While the promise of artificial intelligence transforming the manufacturing industry is not new, long-ongoing experimentation hasn’t yet led to widespread business benefits. Manufacturers remain in “pilot purgatory,” as Gartner reports that only 21% of companies in the industry have active AI initiatives in production. 

However, new research from Google Cloud reveals that the COVID-19 pandemic may have spurred a significant increase in the use of AI and other digital enablers among manufacturers. According to our data—which polled more than 1,000 senior manufacturing executives across seven countries—76% have turned to digital enablers and disruptive technologies due to the pandemic such as data and analytics, cloud, and artificial intelligence (AI). And 66% of manufacturers who use AI in their day-to-day operations report that their reliance on AI is increasing.

The top three sub-sectors deploying AI to assist in day-to-day operations are automotive/OEMs (76%), automotive suppliers (68%), and heavy machinery (67%).

In fact, Bryan Goodman, Director of Artificial Intelligence and Cloud, Ford Global Data & Insight and Analytics shares, “Our new relationship with Google will supercharge our efforts to democratize AI across our business, from the plant floor to vehicles to dealerships. We used to count the number of AI and machine learning projects at Ford. Now it’s so commonplace that it’s like asking how many people are using math. This includes an AI ecosystem that is fueled by data, and that powers a ‘digital network flywheel.’”

Moving from edge cases to mainstream business needs

Why are manufacturers now turning to AI in increasing numbers? Our research shows that companies who currently use AI in day-to-day operations are looking for assistance with business continuity (38%), helping make employees more efficient (38%), and to be helpful for employees overall (34%). It’s clear that AI/ML technology can augment manufacturing employees’ efforts, whether by providing prescriptive analytics like real-time guidance and training, flagging safety hazards, or detecting potential defects on the assembly line.

In terms of specific AI use cases called out by the research, two main areas emerged: quality control and supply chain optimization. In the quality control category, 39% of surveyed manufacturers who use AI in their day-to-day operations use it for quality inspection and 35% for product and/or production line quality checks. At Google Cloud, we often speak with manufacturers about AI for visual inspection of finished products. Using AI vision, production line workers can spend less time on repetitive product inspections and can instead focus on more complex tasks, such as root cause analysis. 

In the supply chain optimization category, manufacturers said they tapped AI for supply chain management (36%), risk management (36%), and inventory management (34%).

In our day-to-day work, we’re seeing many manufacturers rethink their supply chains and operating models to better accommodate for the increased volatility that has been brought about by the pandemic and support the secular trend of consumers asking for increasingly individualized products. We’ll share more on deglobalization in the third installment of our manufacturing insights series.

AI use differs by geography, but not for the reasons you may think

The extent to which AI is already being used today varies quite strongly between geographies, according to our research. While 80% and 79% of manufacturers in Italy and Germany respectively report using AI in day-to-day operations, that percentage plummets in the United States (64%), Japan (50%) and Korea (39%).

It’s tempting to state this disparity is due to an “AI talent gap.” Although the most common barrier, just a quarter (23%) of manufacturers surveyed believe they don’t have the talent to properly leverage AI. Cost, too, does not appear to be a roadblock (21% of those surveyed). Rather, from our observations, the missing link appears to be having the right technology platform and tools to manage a production-grade AI pipeline. This is obviously the focus of our efforts and others in the space, as we believe the cloud can truly help the industry make a step change.

Looking ahead: The Golden Age of AI for manufacturing

The key to widespread adoption of AI lies in its ease of deployment and use. As AI becomes more pervasive in solving real-world problems for manufacturers, we see the industry moving away from “pilot purgatory” to the “golden age of AI.” The manufacturing industry is no stranger to innovation, from the days of mass production, to lean manufacturing, six sigma and, more recently, enterprise resource planning. AI promises to bring even more innovation to the forefront. 

To learn more about these findings and more, download our infographic here and our full report here. 

