Manufacturing, like most other industries, is at a crossroads, as traditional processes are superseded by new models that are driven by technological advances. The scale of transformation under way is unprecedented – reshaping everything from product design to factory operations – and it challenges even the most established practices. But having often made significant investments in capital assets with long lifespans, it can be difficult for manufacturers to justify a change in direction.
Nevertheless, many have chosen the path of transformation, with technology at its heart. Microsoft for Manufacturing is helping organisations reimagine how products are researched, designed and launched.
“The design and engineering phase has undergone a fundamental transformation, driven by the convergence of AI, cloud computing and digital thread technologies,” says John Chien, director of industry and product marketing at Microsoft. “Manufacturers are moving from experimentation to scaled adoption, prioritising agility and resilience. Practices like simulation-led design and shift-left engineering are mainstream, enabling earlier validation and compliance.”
Businesses are shifting towards connected, intelligent workflows that reduce late-stage rework and improve time-to-market. “While integration challenges remain, the trajectory is clear: engineering environments are becoming more collaborative, data-driven and future-ready,” says Chien.
The shift-left approach helps manufacturers identify and solve design or compliance issues earlier in the development process, saving time, reducing costs and accelerating speed to market. “Beyond efficiency, a shift-left approach also improves cross-functional collaboration and supports compliance in highly regulated sectors like aerospace and automotive,” says Chien.
Increasing the adoption of shift-left practices is not without challenge. According to The Impact of AI on Product Design and Engineering: Signals Report – Manufacturing Spotlight, a July 2025 report published by Microsoft, hurdles include siloed simulation models, digital thread gaps and poor integration of computer-aided design, computer-aided engineering and product lifecycle management (PLM).
“Cloud-native platforms and open APIs can help overcome these hurdles,” says Chien. “A strong example is Hexagon, which rebuilt its SDx platform on Azure, enabling customers to automate engineering workflows and achieve dramatic reductions in onboarding time and operational costs.” Hexagon’s customers are now realising more than 90 per cent reductions in facility onboarding and saving millions in productivity improvements and data processing.
This kind of result highlights why cloud migration has become a strategic enabler for real-time collaboration, security and scalability. “Engineers gain faster access to PLM tools without heavy IT overhead, while organisations benefit from centralised governance and compliance,” says Chien. “Cloud also unlocks high-performance computing for simulation, allowing more iterations and better design optimisation. PTC’s transition of Windchill and Creo to Azure illustrates this impact, enabling improved performance and real-time collaboration across global engineering teams.”
The integration of AI into core engineering platforms is further transforming the workforce by automating repetitive tasks, accelerating simulation and improving decision-making. In vehicle manufacturing, Volkswagen, for instance, uses Microsoft Copilot to streamline requirements review, cutting review time by 50 per cent. And Toyota’s technology arm, Woven by Toyota, uses Azure OpenAI to build copilots that help developers design, simulate, and deploy autonomous driving capabilities faster and more safely. “These capabilities reduce cognitive load on engineers, allowing them to focus on innovation while improving overall productivity and quality,” adds Chien.
Connector manufacturer Harting leverages Azure AI to optimise component selection, enabling faster iteration and smarter design. Robotics provider KUKA embeds Azure AI Foundry models into its robotics platform, allowing non-programmers to instruct robots using natural language, cutting integration time and expanding accessibility.
Another real breakthrough comes when cloud PLM and AI converge, to deliver more than the sum of their parts. “Cloud provides a unified data foundation and scalability, enabling AI to automate documentation, generate requirements and simulate product behaviour within the same environment,” says Chien. “Siemens exemplifies this synergy by embedding Azure OpenAI into Teamcenter PLM, allowing natural language interactions that simplify engineering updates and accelerate workflows. Similarly, Continental leverages Azure AI to enhance autonomous systems, enabling rapid simulation, intelligent control and fleet optimisation for next-generation mobile robots and autonomous vehicles.”
Continental uses Microsoft Azure AI to enable fleet optimisation for next-generation autonomous vehicles
The business case for this convergence is increasingly clear. “The return on investment is compelling,” says Chien. “Manufacturers adopting shift-left, cloud PLM and AI see measurable gains in speed, cost and quality. Hexagon’s Azure transformation is a great example. Another is Rolls-Royce, which has unified engineering and operational data on Azure to enable predictive maintenance, reducing downtime across its aerospace fleet and delivering significant cost savings.” Industry studies echo these results. Forrester Consulting’s Total Economic Impact study of Teamcenter X shows how Siemens’ PLM solution, Teamcenter X, reduces operational costs and speeds up implementation cycles, showing that manufacturers investing in these technologies are not just keeping pace – they are pulling ahead.
Security and compliance remain top priorities as manufacturers adopt new technologies. “Microsoft addresses these concerns through Azure’s enterprise-grade encryption, identity management and compliance certifications, ensuring IP protection across collaborative workflows,” says Chien. “Our partners, including Siemens and Autodesk, integrate these capabilities into their platforms. Additionally, Microsoft provides proactive tools for AI security and regulatory readiness, helping customers navigate emerging standards and mitigate risks like prompt injection attacks.”
New AI-enabled technologies are integral to the future of manufacturing. They enable earlier validation, reduce rework, enhance collaboration and unlock resilience at scale. A new generation of engineering environments will be more connected, intelligent and future-ready, and manufacturers who embrace these changes are positioned to thrive.
Partner perspective
We asked AVEVA how it is using Microsoft for Manufacturing, Microsoft Copilot or digital twins powered by Microsoft Azure to design and deliver new products
“AVEVA software transforms manufacturing’s greatest challenges into competitive advantages, driving customer satisfaction and building tomorrow’s intelligent factories,” says Sree Hameed, consumer products industry strategist at AVEVA. “We pair our deep industrial expertise with Microsoft’s Manufacturing Cloud initiatives within a secure, adaptable, cloud-first platform that integrates IT and operational technology systems. Customers gain instant operational insights through edge-to-cloud data integrations and contextual AI analysis that transforms legacy manufacturing systems into agile, secure digital environments – setting the stage for efficiency gains and innovative products. Polymer manufacturer Covestro uses our solutions to simulate the production of green compounds from concept to trial, establishing product viability, enabling cost-effective testing and saving time and engineering effort thanks to fewer errors.”
Discover insights from these partners and more in the Autumn 2025 issue of Technology Record. Don’t miss out – subscribe for free today and get future issues delivered straight to your inbox.