This is the next stage in manufacturing’s evolution

The manufacturing industry stands at a pivotal juncture. Confronted with technological disruptions, environmental imperatives and mounting geopolitical pressures, leaders are increasingly recognizing that traditional, siloed transformation strategies no longer suffice.

A fundamental rethinking is needed, one that not only ties together digital and sustainable agendas but also accounts for the new reality that those in the sector face. Today, it is essential that resilience becomes just as core to the manufacturing business as digitization and sustainability.

Those that master this new reality and embrace and build upon resilience as a core of their business will find themselves with a competitive edge.

To understand where the manufacturing industry must now go and how it must remold itself, it is important to distinguish between the types of innovation manufacturers have historically embraced. These are often categorized into three forms:

Point solutions: These enhance existing procedures without altering the system itself, for example, replacing steam with electricity during the First Industrial Revolution.

Application solutions: These enable new procedures within the current system, such as the shift from one central engine to multiple modular engines.

System solutions: These fundamentally reshape entire systems. A classic example is the introduction of engines beside machines, which enabled the emergence of flexible production lines.

Point solutions are quick wins, but they often yield diminishing returns. To unlock the full potential of digital technologies and sustainability goals, we must coordinate changes across people, processes and platforms. Systemic reinvention lays the foundation for exponential value creation rather than incremental gains.

Today, manufacturers are immersed in two major transformation journeys: the digital transformation in the age of AI and the sustainability transformation.

Both are pressing. The pace of technological advancement is relentless, while the environmental crisis demands swift, systemic action. Most manufacturers have already initiated these transformations, and typically the Chief Innovation Officer (CIO) is responsible for the digital transformation, including all AI topics and the Chief Sustainability Officer (CSO) oversees everything sustainability related. In many cases, transformations start with standalone pilots like installing AI-driven quality checks in one line or testing a carbon offset programme in a single plant.

Attempting these transformations sequentially or in silos is inefficient. Resources are duplicated, strategic alignment is lost and potential synergies are missed.

A Twin Transformation combines digital and sustainability in a coordinated programme. In both transformations, entire systems need to be changed, and so only system solutions can achieve this.

When manufacturers optimize processes towards more automation and AI, they can also optimize for sustainability in the same step. This approach is a competitive imperative and the benefits are substantial:

Higher ROI: Digital technologies can amplify sustainability gains like AI-driven energy optimization, while sustainability initiatives often drive digital readiness like monitoring systems for carbon tracking.

Organizational efficiency: Shared change processes, cultural alignment and data infrastructures reduce complexity and cost.

Market differentiation: Companies that lead in both areas are better positioned to meet stakeholder expectations and regulatory requirements.

To achieve a true twin transformation, companies must break down internal silos and establish a cross-functional transformation office with joint digital and sustainability leadership. They must map digital and green milestones together to identify common enablers and dependencies, and run combined digital-sustainability proofs of concept at scale. They must learn fast and iterate as they go. They must rethink business models to reflect circularity and long-term value creation and invest in scalable digital infrastructure that supports sustainability metrics.

Manufacturing businesses must today add a third key pillar to their transformation journey: resilience.

In doing so, they are embarking on a Triple Transformation: of their technology, of their environmental footprint, and of their resilience in an increasingly complex world.

In practice, this means designing operations not only to be smart and green but also to adapt swiftly in volatile environments.

The risks highlighted in the World Economic Forum’s Global Risk Report – from geopolitical conflicts to cybersecurity threats and trade ruptures – underscore the need to add resilience as a fundamental aspect of manufacturing transformation.

Building resilience often means reimagining seemingly peripheral operations. Take waste management: traditionally seen as a cost centre, AI-powered waste sorting technologies, like those developed by companies such as AdeoAI, demonstrate how digitizing sustainability processes creates resilience buffers. When regulatory frameworks shift, supply chains are disrupted or material costs fluctuate, manufacturers with intelligent waste management systems can adapt more quickly to the new operating environment. This is just one example of how systematic integration of AI and sustainability creates the adaptive capacity that defines truly resilient manufacturing operations.

Another way to build resilience into transformation is by establishing a disruption centre, a cross-functional unit embedded within the operational core of the business. In a recent report, McKinsey & Company outlined the need for such a centre to navigate tariffs, but the mandate doesn’t have to stop there.

Disruption centres could monitor global developments, track geopolitical and climate indicators, predict and mitigate supply chain vulnerabilities and monitor regulatory developments that pose a business risk.

Acting as the connective tissue between the strategic and operational arms of the business, dedicated disruption centres would enable companies to act preemptively and make informed decisions that protect both operational continuity and sustainability gains.

For manufacturers, the road ahead is not without complexity, but this need not paralyze action. Leaders must make a decisive choice to lead transformation. If they do not, they risk being led by it.

Leaders must take three key steps:

1. Understand their operating environment and adopt an integrated transformation strategy that combines digital, sustainability and resilience.

2. Invest in cross-functional capabilities that drive system-wide innovation.

3. Create organizational structures that enhance responsiveness and foresight.

Manufacturing’s future belongs to those who understand that resilience is core to their business, and the power to adapt and transform to account for this is not just necessary; it’s a meaningful advantage in an increasingly complex world.