^{Research methodology
The survey was conducted online by The Harris Poll on behalf of Google Cloud, from October 15 – November 4, 2020, among 1,154 senior manufacturing executives in France (n=150), Germany (n=200), Italy (n=154), Japan (n=150), South Korea (n=150), the UK (n=150), and the U.S. (n=200) who are employed full-time at a company with more than 500 employees, and who work in the manufacturing industry with a title of director level or higher. The data in each country were weighted by number of employees to bring them into line with actual company size proportions in the population. A global post-weight was applied to ensure equal weight of each country in the global total.}

Editor’s note: In part one of this blog, Wayfair shared how it supports each of its 30 million active customers using machine learning (ML). Wayfair’s Vinay Narayana, Head of ML Engineering, Bas Geerdink, Lead ML Engineer, and Christian Rehm, Senior Machine Learning Engineer, take us on a deeper dive into the ways Wayfair’s data scientists are using Vertex AI to improve model productionization, serving, and operational readiness velocity. The authors would like to thank Hasan Khan, Principal Architect, Google for contributions to this blog.

When Google announced its Vertex AI platform in 2021, the timing coincided perfectly with our search for a comprehensive and reliable AI Platform. Although we’d been working on our migration to Google Cloud over the previous couple of years, we knew that our work wouldn’t be complete once we were in the cloud. We’d simply be ready to take one more step in our workload modernization efforts, and move away from deploying and serving our ML models using legacy infrastructure components that struggle with stability and operational overhead. This has been a crucial part of our journey towards MLOps excellence, in which Vertex AI has proved to be of great support.

Carving the path towards MLOps excellence

Our MLOps vision at Wayfair is to deliver tools that support the collaboration between our internal teams, and enable data scientists to access reliable data while automating data processing, model training, evaluation and validation. Data scientists need autonomy to productionize their models for batch or online serving, and to continuously monitor their data and models in production. Our aim with Vertex AI is to empower data scientists to productionize models and easily monitor and evolve them without depending on engineers. Vertex AI gives us the infrastructure to do this with tools for training, validating, and deploying ML models and pipelines.

Previously, our lack of a comprehensive AI platform resulted in every data science team having to build their own unique model productionization processes on legacy infrastructure components. We also lacked a centralized feature store, which could benefit all ML projects at Wayfair. With this in mind, we chose to focus our initial adoption of the Vertex AI platform on its Feature Store component.

An initial POC confirmed that data scientists can easily get features from the Feature Store for training models, and that it makes it very easy to serve the models for batch or online inference with a single line of code. The Feature Store also automatically manages performance for batch and online requests. These results encouraged us to evaluate the adoption of Vertex AI Pipelines next, as the existing tech for workflow orchestration at Wayfair slowed us down greatly. As it turns out, both of these services are fundamental to several models we build and serve at Wayfair today.

Empowering data scientists to focus on building world-class ML models

Since adopting Vertex AI Feature Store and AI Pipelines, we’ve added a couple of capabilities at Wayfair to significantly improve our user experience and lower the bar to entry for data scientists to leverage Vertex AI and all it has to offer:

1. Building a CI/CD and scheduling pipeline

Working with the Google team, we built an efficient CI/CD and scheduling pipeline based on the common tools and best practices at Wayfair and Google. This enables us to release Vertex AI Pipelines to our test and production environments, leveraging cloud-native services.

Keeping in mind that all our code is managed in GitHub Enterprise, we have dedicated repositories for Vertex AI Pipelines where the Kubeflow code and definitions of the Docker images are stored. If a change is pushed to a branch, a build starts in the Buildkite tool automatically. The build contains several steps, including unit and integration tests, code linting, documentation generation and automated deployment. The most important artifacts that are released at the end of the build are the Docker image and the compiled Kubeflow template. The Docker image is released to the Google Cloud Artifact Registry and we store the Kubeflow template in a dedicated Google Cloud Storage Bucket, fully versioned and secured. This way, all the components we need to run a Vertex AI Pipeline are available once we run a pipeline (manually or scheduled).

