New research reveals why the next competitive advantage isn’t connecting more data. It’s making better operational decisions.

Connected manufacturing solved one of manufacturing’s biggest challenges.

It gave manufacturers access to production data that was once trapped in disconnected machines, systems, and spreadsheets.

So why are so many production decisions still slow, manual, and reactive?

The next competitive advantage is no longer connecting more data. It’s making better operational decisions with the data you already have.

The 2026 State of Connected Manufacturing report helps explain why.

We’ve connected the data. So why are so few manufacturers making real-time operational decisions?

If manufacturers have spent the past decade connecting factories, why is acting on production data still so difficult? The numbers suggest the industry’s biggest challenge is no longer connecting data. It’s turning connected data into action.

For years, connectivity has been the benchmark for manufacturing digital transformation.

It made sense. Before manufacturers could optimize production, deploy AI, or scale analytics, they first had to connect machines, integrate systems, and make production data available across the business. By that measure, the industry has made remarkable progress.

Today, 42% of manufacturers report having integrated manufacturing data, reflecting years of investment in Industrial IoT, MES, cloud platforms, and factory connectivity.

Yet fewer than one in three consistently use that data to make real-time operational decisions.

That’s not because connected manufacturing failed. It’s because the definition of success has changed.

For years, success was measured by what manufacturers connected. Increasingly, it will be measured by how quickly they can make confident operational decisions.

Connectivity was never the destination. It was the foundation.

If manufacturers have largely solved the connectivity problem, why do so many production decisions still require manual investigation?

Because connected data and operational context are not the same thing.

Connected data tells you what happened. Operational context explains why it happened, what it means, and what should happen next. That’s the difference between information and action.

Consider a production supervisor investigating an unexpected drop in throughput. The dashboard confirms production has slowed. It doesn’t explain whether the cause is a material shortage, an equipment issue, a recent changeover, or operator intervention.

The data is connected. The decision still isn’t obvious.

Or imagine a quality engineer receives an alert that first-pass yield has declined. Before stopping production, they need to understand whether the issue is isolated, recurring, or spreading across multiple lines.

Again, the data identifies the symptom. Context determines the response.

That helps explain why 36% of manufacturers still struggle to translate production data into operational action.

Manufacturers aren’t looking for more information. They’re trying to make better decisions.

Operational decision advantage isn’t about making faster decisions. It’s about identifying problems sooner, understanding them faster, and taking the right action with greater confidence. Operational teams ask questions like:

• What changed?
• Why did it happen?
• Does it require action?
• What should we do next?
• Can we trust the recommendation?

Answering those questions requires operational context, not simply connected data.

The competitive advantage is shifting from connectivity to decision-making.

Connected manufacturing solved the problem of data access. The next competitive advantage is transforming connected data into operational context that enables faster, more confident decisions.

AI is often presented as the solution to manufacturing’s decision gap. In reality, it exposes it.

AI can analyze information faster than people. It still depends on trusted operational context. If production data is fragmented, incomplete, or disconnected from what is happening on the shop floor, AI simply reaches uncertain conclusions more quickly.

That’s why AI doesn’t reduce the importance of connected manufacturing. It changes what “connected” must mean. AI doesn’t need more data. It needs operational context.

That helps explain another finding from the research. More than one-quarter of manufacturers still report lacking the real-time visibility needed to support operational decisions. AI cannot compensate for missing context.

The manufacturers that realize the greatest value from AI won’t necessarily deploy more models.

They’ll improve decision velocity by giving both people and AI the operational context needed to identify problems sooner, understand them faster, and act with greater confidence.

AI doesn’t replace the need for operational context. It makes it more valuable than ever.

Operational context turns connected data into confident decisions and accelerates the impact of AI

The findings align with a broader shift taking place across manufacturing.

McKinsey’s Transforming Factories: The Power of Continuous, Connected Insights reaches a similar conclusion. Manufacturers create lasting operational advantage by connecting insight to frontline action, not simply by expanding data collection.

Connected manufacturing is evolving from an infrastructure initiative into a decision-making capability.

For more than a decade, manufacturers competed by connecting machines, integrating systems, and making production data accessible. Those investments were necessary. They also worked.

Today, connectivity is becoming table stakes. The next competitive advantage belongs to manufacturers that consistently transform connected data into confident operational decisions.

That shift changes how manufacturers should measure digital transformation. Not by how many assets are connected. Not by how much data is collected. But by how quickly people can understand what’s happening, decide what matters, and take the right action.

For the past decade, manufacturers competed on connectivity. Over the next decade, they’ll compete on decision advantage.

• Are we measuring digital transformation by connected assets or by operational outcomes?
• How much time do our teams spend investigating before they can act?
• Where are decisions delayed because people lack operational context?
• Are we preparing our data for AI, or simply making more of it available?
• If we connected every remaining machine tomorrow, would our teams actually make better decisions?

Want to explore the complete findings?

Download the 2026 State of Connected Manufacturing report to see how manufacturers are approaching connectivity, AI, and operational decision-making.