Industry 4.0 is here. Where are the Manufacturers?

10 April 2019

The Booming of Digital Transformation

No industry is spared by the disruptions wrought by the digital era. Businesses that do not keep up with the current digital trends and do not take pre-emptive measures to apply digitalisation as part of their business’s competitive edge will not survive the market.

According to a survey by TM ONE, 75% of 40 CXO key manufacturing players in the market believed that digitalisation will drive organisations within the next 3 years. Half of the respondents (50%) from the IT professional field said that their organisations are in the midst of implementing cloud computing, system integration, addictive manufacturing and internet of things (IoT) as part of their readiness for Industrial Revolution 4.0, or IR4.0.

Certainly, Malaysia is gaining a huge awareness here, as exemplified by its efforts in adopting digital transformation in various industries, resulting in rapid transformations in the manufacturing and/or automotive sectors.

Many Malaysian-based businesses are predicted to position themselves in adopting IR4.0 in the next few years. Manufacturing accounts for over 80% of all exports and 23% of GDP, according to the Malaysia External Trade Development Corporation (MATRADE) and Department of Statistics Malaysia (DOSM). The Electrical and Electronics (E&E) industry, with its products and services related directly to IR4.0, was expected to lead Malaysian exports in 2018.

What do you need to know about IR4.0

IR4.0, also known as “smart factory”, is the cutting-edge development in the digitisation and automation of manufacturing processes. It incorporates the most advanced and innovative technologies such as advanced sensors, big data analytics, intelligent robotics, 3D-Printing, machine learning and cloud computing, not forgetting cybersecurity and Internet of Things (IoT).

This cyber-ecosystem enables businesses to monitor the physical processes of the factory, which in turn enables them to make intelligent decisions. Physical systems make up part of the sensory mechanism of the Internet of Things - communicating, analysing, cooperating and interacting with each other, and with humans in real time via wireless web-platforms.

IR4.0 covers the entire end-to-end value chain – from suppliers, procurement, production, design, logistics to sales in order to achieve higher productivity and output flexibility.

In a nutshell, businesses can reduce operational cost as IR4.0 emphasises on streamlining overall business operations by minimising wastage or storage, enhancing supervisory processes and maintenance of machinery, at the same time instilling streamlined security and safety efficiencies.

Even though Malaysia is slow in embracing digital transformation as compared to other APAC countries such as Vietnam, Thailand or Singapore, the digitalisation and automation journey will soon push businesses to the forefront of our industrialised world, and set to fast-track business transformation in today’s digital economy - allowing us to work smarter, optimising work streams and enabling growth.

In the next few years, the manufacturing sector in Malaysia will continue to embrace and adopt new technologies in order to help increase visibility in both of their raw production lines and to streamline operational processes.

“IR4.0 covers the entire end-to-end value chain - from suppliers, procurement, production, design, logistics to sales in order to achieve higher productivity and output flexibility.”

Overcoming Barriers to adopt IR4.0

In general, Malaysia is still struggling to adopt IR4.0, and many businesses are stuck at Industry 3.0, in terms of manufacturing technology. The common challenges faced by many manufacturing businesses in implementing IR4.0 are:

  1. Uncertainty and hesitation to modernise infrastructure and their legacy system
  2. Lack of capabilities in converting huge amounts of data collected into useful business insights and using these insights to improve operational efficiencies.
  3. Lack of data security and skillsets needed in digitising their processes.

Because of these challenges, many manufacturers still rely on low cost labour i.e. foreign workers and are hesitant to invest in innovative automation technologies.

Manufacturers need to move with the market, but movement will only happen when it is justified by a viable business case. The Malaysian government, industry leaders, private sectors and the local academia need to work together to prove, with practical and pragmatic business cases, that digital transformation is fundamental for an organisation to enhance customer service and experience.

The Ministry of Commerce and Industry (MITI) is already in the process of formulating a national policy or framework on IR4.0. MITI and its agencies, in collaboration with other relevant Ministries and Agencies, are undertaking various outreach programs to increase public, industry, academia and training institute’s awareness on IR4.0. Targeted incentives and funding are provided to promote the adoption of IR4.0 under the Technical Working Groups (TWG) for Incentives and Funding.

The private sector industry is also being urged to invest in their own digitalisation efforts. Many are already putting in effort in implementing IR4.0, however, more concerted efforts from industry leaders need to be seen. There are organisations from the Electrical & Electronics (E&E), aerospace and the automotive sectors who are more advanced in terms of IR4.0 adoption. These success stories by industry captains can then be set as a benchmark for others to emulate moving forward.

Realising IR4.0

Pacing automation and robotics into the seams of a manufacturing foundation is crucial in the elimination of human errors, and enables businesses to refocus their effort in areas which drives revenue for the company.

It drives and encourages greater enhancements in manufacturing processes and sets local market benchmarks in attaining quality production output, efficient practice and better profit-gaining opportunities for businesses.

With AI riding alongside IR4.0, smart factories will mushroom in high industrial areas fully equipped with smart solutions. It consists of technology enablers such as robotics arm, machine learning, augmented reality, autonomous vehicles and 3D printing that will enable lean, accurate, and real time production, creating business performance efficiencies throughout the manufacturing process.

With an efficient supply chain in place, it will allow businesses to adjust itself to constant shifts in market demand and mitigate risks of unforeseen incidents that will directly impact production and the business.

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