Becoming a digital enterprise is no longer optional. Combating labor shortages and decreasing profit margins have driven machine builders in the industrial manufacturing industry to jump into their digital transformation journeys. Solutions such as the Digital Twin and AI—including traditional, generative and now agentic—have helped businesses become more flexible, resilient and efficient while setting the foundation for increased automation that keeps the human in the loop.

Digitalization is now the key to competitiveness; and the comprehensive Digital Twin combined with digital threads are the foundation of digitalization, connecting every stage of a product’s lifecycle, from concept to manufacturing, into a single source of truth. Additionally, digital threads unify processes and systems, enabling seamless collaboration across departments and promoting the integration of new technologies.

AI and the comprehensive Digital Twin: democratizing digital transformation

The dynamic shift in industrial machinery—driven by the integration of AI across design, operations and supply chains—will continue to disrupt the sector for years to come. Accessibility is key as AI capabilities accelerate, and enterprises of all sizes look to modernize their systems and processes. Updating business processes may initially seem intimidating for SMBs and brownfields, but there are solutions that ease access to automation and AI processes which are growing increasingly important as talent gaps continue to widen.

Large language models (LLMs), for example, have been empowering workers to dabble with AI. Only last year, many manufacturers began deploying LLMs to fill in knowledge gaps and bridge human and machine operations. Starting with these simple tools gives designers and engineers time to adapt to new solutions so that the company can determine their specific AI needs and build from there. Incrementally leveraging AI-infused solutions that address engineering and manufacturing needs will ultimately simplify the adoption of more complex and powerful solutions on the horizon.

Once a company knows where and when to include AI in its operations by identifying value use cases, it can begin training in-house AI models. At this point, machine builders, for example, can fully integrate generative AI and agents into their processes to create new engineering and manufacturing content and even automate complex workflows.

Achieving a more automated factory that is ready to face a volatile landscape starts with a plan. To create a solid plan, OEMs should look to the Digital Twin for virtual commissioning. It is crucial to test how and where certain processes will work before integrating new machines or processes into more traditional workflows. The Digital Twin of the factory creates an accurate, real-time virtual representation of their factory that is accessible for workers across teams and disciplines.

Harmonizing humans, robots, and automation through digitalization

Digitalization does not always mean scrapping old, reliable equipment and replacing it with new machinery. Many OEMs have seen ROI from integrating collaborative robots (cobots), or robots that aid human workers during production. Cobots enable seamless integration between automated and manual systems, allowing machine builders to put them where they are needed without upending processes that work for them. Leveraging cobots, a brownfield environment can quickly evaluate how to upgrade operations and become a state-of-the-art facility.

A factory that has fully integrated the Digital Twin can also implement AI in tandem to supercharge operations. Machine builders can create immersive settings that perfectly imitate physical factories and production lines to accelerate robot training and programming. In this virtual classroom, robots can practice tasks, address common challenges and develop problem-solving skills in just hours, rather than months or even years.

Digital Twin and AI capabilities further lay the groundwork for budding technologies such as humanoid robots. Humanoids are poised to shake up the industrial manufacturing space and will likely enter the factory floor within the next few years. As a result, virtual commissioning powered by the Digital Twin will become even more important. Virtual commissioning will be at the heart of harmonious operations between humans, cobots, smart robots and humanoids; enabling the factory to forecast human interactions with automated systems and equipment.

The pivot from hardware to software

With the rapid advancements in technology, industrial manufacturing is under pressure to tackle skill shortages, unpredictable supply chains, and increasing demand for more resource-efficient and sustainable production. Autonomous operations help machine builders address current challenges and position them to tackle future ones. As part of this shift, automation is transitioning from hardware-based devices to software-defined functionalities. Software-defined automation (SDA) combines information technology (IT) flexibility with operational technology (OT) robustness.

Now, instead of relying on fixed hardware for functionality, SDA uses software to control, enhance and update features, making it more adaptable and scalable. Brownfields, for example, can take special advantage of SDA because it enables connection between legacy equipment and systems to more modern data-driven services and applications. Once these machines are connected, older factories can begin to craft their own digital thread and move towards greater automation and accelerated operations.

Journey, not destination

Industrial machinery is entering its next golden age. Success in 2026 will hinge on the industry’s ability to stay afloat as the AI revolution keeps or even accelerates its momentum. For machine, equipment and component manufacturers, the digital enterprise model represents a transformative approach where every aspect of the business is interconnected through data, automation and real-time insights.

By integrating the Digital Twin and leveraging AI, organizations can move beyond outdated, fragmented systems and build flexible frameworks that address both current and future challenges. As more companies adopt this approach, it has become clear that embracing digital transformation is imperative to ensuring sustained agility and long-term success in this new age of manufacturing.

About the author:

Rahul Garg is Vice President for Industrial Machinery Vertical Software Strategy at Siemens Digital Industries Software.

As a customer-centric leader, one of his great joys is helping simplify complex problems for customers and enabling success by delivering powerful, effective solutions that support small and mid-sized businesses.

Throughout his career, having worked at three start-ups and now a large enterprise, Rahul has worked closely with SMBs and in technology-led industries to overcome key challenges and drive revenue growth with strategic solutions, smarter services and better business practices.