This article first appeared in Digital Edge, The Edge Malaysia Weekly on October 9, 2023 - October 15, 2023
The manufacturing sector in Malaysia is currently in a transitional phase between Industry 2.0 and 3.0 of the Industrial Revolution. The country’s technology infrastructure is already advanced and mature, but digital adoption by small and medium enterprises is still low.
Eighty per cent of businesses in Malaysia are still resistant to smart manufacturing. Businesses are unaware of how digitalisation can streamline their operations, and this lack of knowledge can leave business leaders feeling intimidated by the financial or technical barriers that come with smart manufacturing.
Nevertheless, according to the Deloitte 2023 Manufacturing Industry Outlook, manufacturers will continue to progress towards smart factory transformations as these drive future competitiveness. Smart manufacturing brings many benefits: it can help businesses improve efficiency, increase capacity, reduce inventory, view processes and address production bottlenecks in real time — from sourcing, procurement, processing and manufacturing to distribution, warehousing, customer service and sales.
This is why, on Sept 1, the Malaysian government launched the New Industrial Master Plan (NIMP) 2030 with the goal of creating 3,000 smart factories by 2030. It is a new approach to enhance Industry4WRD — Malaysia’s first national policy on Industrial Revolution 4.0 — that was introduced in 2018 to ensure that the manufacturing sector succeeds in digitalising and adopting more technologies and automation that will keep it competitive in the international market. This bold move by the government needs to be reciprocated with the support of the manufacturing sector that stands to gain through this initiative and its success.
Implementing smart factory technologies is a daunting step. It can be a costly process for manufacturers as it requires investment in infrastructure, equipment, software and people.
The workforce will need to adapt to new systems, so companies will have to organise training programmes and workshops to ensure they are equipped with the digital skill sets they need.
Businesses may also need to look outside their existing talent pool and invest in hiring those who already have experience working with the latest technologies. As a result, smaller businesses with fewer resources may be left behind in the race to adopt and implement.
As smart factories become more prevalent, another obstacle will be standardising operational processes and data across different business systems and platforms — both in their own company and across any partners they may be working with.
Without a seamless integration of standards, protocols and formatting, it will prove difficult for companies to truly see the benefits of any new technologies they are implementing.
The rise in robotics and artificial intelligence (AI) provides solutions to repetitive or dangerous manual tasks, allowing them to be automated and undertaken by machines, resulting in fewer workers having to be physically required on the shop floor.
Employees who were previously carrying out lower-skilled manual tasks have the opportunity to be upskilled to meet the growing demand for knowledge workers who can operate and troubleshoot more sophisticated software and machinery.
Relevant training programmes will be needed to support this. Companies will need to expand their hiring efforts to bring onboard talent who already have experience in advanced smart factory technologies, enabling them to hit the ground running from day one so that they are able to facilitate the effectiveness of these new technologies.
The integration of the Internet of Things (IoT), AI and automation is transforming the manufacturing industry by improving productivity, efficiency and innovation. AI is at the core of the smart factory of the future. The data it analyses from factory equipment and IoT-connected sensors will enable manufacturers to intelligently predict machinery maintenance requirements, reducing downtime on the shop floor. This data, in tandem with AI, also enables more efficient quality control and compliance by automatically identifying defects and anomalies before a product reaches the end of the manufacturing line.
AI-powered robotics can work alongside humans in both the factory and the warehouse to perform repetitive manual and labour-intensive tasks with precision and speed, increasing efficiency and reducing errors.
With robots automating operations such as stock picking and inventory management, human workers can be directed to other areas of the company — such as customer engagement or employee-led learning and development — to add value.
By automating production processes and connecting digital solutions, manufacturers can ensure that business units are no longer operating in silos, thanks to insights gathered from the supply chain and inventory.
Standardisation and consistency can lead to competitive advantages, as AI-enabled digital solutions are able to generate more accurate business predictions. At the core of it all is connectivity, with IoT set to play a fundamental role in how it facilitates networks of devices, sensors and systems across the entire smart factory.
Workers can use the collected data to monitor each area of the production line in real time, improve decision-making, enhance supply chain management and optimise resource allocation — meaning stronger resilience and higher profit margins.
Smart factory technologies will transform the visibility, efficiency and resilience of supply chains globally. These new technologies enable the real-time monitoring of inventory and production data, meaning that stakeholders, manufacturers and distributors across the entire supply chain can all be kept up to date with the latest information.
Another benefit of continuous monitoring and live data is quality control, as throughout the entire manufacturing process, products can be analysed automatically for faults or defects.
Production managers can be immediately notified from any remote location, so any issues can be rectified at once, reducing costs for remanufacturing and redesign — improving the end-customer experience.
Data that’s collected by smart factory technologies not only enhances transparency across the supply chain but also allows manufacturing businesses to better forecast demand and supply chain disruptions. This enables manufacturers to be more agile, so they can quickly adjust their production and delivery schedules accordingly, reducing delays and improving overall supply chain efficiency.
Partnerships between different stakeholder groups across industries are pivotal to smart factory deployments. It isn’t a case of “one solution fits all”, and only effective collaborations can support the development of industry-specific smart factory solutions.
While manufacturers and distributors can provide expertise and knowledge of their respective sectors, technology providers will need to share learnings on how to best bring solutions to market that are tailored for specific industries.
Any concerns related to security, talent, privacy and compliance can be shared with policymakers and regulatory groups creating standards and codes of conduct for widespread implementation across different industries. Throughout the process, any challenges that arise can be discussed to drive research and development into future smart factory technologies, ensuring continuous innovation.
Prior to commencing their digitalisation journey, manufacturers must first take stock of their operations to ensure their readiness.
Under NIMP 2030, the readiness assessment conducted by the Malaysia Productivity Corporation, a requirement to access the Malaysian Industrial Development Authority’s Intervention Fund approvals under the Industry4WRD programme, will be enhanced. It will ascertain the necessary components required by manufacturers applying, not just to qualify for financial assistance but also to identify areas within their operations that need attention.
Tactically, investing in a comprehensive digital transformation strategy that’s tailored to a specific industry is also necessary.
Many companies have already started the process to remove legacy systems and transition their enterprise resource planning (ERP) systems to the cloud, but some still choose to maintain key on-premises infrastructure as part of a hybrid approach.
To fully unlock the full benefits and many applications of cloud technologies over the coming decade, manufacturers should prioritise putting the cloud at the heart of their transformation road map and ensure that they have a comprehensive plan in place for migration.
The key to success is working with a technology partner who is able to provide industry-specific expertise and post-sales support. In fact, Epicor’s Industry Insights Report 2023 found that 97% of manufacturers surveyed put a high value on partnering with an ERP provider throughout the entire implementation process, demonstrating the importance of bringing a trusted partner onboard from the very beginning.
It’s crucial to choose a technology partner with the right combination of technical experience and industry knowledge to help implement tailored manufacturing solutions that suit unique business requirements. A trusted partner will work with you to make sure it is the right solution — not just today, but for the future.
Vincent Tang is regional vice-president of Asia at Epicor Software Corp, a global provider of enterprise software solutions designed to help businesses automate and streamline their operations
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