What’s Next for Manufacturing? Expert Perspectives on AI, Risk, and Growth

Manufacturing is evolving rapidly. From artificial intelligence and digital payments to workforce development and economic uncertainty, business leaders face a growing list of complex decisions. At our recent Innovation in Manufacturing roundtable, 1st Source Bank brought together industry experts and regional manufacturers to share insights, challenges, and strategies for staying competitive in today’s dynamic environment.

What are the key takeaways from the event? And what do they mean for your business? Let’s explore.

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#1 Artificial Intelligence: From Buzzword to Business Tool

Artificial intelligence (AI) was a central theme throughout the discussion. Rich Carlton and Dr. David Cieslak of Aunalytics kicked things off with a grounded explanation of AI’s growth and its relevance to manufacturing.

“OpenAI went from spending $9 billion in 2023 to a projected $28 billion this year,” said Cieslak, a former professor of machine learning. “Even if they only make $12 billion, that level of investment shows how seriously the tech sector is taking this.”

Thanks to improved computing infrastructure and cloud capabilities, AI is no longer limited to major tech firms. Mid-sized manufacturers can now explore real applications, such as:

Predictive maintenance using sensor data
Root cause analysis of production issues
AI-assisted customer service via chatbots
Forecasting demand and managing inventory

For example, one company piloted an image-recognition system to verify dishwasher assemblies. It performed better than human inspectors, but the ROI wasn’t high enough to justify expansion—a reminder that practicality still matters.

Putting AI Into Practice

Dr. Cieslak described three types of problems where AI delivers value:

Workload imbalance – Automating repetitive tasks where staff are overwhelmed.
The “1,000 interns” problem – Scaling work that a team of junior employees could do with guidance.
Communication bottlenecks – Reducing back-and-forth between teams and systems.

Carlton emphasized starting small. “Treat AI like any other capital investment. Start with the business problem. Know what success looks like. Measure it. And make sure it’s big enough to matter.”

He shared a real-world example: their IT help desk receives 17,000 tickets monthly, many of them password resets. Automating those requests improved efficiency while reducing burnout among support staff.

Budgeting for AI

As interest in AI grows, more companies are allocating funds for pilot projects. Carlton reminded attendees to avoid buzzword distractions: “Don’t fall in love with the tech—start with the ‘so what.’ If it doesn’t make you better, faster, smarter, or cheaper, then it’s not worth it.”

AI may take 12 to 36 months to deliver measurable ROI. But for many manufacturers, especially those struggling with labor shortages and rising costs, automation can be a long-term game changer.

AI, Labor, and the Skills Gap

As manufacturers adopt AI, concerns about job loss persist. But Carlton and Cieslak agreed: AI is not a job killer—it’s a force multiplier.

“There aren’t enough skilled people to go around,” said Cieslak. “AI isn’t going to replace expertise. It’s going to extend it.”

He pointed to healthcare as a model. In Ghana, only 96 radiologists serve the entire country. At Mass General, there are 130. AI isn’t eliminating radiology—it’s expanding access. The same applies in manufacturing: AI can support skilled workers by handling repetitive or time-consuming tasks.

To prepare, companies must invest in workforce development:

Train employees in digital tools and data interpretation
Encourage collaboration between IT and operations
Build relationships with educational institutions

Local universities like Notre Dame and IU South Bend offer internship programs and capstone projects that connect students with manufacturers tackling real challenges.

Getting Started with AI: Practical First Steps

If your business is new to AI, there are manageable ways to explore it:

Try internal pilots using tools like ChatGPT for writing, summarizing, or document analysis
Create policies that outline responsible AI use and data security
Identify a bottleneck and test a low-risk automation solution
Partner with local experts from universities or consulting firms

“Start small. Train the algorithm. Iterate,” said Carlton. “You don’t need a moonshot on day one.”

#2 Fraud and Faster Payments: Managing Risk in Real-Time

The second major topic was how businesses can take advantage of new payment methods while keeping themselves protected.

The shift toward real-time payments offers clear advantages in speed and convenience—but also opens the door to new fraud risks. With supply chains expanding, vendor networks growing, and financial systems becoming more digital, manufacturers are exposed to increasingly sophisticated cyber threats.

The Rising Risk of Real-Time Fraud

“Faster payments can mean faster fraud,” said Shelli Workman, Regional President at 1st Source Bank. Unlike traditional checks or batch ACH transfers, which often have a window for recalls or reversals, real-time payments settle instantly. Once a fraudulent transaction is sent, the money is often gone.

