Crystal Ball 2026: The year AI moves from promise to production

As manufacturers face unprecedented complexity, from supply chain volatility to labor shortages, the technology choices made in 2026 will define competitive advantage for years to come.

This year marks a pivotal shift: We’ll see AI transition from pilot projects into scaled production operations, and workforce transformation move to the forefront of strategic planning.

At the core of these changes is a crucial point: Digital transformation is no longer optional for manufacturers; it’s essential to be competitive.

Digital transformation: The non-negotiable foundation

For a long time, manufacturers treated digital transformation as a separate workstream—something the IT team owns—but that's changing.

We’re moving past just narrow use cases, predictive maintenance or demand forecasting, toward broader AI integration that optimizes entire production systems thanks to agentic AI.

In the next wave of manufacturing AI agents will autonomously monitor data across systems and suggest corrective action before problems impact production.

Smart Industry's Crystal Ball 2025 Report: A look into manufacturing technology

This means manufacturers can both move away from manual analysis and gain unprecedented insights into operations, enabling faster and more informed decision-making at every level of the business.

Agentic AI is enabling a manufacturing environment where speed, cost, and customer experience are all substantially improved simultaneously.

Companies implementing AI-driven planning and scheduling are reporting significant improvements in on-time delivery and asset utilization. The leaders we see thriving are those who treat AI not as a technology initiative, but as a business transformation imperative.

The workforce equation gets more difficult and more critical

Labor remains the defining challenge for manufacturing, and digital transformation plays a crucial role. Equipping workers with the skills and knowledge they need to maximize the potential of smart manufacturing and operations is a top concern for manufacturers, and in the year ahead, manufacturers will increasingly need to focus on human-machine collaboration rather than outright automation.

See also: AI that augments the workforce … and doesn’t replace it

Those who successfully design jobs to work in tandem with smart technology will outpace competitors. With the volatility that 2026 will bring, an adaptive workforce planning framework will be essential to helping companies address uncertainty while building long-term workforce resilience.

The rise of physical AI is another early trend that is accelerating quickly, and beyond 2026 may be a crucial part of the workforce equation. These tools are ushering in a profound shift for businesses as robots equipped with advanced sensors and intelligent systems learn to seamlessly adapt to real-world environments and engage with humans in new ways.

These adaptable machines aren’t just automating tasks—they’re becoming strategic partners to human workforces, able to observe, decide, and act in changing settings.

Some industry use cases already span humanoid robots in factories, and as highlighted in Deloitte’s Robotics and Physical AI report, the convergence of robotics innovations, increased affordability and growing market demand is accelerating adoption.

For physical AI to meaningfully augment workforce gaps in manufacturing, organizations first need solid core data functions and strong governance and cybersecurity plans.

A competitive shift for manufacturers

Heading into 2026, the manufacturers pulling ahead are the ones doubling down on smart manufacturing as core infrastructure, using it to scale AI where it matters most to unlock capacity and resilience amid uncertainty.

See also: IFS debuts package of ‘digital workers’ in next iteration of agentic AI industrial software

With trade complexity and rising costs, leaders are pairing these foundations with AI-driven trade analytics and agentic AI to enhance visibility, balance cost and risk, and harden supply networks.

Leaders are seeing that digital transformation goes beyond the four walls of a facility—new digital tools can offer transformative solutions for managing global supply chain complexity, creating more resilient manufacturers who can respond quickly to changing headwinds.

For example, when policies change or supply disruptions occur, AI-driven trade analytics allow manufacturers to quickly model alternative sourcing strategies and make informed decisions about inventory, production, and supply chain redesign.

At the same time, policy-driven incentives, the data center boom, and sustained semiconductor demand are fueling multi-year component agreements and new U.S. production, creating near-term growth opportunities for those ready to scale.

See also: What manufacturers risk when they try to patch everything

Ultimately, competitive advantage is shifting to those who align digital investment with workforce strategy and aftermarket value. Manufacturers who equip their people to leverage smart tools and adopt adaptive workforce planning to navigate demand volatility are building durable resilience.

The mandate is clear: invest in the digital and workforce foundations now to capture growth from structural tailwinds while navigating continued uncertainty.

Editor's note: The Crystal Ball Series will continue on Monday, Dec. 29.