Are Malaysian SMEs ready for Industry 4.0?

• While SMEs are aware, they are not convinced that Industry 4.0 is crucial for their business
• Barriers SMEs face are lack of funding, talent and knowledge concerning implementation

IN THE race towards implementing Industry 4.0 in manufacturing and services, on the surface it may seem that Malaysia is doing well compared to neighbouring countries.

However, this could not be further from the truth, as Industry 4.0 consultant and training provider Knowledgecom Corporation Sdn Bhd chief executive officer S T Rubaneswaran (pic) points out that local small-and-medium enterprises (SMEs) are far from ready to adopt Industry 4.0.

When asked how aware top management of local SMEs are towards Industry 4.0, he says that when they first started conducting training about two years ago, the SMEs had no clue.

“We went to each state and pitched to the state centres and universities. When we pitched to the industries, no one knew what IR4.0 was all about. So we took quite a bit of time to convince them,” he recalls.

The numbers spoke for themselves when they started training. SMEs simply weren’t ready to send their staff for training yet. “Once we got the sites up and started the training, the people who sent staff for training were mostly multinational corporations. They were already aware of IR4.0 and why it is important,” he explains.

That said, Industry 4.0 awareness started picking up steam during the past six to eight months, when the government announced Budget 2018 and the Prime Minister was promoting Industry 4.0, he says.

“So only after that, many local companies in Malaysia started becoming aware about it and we started getting SMEs coming to us with interest and queries about IR4.0, especially during our roadshows.”

He discovered after speaking to SMEs, that while they are aware of what Industry 4.0 is all about, they are not yet sure how crucial it is going to be for their businesses.

Rubaneswaran shares that Knowledgecom did a survey of about 300 companies across the country. “Based on the survey, we came up with data showing how important IR4.0 is and how soon it will be implemented. Those surveyed included companies that are already sending their staff for training and we also surveyed companies that only just know about IR4.0,” he explains.

The results of the survey showed that the main barriers SMEs face in adopting Industry 4.0 are lack of funding, talent and knowledge concerning implementation.

“If you look at it holistically, overall, most of these companies’ back end work can be automated. In a restaurant, take for example grinding flour. They can save some headcount through automation, but they keep complaining there aren’t enough foreign workers. That’s why local SMEs suffer. It’s a combination of not knowing how to implement IR4.0 and lack of automation, When they suffer and don’t change, their competitors from other countries will take advantage of them,” he emphasises.

He believes that the biggest threat to countries in this region is China. “This is because they produce the highest number of international technology patents in the world, which is a combination of IR4.0, cloud, big data, IoT and such. The SMEs over there are resilient and know what to do to be able to compete. Those SMEs are employing technology in their processes,” he explains.

“In Malaysian companies, if you ask an SME to sell a product to another country, the first thing he does is take a photo of the product and post it on Facebook and send it to everyone. But you’re not putting it in the marketplace or using technology in the backend. So when IR4.0 happens, those are the kinds of guys that will be wiped out because the marketplace will be open with the Digital Free Trade Zone,” he cautions.

How can local SMEs help themselves? “Start talking to Miti, the government. They need to want to change themselves, they need to know that in four to five years’ time it will be an issue for them. If they realise that they have a problem and find a way to solve it using technology, then they will be on the right track.

“Most are used to the traditional way of doing business, so they hire more workers. But they fail to understand that human labour cannot compete with automation of the workforce. You’re bound to fail. In the next ten to fifteen years you will not be able to compete,” he says.

On what local SMEs can learn from other countries? “SMEs can look at what other SMEs are doing and take what they learn best from them. Such as packaging, raw materials preparation---you’ve got to see what works best for you. Once you get that thing right, it will decrease your costs and time involved, and increase revenue and profits,” he says.

“Do it part by part. You’ve got to apply lifelong learning in your business. If you were in the 1980s to 2010, technology was slow-paced. Now, you’re at risk if you don’t start on IR4.0.”

If SMEs don’t adopt IR4.0 within the next five to ten years, what kind of negative impact or damage does he foresee? “We’re looking at high unemployment, companies shutting down and government revenue decreasing, a series of issues could happen. These will make things worse for the country as a whole,” he concludes.

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