Gareth Mitchell, Associate Partner, IRIS by Argon & Co

Manufacturing globally faces relentless pressure for operational excellence, efficiency, and resilience. Over the past five years, Artificial Intelligence (AI) has emerged as a revolutionary innovation and a true economic engine reshaping modern manufacturing.

As companies encounter supply chain disruptions, predictive maintenance needs, and real-time quality demands, AI adoption is becoming essential. However, much confusion remains about the economics of AI. Below, we demystify this confusion and explain why integrating AI into your strategy is both the smartest and most cost-effective path for leaders focused on competitiveness and capturing new value.

AI is expected to add approximately $7 trillion USD to global GDP over the next decade, mainly by automating tasks, increasing productivity, and driving new value creation.

IRIS by Argon & Co is already sees significant ROI across planning, supply chain, document and spend intelligence, and manufacturing efficiency. However, AI adoption represents a fundamental shift in how businesses create value and how labour may be structured in the future.

AI’s cost-saving potential is profound, and exceedingly more high-ROI use cases appear across industries. AI has in some cases increased productivity by 40% and delivered cost reductions through AI automation and optimization.

Businesses see stark improvements when AI automates repetitive actions, allowing workers to focus on higher-value tasks.

The types of real-world use cases IRIS and its clients are developing show real AI-enabled efficiencies, such as reduced error rates, predictive AI reasoned planning, and automation of routine service tasks, all which lead to substantial improvements at all levels of the P&L.

Besides economic advantages, early AI adopters gain multiple competitive edges. Early adopters benefit from foundational AI infrastructure that supports future innovation and ongoing productivity.

AI-driven companies are focused on productivity gains and disciplined ROI, enabling faster data-driven decisions, better productivity, and improved customer experience— and this is yielding significant returns. Subsequently companies who adopt AI are also becoming more attractive employers.

In contrast to the early adopters, companies who lag in the AI race are at a real risk of suffering higher comparative costs, missed growth opportunities, and possible market irrelevance as their competitors gain an advantage through sheer AI adoption velocity.

Most critically IRIS sees that the biggest prize is when the economics of AI extend beyond simple cost-reduction. Implementing AI in your operation enables new processes or business models that were never possible and may fundamentally reshape industries and new approaches to competition.

The exponential decrease in the cost of implementing AI is democratizing AI tools allowing small and mid-sized enterprises (90% of New Zealand’s businesses) to compete with the largest industry incumbents. However, again disparities exist—organizations with robust digital infrastructure reap the highest gains, while those slow to adapt are going to experience increasing inequality.

Where to from here?

• First, when contemplating the cost to implement AI, take note that over time, the costs of not adopting AI (such as inefficiency, lost talent, and diminished competitiveness) will likely exceed initial investment costs.
• Secondly, put your people first. Take the first step and gain an understanding of your organization’s readiness for AI (in terms of data, processes, and workforce) and invest early to maximise the strategic and economic benefits.
• At IRIS by Argon & Co we offer a rapid AI and data maturity assessment that can help you define your current state and the journey to AI adoption (get in touch via our website – https://www.argonandco.com/en/iris/).
• Finally, if you are a policymaker or industry leader then ensure change management is a key focus of your AI strategy. Workforce transition and the impact of AI transformation are key considerations when contemplating not only the economic value of AI but also the impact.
• The IRIS team can help you build a resilient strategy focused on your AI journey and making change management a core element of that strategy.