How to Save 50 Million Euros a Year with AI
A discussion with Yves Caseau, CDIO of Michelin
Yves Caseau is Chief Digital and Information Officer at Michelin, where he leads a large team of IT and AI specialists for the French tire company that was established in 1889. With annual revenues of about 30 billion Euros and profits of nearly 3.5 billion Euros, it’s the world’s leading tire manufacturer.
So how can you apply AI in tire manufacturing? In this fascinating discussion, Yves shares at least a dozen different applications of AI, including in R&D simulation, machine vision, maintenance, supply chain, marketing, services, and fleet management for users of Michelin tires.
He talks about what he calls “classical AI” using operations research techniques starting a decade ago, and how they’re using Generative AI and today’s LLMs as well.
Their efforts pretty much span the entire scope of the modern enterprise, from the front end of innovation and materials sourcing, through the complexities of manufacturing (Yves shares that making tires is actually not so simple), distribution, and then on to marketing and sales. In all of these facets of its business, Michelin is using AI to optimize its operations.
One of its key ways of doing so is using AI to provide new tools and capabilities to Michelin workers in its 100+ factories around the world. So how many workers are using these tools. Yves reports that tens of thousands are doing so already. Hence, as CDIO Yves has created a system in which essentially everyone in the entire organization is a co-participant in the journey to improve the organization and its products.
And the net result? Yves reports that its AI investments have already yielded cost savings for the company of a very impressive 50 million Euros per year.
But that’s not the end of the road. Not at all. In fact, Yves is targeting savings of 500 million by 2030.
Interestingly, when I asked how many people it will take for his staff to get to 500 million in savings, he said it will only mean a doubling of the current AI workforce of a few hundred. That means 10x impact for 2x people investment, a very satisfying return, to be sure.
Yves also mentioned that Michelin aspires to create fully sustainable tires by 2050, which means replacing all its petrochemical ingredients with plant materials, and assuring that all its heavy components (largely steel) are recycled. AI is thus supporting all facets of the company’s operation, from employee engagement to profitability and sustainability.
This span of benefits exemplifies a point we are now making regularly with everyone we speak to – that AI is proving its value not so much at the lower ends of the value chain, but at the highest levels. It is there, where the most educated people (and often the most highly paid) are thinking the hardest about how to innovate better, and how to operate their organizations more effectively. AI is a tool for very sophisticated work that all professions are embracing. Whether or not it leads to massive dislocation at low-paying jobs is as of now unclear, but it is crystal clear that AI is altering the nature of professional work in a profound way.
And whatever we’re doing today, well, it’s only the beginning. AI tools are getting better, and thus smarter, all the time. As Ethan Mollick observed in his book Co-Intelligence, whatever AI tool you’re using today will be the worst you ever use, because tomorrow it will be better.
Yves and I spoke for over an hour, which means that there is enough content here for three videos. Look for Parts 2 and 3 to come along shortly.
Aston Martin Image by PIRO from Pixabay
Tire Image by Daina Krumins from Pixabay
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