More than three-quarters (77%) of manufacturers expect physical artificial intelligence (AI) to have a significant or transformative impact on warehouse operations, and 75% expect it to have a similar impact on assembly and manufacturing, a study by Tata Consultancy Services (TCS) has found.
of Future-Ready Manufacturing: TCS Physics AI Readiness Report 2026 The study is based on a survey of 300 manufacturing CEOs and vice presidents in North America and Europe, representing sectors such as automotive, electronics and high-tech manufacturing, industrial equipment and machinery, process industries, and aerospace and defense.
He noted that as the adoption of physical AI across the enterprise accelerates, manufacturers are focusing on long-term investments in fast-growing areas. As manufacturers increase their investments in AI, the focus is shifting from standalone automation projects to large-scale physical AI ecosystems.
This paper highlighted how companies are viewing physical AI as a human-first transformation. Rather than replacing employees, manufacturers are using intelligent systems to help employees work more safely, efficiently, and productively, while human and AI operating models support redeploying workers as needed.
Among the data generated, the report highlighted four key findings. Investments are long-term, logistics is a huge opportunity, there is a focus on workforce expansion, and governance remains a barrier to scale.
For example, while the organizations surveyed had no plans to reduce investments in physical AI, 26% plan to increase spending, and as many as 72% expect a significant or transformative impact across logistics and material movement. Just over two-fifths expect “significant” employee benefits from improved safety and support, especially for employees working in dangerous, repetitive or complex environments.
Roughly the same number of companies reported unclear or no formal liability structure for AI physical failures, while 40% said they were unprepared for new regulatory requirements. TCS said this has given manufacturers a clear signal on where to focus their efforts as deployment accelerates.
The report also highlighted how companies are preparing to extend physical AI across factories, warehouses, logistics networks, maintenance operations, and quality control environments. Manufacturers are gearing up for longer-term value realization timelines and are emphasizing sustained transformation through short-term pilots, TCS said.
Warehousing operations are expected to have a significant impact, with 77% expecting a significant or transformative impact, followed by assembly and manufacturing operations at 75% and logistics and material movement at 72%.
Human-centered transformation is already taking shape. Approximately 42% of manufacturers expect physical AI to significantly augment their workforce by improving safety and supporting workers in complex, dangerous, or repetitive industrial environments.
The study looked at where companies were in implementing physical AI and found that 68% of manufacturers remain unadopted or in the experimental stage, identifying traditional systems integration, data infrastructure, and employee skills as the primary paths to enterprise-scale adoption.
Recognizing the insights gained from this study, Anupam Singhal, president of manufacturing at TCS, said that physical AI is bringing intelligence beyond the screen and into the shop floor, where machines sense, adapt and act in real time. “Manufacturers who successfully scale it will define the next era of manufacturing. TCS’s ‘Infrastructure to Intelligence’ approach positions them to lead that transformation.”
“All manufacturers in our study plan to maintain or increase their investments, and the direction is clear: towards more resilient, adaptable and future-ready manufacturing companies.”
TCS has partnered with Google Cloud since March 2026 when it launched the TCS Physical AI Gemini Experience Center in Michigan, USA. The center is designed to help Manufacturers explore, test, and expand physical AI use cases for safety, quality, and operational efficiency.
Commenting on the findings, Kevin Ichhpurani, President of Global Partner Ecosystem at Google Cloud, said, “Physical AI is moving manufacturing from digital insights to real-world autonomous action. Through our partnership with TCS, we are bringing Gemini’s multimodal reasoning to the factory floor, enabling robots and systems to operate safely and intelligently in complex industrial environments.”
