10/26/2017 Smartening up with artificial intelligence | McKinsey & Company

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Semiconductors OK

Report
April 2017

Smartening up with artificial

intelligence
How AI will transform Germanys industrial sector.

A
rtificial intelligence (AI) is finally bringing a multitude of capabilities to
machines that were long thought to belong exclusively to the human realm, such
as processing natural language or visual information. In this report, we explain how and
where AI could affect the German industrial sector by exploring several questions: Which
subindustries are most strongly affected by the automation potential of AI? What are the
most promising use cases? What are pragmatic recommendations for managers of
industrial players planning to harness the power of AI?

Highly developed economies like Germany, with a high GDP per capita and challenges
such as a quickly aging population, will increasingly need to rely on automation based on
AI to achieve GDP targets. About one-third of Germanys GDP aspiration for 2030
depends on productivity gains. Automation fueled by AI is one of the most significant
sources of productivity. By becoming one of the earliest adopters of AI, Germany could
even exceed its 2030 GDP target by 4 percent. However, if the country adopts AI more
slowlyand productivity is not increased by any other meansit could lag behind its
2030 GDP target by up to one-third. AI is expected to lift performance across all

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10/26/2017 Smartening up with artificial intelligence | McKinsey & Company

industries and especially in those with a high share of predictable tasks such as
Germanys industrial sector. AI-enabled work could raise productivity in Germany by 0.8
to 1.4 percent annually.

We selected eight use cases covering three essential business areas (products and
services, manufacturing operations, and business processes) to highlight AIs great
potential in the industrial sector. Use cases include topics such as autonomous vehicles,
predictive maintenance, collaborative robotics, and supply-chain management. Five
pragmatic recommendations help with getting started on the journey toward a fully AI-
enabled organization.

Download the full report (PDF-5MB)

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