Criminals exploit urgency and impersonation. One common method is business email compromise (BEC), where attackers pose as a vendor or executive requesting an urgent wire transfer. These scams may use spoofed domains, social engineering, or hacked inboxes to appear legitimate. According to the FBI, BEC fraud led to over $2.7 billion in reported losses in 2022 alone.

This risk is especially high for manufacturers relying on just-in-time payments or frequently updating vendor accounts. A simple lapse in verification can lead to large, unrecoverable losses.

Best Practices for Preventing Payment Fraud

Panelists at the symposium emphasized prevention as the best defense. Key recommendations included:

Dual approval workflows for all outgoing payments, especially wires
Multi-factor authentication (MFA) for financial systems and banking platforms
Out-of-band verification, such as calling a known contact to confirm changes to account information
Role-based access control to limit who can initiate or approve transactions
Transaction alerts and daily payment caps for added visibility

Shelli stressed that internal controls must evolve with the pace of technology. “Fraud schemes are getting more complex. If your controls haven’t changed in five years, you’re probably behind.”

Many financial institutions now offer advanced security features such as biometric authentication, AI-driven anomaly detection, and real-time payment approval tokens. Manufacturers should work closely with their banks to understand what’s available and tailor solutions to their risk profile.

Building a Culture of Vigilance

Technology alone isn’t enough. Human behavior remains a critical factor in both preventing and enabling fraud. A single employee clicking a phishing link or approving a transaction without question can create an entry point for attackers.

To reduce risk, companies should:

Conduct regular fraud awareness training for finance, operations, and procurement teams
Develop written protocols for payment processing and vendor onboarding
Encourage a culture where employees feel empowered to question unusual requests
Simulate fraud attempts internally to test response times and procedures

Fraud is not just a finance issue—it’s a cross-functional challenge that affects operations, reputation, and long-term profitability. By combining technology, process, and training, manufacturers can create layered defenses that are harder to breach.

#3 Economic Outlook: Adapting to a Shifting Landscape

Paul Gifford, Chief Investment Officer at 1st Source Bank, provided an overview of today’s economic challenges—and opportunities.

“The word of the year is uncertainty,” Gifford said. From interest rates to trade policy, variables are shifting faster than most companies can plan for.

Manufacturers have faced a whirlwind in recent years:

A global pandemic and labor shortages
Supply chain disruptions and demand volatility
Elevated borrowing costs
Tariff uncertainty and credit downgrades

Despite these pressures, Paul highlighted signs of resilience: improving labor participation, stabilizing supply chains, and manufacturers becoming more adaptable. He noted that companies that made strategic investments during the pandemic are now better positioned to weather economic headwinds.

Capital Costs and Investment Strategy

One of the most significant challenges facing manufacturers is the rising cost of capital. Interest rates have risen sharply since the pandemic, making equipment purchases, expansion projects, and borrowing for working capital more expensive.

“In 2020, money was essentially free. That’s no longer the case,” he said. “Companies need to be more selective about where they invest and look for higher certainty of return.”

He advised manufacturers to revisit their financing strategies, review fixed vs. variable debt structures, and work closely with lenders to secure favorable terms based on current cash flow.

Trade Policy and Global Competition

Geopolitical risk remains a wildcard. With new tariffs being proposed and international relationships shifting, manufacturers that rely on imported materials or export goods should stay vigilant. Gifford emphasized the importance of scenario planning:

What happens if tariffs increase?
What if a major supplier faces sanctions or restrictions?
How might currency fluctuations affect cost structures?

Resilient companies are already diversifying their supply chains, reshoring where feasible, and building buffer inventory for critical components.

Strategies for Resilience

Gifford closed by highlighting key strategies for riding out economic volatility:

Maintain strong liquidity positions
Monitor interest rate trends and refinance opportunistically
Build partnerships with financial advisors, legal counsel, and accountants
Invest in technology that drives efficiency and transparency

“Don’t let short-term noise distract from long-term goals,” he said. “The most successful companies will be those that balance cautious planning with the courage to seize opportunity when the time is right.”

Connecting the Dots

While the topics at this year’s symposium may seem distinct—AI, fraud, the economy—they all influence a manufacturer’s ability to plan, adapt, and grow.

The key takeaway? Innovation doesn’t have to be overwhelming. With the right partners, a clear focus, and a willingness to experiment, manufacturers can take practical steps toward a smarter, more resilient future.

Thanks to all the panelists and attendees who helped make this event a success. We look forward to continuing the conversation and supporting the success of manufacturers in our region.