To schedule pipelines, we developed a dedicated Cloud Function that has the permissions to run the pipeline. This Function listens to a Pub/Sub topic where we can publish messages with a defined schema that indicates which pipeline to run with which parameters. These messages are published from a simple cron job that runs according to a set schedule on Google Kubernetes Engine. This way, we have a decoupled and secure environment for scheduling pipelines, using fully-supported and managed infrastructure.

Abstracting Vertex AI services with a shared library

We abstracted the relevant Vertex AI services currently in use with a thin shared Python library to support the teams that develop new software or migrate to Vertex AI. This library, called wf-vertex, contains helper methods, examples, and documentation for working with Vertex AI, as well as guidelines for Vertex AI Feature Store, Pipelines, and Artifact Registry.

One example is the run_pipeline method, which publishes a message with the correct schema to the Pub/Sub topic so that a Vertex AI pipeline is executed. When scheduling a pipeline, the developer only needs to call this method without having to worry about security or infrastructure configuration:

@cli.command()
def trigger_pipeline() -> None:
    from wf_vertex.pipelines.pipeline_runner import run_pipeline

    run_pipeline(
       template_bucket= f"wf-vertex-pipelines-{env}/{TEAM}",  # this is the location of the template, where the CI/CD has written the compiled templates to
       template_filename="sample_pipeline.json",  # this is the filename of the pipeline template to run
       parameter_values= {"import_date": today()}  # it’s possible to add pipeline parameters
)

Most notable is the establishment of a documented best practice for enabling hyperparameter tuning in Vertex AI Pipelines, which speeds up hyperparameter tuning times for our data scientists from two weeks to under one hour.

Because it is not yet possible to combine the outputs of parallel steps (components) in Kubeflow, we designed a mechanism to enable this. It entails defining parameters at runtime and executing the resulting steps in parallel via the Kubeflow parallel-for operator. Finally, we created a step to combine the results of these parallel steps and interpret the results. In turn, this mechanism allows us to select the best model in terms of accuracy from a set of candidates that are trained in parallel:

Our CI/CD, scheduling pipelines, and shared library have reduced the effort of model productionization from more than three months to about four weeks. As we continue to build the shared library, and as our team members continue to gain expertise in using Vertex AI, we expect to further reduce this time to two weeks by the end of 2022.

Looking forward to more MLOps capabilities

Looking ahead, our goal is to fully leverage all the Vertex AI features to continue modernizing our MLOps stack to a point where data scientists are fully autonomous from engineers for any of their model productionization efforts. Next on our radar are Vertex AI Model Registry and Vertex ML Metadata alongside making more use of AutoML capabilities. We’re experimenting with Vertex AI for AutoML models and endpoints to benefit some use cases at Wayfair next to the custom models that we’re currently serving in production.

We’re confident that our MLOps transformation will introduce several capabilities to our team, including: automated data and model monitoring steps to the pipeline, as well as metadata management, and architectural patterns in support of real-time models requiring access to Wayfair’s network. We also look forward to performing continuous training of models by fully automating the ML pipeline that allows us to achieve continuous integration, delivery, and deployment of model prediction services.

We’ll continue to collaborate and invest in building a robust Wayfair-focused Vertex AI shared library. The aim is to eventually migrate 100% of our batch models to Vertex AI. Great things to look forward to on our journey towards MLOps excellence.

While some traditional financial services companies have more slowly transitioned to the cloud, capital markets firms have embraced cloud computing across their entire value chains — front-, middle-, and back-office. We wanted to understand the dynamics behind this rapid adoption, the most common use cases, and the types of technology most in use, particularly as it relates to market data. Google Cloud commissioned Coalition Greenwich to survey 102 institutional capital markets professionals — at exchanges, trading systems, data aggregators, data producers, asset managers, hedge funds, and investment banks — in the United States, Canada, France, Germany, Italy, the Netherlands, Switzerland, and the United Kingdom. 

Our research found that while there are many drivers, demand for easier accessibility is fueling widespread adoption of cloud-based market data services, and associated trading infrastructures, across the buy side and sell side. In fact, 68% of sell-side and buy-side users find it critical for market data providers to offer public cloud-based data services. At the same time, exchanges, market data providers, aggregators, and trading systems are embracing the cloud as a delivery model by offering access to data directly via their own cloud services, APIs or partners.

