Smart manufacturing gets smarter with industrial AI This year’s report highlights the rising pressures on manufacturers: ongoing supply chain disruptions, shifting trade policies, evolving regulations, and growing cybersecurity threats. . By Marcelo Tarkieltaub, regional director, Southeast Asia Rockwell Automation’s newly released 10th edition of the State of Smart Manufacturing Report (SOSM) provides a global pulse on the industry’s most pressing challenges and emerging opportunities. Drawing on insights from over 1,500 manufacturers across 17 countries, the findings underscore how manufacturers are navigating a rapidly changing landscape. This year’s report highlights the rising pressures on manufacturers: ongoing supply chain disruptions, shifting trade policies, evolving regulations, and growing cybersecurity threats. Internally, companies are also grappling with workforce challenges, rising operational costs, and growing demands for agility and productivity. More than 94% of APAC manufacturers surveyed have either invested or plan to invest in artificial intelligence/machine learning (AI/ML), generative AI (GenAI), or causal AI over the next five years. AI isn’t just about automation, it’s about transformation. Manufacturers are applying it to some of their most pressing challenges: 47% plan to use it for quality control, 44% for cybersecurity, and 43% for process optimization. The report identifies three key forces accelerating the shift toward industrial AI: increasing complexity, rising cybersecurity risks, and workforce challenges. Navigating Complexity with AI Global supply chains are becoming more fragmented due to geopolitical shifts, trade restrictions, and changing sourcing strategies. Meanwhile, customer expectations are evolving just as fast—demanding greater speed, customization, and quality. These dynamics require faster, smarter decision-making across the enterprise. Industrial AI is proving critical in this transformation. By enhancing demand forecasting, production scheduling, and logistics planning, AI helps manufacturers respond with speed and precision. In fact, 81% of manufacturers in the study cite improving internal efficiency and sharpening external competitiveness as the primary goals of their digital transformation initiatives. Manufacturers leading the way are already seeing results: Predictive maintenance: AI helps to anticipate equipment failures, reduce unplanned downtime and extend asset life. Real-time quality control: Computer vision systems catch defects in milliseconds, improving first-pass yield. Dynamic process optimization: AI continuously adjusts variables like energy use and line speed to boost efficiency—without sacrificing quality. Addressing Cybersecurity with Intelligence As factories become more connected, they also become more vulnerable. Cybersecurity has surged to become the second-highest external threat to business growth—up significantly from previous years. Facing strict international compliance requirements and the desire to improve production efficiency, Pharbaco turned to Rockwell Automation and its local OEM (original equipment manufacturer) partner Qui Long, to implement a smart manufacturing solution. Marcelo Tarkieltaub This is not surprising considering that manufacturing is a key target for ransomware, accounting for 21% of global attacks. In response, manufacturers globally are turning to AI/ML to help fortify their cyber defenses. Nearly half (49%) plan to use AI for cybersecurity, up from 40% in 2024. Key use cases include: Detecting anomalies in IT and OT systems before they escalate Automating threat response to reduce downtime and exposure Gaining real-time visibility across the enterprise Predicting and containing attacks before they cause damage Bridging the Skills Gap In fast-growing regions like Southeast Asia, manufacturers face a dual challenge: a widening skills gap driven by rapid technological change and shortage of digitally skilled talent. To close this gap, 41% of manufacturers globally are turning to AI and automation—while also investing in upskilling and reskilling their workforce. Nearly half (48%) plan to repurpose or hire talent to support smart manufacturing, and 35% are exploring digital twin and simulation technologies for training and operational support. AI can play a pivotal role in workforce enablement: Automating routine, labor-intensive tasks like material handling and inspection Supporting faster onboarding through immersive training tools Enhancing human decision-making with real-time insights that improve safety, accuracy, and productivity Industrial AI in Action: Pharbaco success story Adoption of industrial AI is moving from pilot projects to full-scale integration. A compelling example is Pharbaco, a leading pharmaceutical manufacturer in Vietnam. Facing strict international compliance requirements and the desire to improve production efficiency, Pharbaco turned to Rockwell Automation and its local OEM (original equipment manufacturer) partner Qui Long, to implement a smart manufacturing solution. By leveraging AI-enabled HVAC automation, continuous environmental monitoring, and integrated IT/OT systems with platforms like FactoryTalk software and Logix controllers, the company achieved: Over 45% reduction in energy use Enhanced compliance through automated data reporting Improved process control and cleanroom efficiency Pharbaco’s experience shows how embedding intelligence into every layer of operation—from building systems to production lines—can drive measurable results and long-term scalability. A Defining Moment for Southeast Asia The latest SOSM report doesn’t just highlight trends—it offers a blueprint. Whether organizations are beginning their smart manufacturing journey or scaling up, the approach is consistent: identify priority challenges, align AI use cases to real business needs, and balance technological innovations with human expertise. For manufacturers ready to evolve, the message is clear: smart starts now. And those who act with purpose—pairing technology with talent—will be the ones to lead the next era of industrial innovation.