Physical AI Powering the New Age of Industrial Operations 2025

Foreword Amid mounting global pressures – from economic volatility and geopolitical disruption to growing supply-chain complexity, and labour and talent shortages – industrial operations are entering a transformative new phase. While these challenges are not new, heightened uncertainty has significantly intensified their impact, forcing a fundamental rethink of how work is organized, executed and scaled. At this inflection point, a new era of industrial automation is emerging – powered by physical AI. These intelligent robotic systems combine perception, reasoning and action, enabling a level of autonomy and adaptability that marks a critical juncture in industrial automation. By bridging the digital and physical realms, physical AI promises to reimagine how industrial systems function – from factory floors to supply chains. As physical AI becomes increasingly viable and strategically essential, industry leaders are seeking a deeper understanding of how to make use of these innovations for sustainable, long-term competitiveness. At such a pivotal moment, this white paper – developed through the World Economic Forum’s Next Frontier of Operations initiative in collaboration with Boston Consulting Group – builds on a tradition of strategic foresight and multistakeholder engagement to chart a bold path forward. The insights presented here draw on the collective experience of global manufacturers, robotics innovators and leading academic experts. Grounded in real-world use cases and, more importantly, the transformation journeys they represent, the paper explores how physical AI is reshaping operations, enabling new forms of human–machine collaboration and unlocking productivity at scale. But this transformation is not solely about technology. It also requires the industrial workforce to be equipped with new skills to collaborate with intelligent systems and take on emerging roles. We invite all stakeholders – including manufacturers, policy-makers, researchers and technologists – to engage with this agenda. Together, through bold and coordinated action, we can shape a future in which intelligent automation drives inclusive, resilient and sustainable industrial growth.Kiva Allgood Managing Director, World Economic ForumDaniel Kuepper Managing Director and Senior Partner, Boston Consulting Group (BCG) Physical AI: Powering the New Age of Industrial Operations September 2025 Physical AI: Powering the New Age of Industrial Operations 3