Here were five noteworthy takeaways from the study: 

1. Cloud services are becoming ubiquitous for data delivery. Today, the cloud is pervasive, with 93% of exchanges, trading systems and data providers offering cloud-based data and services, according to surveyed executives. Moreover, 100% of those surveyed intend to offer new cloud-based services, such as derived data, in the next 12 months.

2. Commercial and investment banks are offering additional connectivity, real-time data feeds, and trading applications delivered via the cloud,demonstrating that it’s not only exchanges, trading systems, and data providers that are moving rapidly to the cloud. Internal use cases abound as well, with 67% of those surveyed consuming cloud-deployed market data, primarily for data analytics. 88% of surveyed sell-side firms intend to consume cloud-based market data services, with digital transformation, data science and quant research as the top use cases.

3. Buy side firms will consume even more cloud-deployed data. Today, 90% of surveyed buy-side firms are consuming cloud-deployed market data, mostly for portfolio management. 70% of buy-side firms intend to consume more public cloud-based market data services in the next 12 months, adding services such as compliance and regulatory reporting.

4. AI/ML, powered by cloud, is moving out of the pilot phase and into mainstream use. Today, 50% of exchanges, trading systems, and data providers are offering data products or services powered by AI/ML, and of those, 42% intend to offer AI-powered trade execution and trading analytics services in the next 12 months. Within commercial and investment banks, 55% said they are currently using AI/ML in the cloud, and while that was true for only 14% of overall buy-side respondents, 44% of large buy-side respondents are using it.

5. Exchanges, trading systems, and data providers are prioritizing public cloud for internal insights. 71% of these firms are using the public cloud, mostly for data transmission, processing, analysis, and long-term data storage. Over the next 12 months, 33% of new public cloud workloads will focus on data mining, data insights and advanced analytics, while 28% of new AI/ML tooling and infrastructure investments will focus on faster analytics and risk reviews, and 27% on data quality maintenance.

“We see new, dramatic shifts on the adoption of cloud across market data,” said David Easthope, Senior Analyst for Coalition Greenwich. “And we expect further proliferation of cloud-based services and greater consumption across the trading and investing lifecycle.”

Conclusions and future predictions

Based on the survey results, Coalition Greenwich predicts five following trends over the next 12 months:

1. Exchanges and trading systems will continue to launch a wide array of new cloud-based and possibly cloud exclusive data services across derived data, end of day data, reference data and pricing data.
2. Data providers will launch new data products such as pre-trade analytics powered by AI/ML in the cloud.
3. Commercial and investment banks will offer additional connectivity, real-time data feeds, and trading applications delivered via the cloud.
4. Buy-side firms will consume even more cloud-deployed data, including real-time market data, portfolio management data, and risk analytics.
5. Exchanges, trading systems and data providers will explore proof-of-concepts around core systems on the cloud. Improvements to AI/ML tooling or infrastructure will ramp up as firms seek more rapid responses to risk initiatives.

To learn more about these findings, download our two full reports, The Future of market data: Distribution and consumption through cloud and AI and Exchanges and data providers: Prioritizing the cloud and AI for internal insights or our short infographic.

Research methodology

The survey was conducted online by Coalition Greenwich on behalf of Google Cloud from March 2021 to April 2021 among 102 executives in North America (n=82), EMEA (n=17) and other (n=3) who are employed full-time and who are participants or influencers in decisions around cloud and/or senior management with a role at a company which is an institutional asset manager, hedge fund, alternative investment manager, exchange and/or trading system, information provider, information aggregator, or other asset manager/asset owner. The survey included wide perspectives from a range of firm size and asset class focus, including equity, fixed income, FX, commodities, multi-asset, and other asset classes.

Foot Notes

1.  We defined market data as direct feeds, consolidated feeds, terminal and desktop products, security and reference data, pricing data, historical data, alternative data, and index data.