Tuesday 25 Feb 2025
Industry 4.0: Procurement partner for businesses
08 May 2023, 12:00 am
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This article first appeared in Digital Edge, The Edge Malaysia Weekly on May 8, 2023 - May 14, 2023

The memorandum of understanding (MoU), signed in January, between Malaysia and Singapore covering the digital economy, green economy and cybersecurity is an impetus for more Malaysian companies, especially small and medium enterprises (SMEs), to gain greater insight into the Fourth Industrial Revolution (IR4.0) technologies and how these can help their businesses, says Sean Er Lim, general manager of RS Malaysia.

RS Malaysia, which is part of the RS Group, a global omnichannel solutions partner for industrial customers and suppliers who are involved in designing, building or maintaining industrial equipment and facilities, is already using the insight gained by its sister company in Singapore to assist companies that are trying to jump on the IR4.0 bandwagon.

“Many of our customers in Malaysia are reluctant to talk about digitalisation and some can’t see how IR4.0 technologies will impact their businesses. By using the examples of companies in Singapore that RS Singapore has helped and the data available, Malaysian companies can see the benefit, which then allows them to change their mindset.

“There are many opportunities for SMEs to undertake IR4.0 transformation, which is why the MoU with Singapore is critical. The adoption of IR4.0 technologies such as artificial intelligence, cloud computing and the Internet of Things (IoT), among others, has the potential to significantly improve productivity and efficiency across a range of industries, from manufacturing to services. This will drive economic growth and enhance the country’s competitive edge through cost reduction and improvement in the quality of products and services,” she says.

Lim says Malaysia has made great strides in areas such as research and development funding for start-ups and SMEs as well as cooperation with international organisations to achieve digital transformation goals. Government initiatives such as Industry4WRD: National Policy on Industry 4.0, which was launched in 2018 to drive the digital transformation of the manufacturing and related services sectors in the country, are a boost for companies, she adds.

However, the level of awareness, especially among SMEs, is still lacking. “They may be aware of the importance of IR4.0 technologies but do not really know how these technologies can benefit their organisations.”

One of the pain points faced by the industry is that despite the resources invested, many businesses, especially SMEs, are not seeing results. This is where she feels RS, through its suite of procurement tools, has a role to play. A large part of process costs can be attributed to inefficient inventory management, particularly when it comes to low-value, fast-moving industrial consumables. Overstocking, poor stock monitoring and availability issues lead to lost productivity and downtime.

As one of the largest distributors of industrial and electronic products, RS has positioned itself to help businesses streamline their processes and achieve cost efficiencies. RS offers customers in Malaysia access to some 600,000 industrial and electronic products from 2,500 leading suppliers through its dedicated e-commerce site.

“By working closely with our customers, we learn of their pain points and growth strategies, and with the information we gain, we work together with our customers to help drive their digitalisation efforts,” says Lim.

Over the last three decades, RS has served some 40,000 customers in Malaysia, from multinational corporations to SMEs, including hardware shops, says Lim. The purchasing manager platform is a cost-­effective solution for high-volume, low-value, ad-hoc purchasing that streamlines the process of sourcing right through delivery and payment.

“As everything is automated, customers are assured of getting the right parts within a shorter period. Traditionally, SMEs will source electronic or mechanical tools and equipment from hardware shops, which requires them to physically go to these shops to look for the items and tools and purchase them. What happens is that sometimes, the item purchased is not the right one, and this process is also time-consuming and cumbersome because you’ll need to go from one supplier to another to source what you need. So, these are hidden costs that can impact production activity.

“With our easy-to-use procurement tool, all the engineer or person in charge needs to do is go to the website and search for the items that they want based on the specifications, price and lead time required,” says Lim, adding that the procurement tool can also be customised to link the next step of the purchase to the approving authority within the organisation. Once that is done, the item will then be dispatched from any one of RS’ warehouses around the world. “So, within a few clicks, the purchase is completed, which increases the organisation’s efficiency and allows it to enjoy cost savings.”

Currently, deliveries typically take about two to four working days if dispatched from the warehouse in Singapore and four to six working days from the UK. With the launch of a new warehouse in Subang in the second half of this year, the turnaround time for deliveries will be shortened to two working days. The warehouse in Malaysia is expected to stock 5,000 products to begin with, increasing to 50,000 within a year, says Lim.

By capitalising on IR4.0 technologies, such as big data analytics, RS also offers a tool for customers to analyse their purchasing patterns. “With this, we can assist customers in standardising the purchase and avoid keeping a lot of inventory,” says Lim. Using vendor-managed inventory (VMI), such as RS ScanStock, customers can also reduce inventory holding costs.

The feedback received from its customers to date has been positive. Customers are not only reducing time spent sourcing for products, but through RS ScanStock, for example, the responsibility for controlling and replenishing agreed-upon products falls on RS. This frees up the customer to focus on other areas of business, eliminates delays in the ordering process and prevents excess inventory from building up.

Lim believes that as businesses pivot towards IoT solutions and automating business processes, the tools offered by RS will gain traction. “Businesses are looking at how they can improve their activities so that they can compete with others,” she says, pointing out that predictive and preventive maintenance is gaining ground. “This means that we’ll see more changes in the way maintenance is carried out; rather than wait for breakdowns to happen, businesses will identify the root cause and issues that may impact their systems and processes. As consultants, we are in the right position to offer advice to the procurement team,” says Lim.

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