Abstract This paper presents a novel conceptual framework integrating Artificial Intelligence (AI) with Industrial Engineering Management to enhance productivity, efficiency, and sustainability in the manufacturing sector of Pakistan. Traditional industrial systems often rely on manual decision-making and reactive strategies, resulting in inefficiencies and increased operational costs. The proposed framework combines AI tools, Lean Manufacturing practices, and data-driven decision-making processes to create a predictive and optimized industrial system. Independent variables include AI technologies and Lean techniques, while dependent variables focus on productivity, cost reduction, and operational efficiency. Moderating factors such as workforce skills and technological readiness are also incorporated. This framework aims to guide industries, policymakers, and researchers in adopting Industry 4.0 strategies for economic growth and industrial transformation.