A rapid rise in the adoption of artificial intelligence by manufacturing companies coincides with a growing trend of re-shoring some operations that U.S. manufacturers had sent overseas, according to new survey results from B2B marketplace provider Xometry Inc.
Xometry’s fourth-quarter American Manufacturing Resilience survey, which polled more than 150 chief executive officers of manufacturing firms of all sizes, found that 76% of respondents had successfully re-shored some or all their operations or were in the process of doing so. That figure is well above the 48% of CEO respondents who said they were re-shoring in the third quarter, and 35% in the second quarter.
The latest survey found that 83% of manufacturing leaders say the health of American manufacturing depends on re-shoring, and that AI and re-shoring go “hand-in-hand,” Xometry CEO Randy Altschuler said in a statement.
Reconsidering supply chains
Although American labor costs more than labor in Asia or Mexico, manufacturers are coming to believe that more localized supply chains are less prone to disruptions than far-flung ones. Bill Cronin, chief revenue officer at North Bethesda, Md.-based Xometry, tells Digital Commerce 360 that the “post-COVID CEO” is overly concerned about potential supply chain disruptions in the wake of the COVID-19 pandemic, inflation, and the geopolitical risks of global sourcing. Examples of geopolitical risk sources abound, especially recent U.S.-China tensions and now the Israel-Hamas war in the Gaza Strip.
“Companies are looking at those different options — ‘how can I get this done in the U.S.,’ ‘how can I get this done in North America?’” Cronin says.
With AI, manufacturers can get better reads on their supply risks and options, according to Cronin.
“They are now trained and better prepared,” he says. “It helps them to be more efficient in how they’re prepared to manage any disruption that comes up.”
Some 76% of respondents said they use AI for supply-chain management, more than for any other business function. Next were procurement, cited by 71% of the CEOs; quality control, 47%, and automation, 37%.
“These are areas that are ripe for innovation,” Cronin says. “It’s also about the ability to modernize.” He adds: “it’s amazing what they [manufacturing executives] are able to look at.”
The survey was done by research firm John Zogby Strategies and cobranded by Xometry and the business publication Forbes.
Other uses for AI
In other findings, AI is driving positive responses. Among CEOs who reported they had deployed AI, 67% said they had received a “significant” return on their investments. Some 31% said they expected it will take time to see a strong return but were confident they will. The survey did not ask how much each company had spent on AI technology.
Xometry uses AI to give prospective buyers instant price quotes on its B2B marketplace. As of Sept. 30, Xometry’s marketplace had 52,467 active buyers, up 43% from a year earlier, and 7,415 active paying suppliers, down 2%. The company has developed its AI systems in-house, but on Nov. 9, Xometry announced it will deploy Vertex AI technology from Google’s Google Cloud unit to accelerate further development of its auto-quote methods and models. The goal is to eliminate the time-consuming back-and-forth exchange of pictures, price lists, and paper-based documentation as buyers and sellers negotiate prospective sales, including those involving custom manufacturers.
“For us, it is driving greater efficiency in custom manufacturing and the industrial marketplace,” says Cronin.
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