risk.
Smarter Operations with AI
AI is completely reshaping factory operations within larger companies across the world. AI helps reduce maintenance downtime, predict equipment failure, assemble products, and reduce quality control issues.
Through analyzing real-time sensor data, AI can predict the lifespan of equipment and determine when failures will occur. This allows for select maintenance windows to be scheduled during planned downtimes, helping reduce unplanned downtime by up to 50%.
AI robotics have helped increase the speed of product assembly while also being able to spot defects in real time before distribution. For example, some automakers utilize AI robotics and computer vision to identify flaws faster and more accurately than human inspectors, which helps reduce recalls and liability claims.
New Risks, New Coverage
While traditional risks within the industry are reduced by AI, insurance remains just as important. With more general technology being implemented, manufacturers must still defend against system failures, cyber-attacks, and risks of liability. AI creates a reliance on technology, which then requires stronger cybersecurity implementation for users.
Insurers will be implementing and pushing cybersecurity further as the world continues to become more technologically reliant. Issues such as system failures, data breaches, and others, increase with the higher reliance on AI. Cybersecurity measures will need to be stronger, and insurers need to focus more on their cyber coverage to meet their clients’ needs.
Smart Adoption Starts with People
Incorporating AI into the industry requires companies to strategically think whether the benefits of AI implementation outweigh the costs. Upfront costs are expensive as infrastructure, software, and training are all needed before functionality. However, over the long run, significant benefits are presented such as efficiency increases and cost reductions. Companies are starting to launch AI training programs to help equip their current employees with the skills needed in this new workforce of AI implementation. The goal is to empower current employees, not replace them.
What’s Next for Manufacturers and Insurers
As AI continues to quickly adapt into the manufacturing industry, it is important for insurance strategies to evolve alongside these changes. With new risks and smarter operations, cybersecurity protection from insurers corresponds to the manufacturing industry’s implementation of AI. For success, manufacturers and insurers must balance both performance with protection to remain successful.
References: Artificial Intelligence (AI) in Manufacturing by Intel, The Impact of Artificial Intelligence on Automated Manufacturing and Supply Chain Systems: Advancements, Challenges, and Future Prospects by Sai Dhiresh Kilari, and AI Revolution in Insurance: Bridging Research and Reality by Sukriti Bhattacharya, German Castignani, Leandro Masello, and Barry Sheehan.
