SMEs wary about Industry 4.0, but they shouldn’t be, say industry reps

• Confusion still prevalent amongst SMEs, but they must get on board
• Government doing its part to help SMEs adopt IR 4.0, via various initiatives

THE term Industry 4.0 has been bandied about for a few years now and while some enlightened folk in the industry may tout its benefits, small- and medium-sized enterprises (SMEs) are still generally not sure what it entails, are wary of the term, and hence may be shying away from adoption, according to two industry players.

Speaking at the Industrial Transformation Asia Pacific (ITAP) 4.0 Forum in Kuala Lumpur recently, the president of the Malaysian Industry 4.0 Association Raja Teagarajan noted that there are several factors as to why SMEs in Malaysia are slow in adopting Industry 4.0.

He said these include the fear of the workforce losing their jobs due to automation, the lack of information regarding what Industry 4.0 actually is, the high cost of adoption, a cultural mindset barrier and even the confusion in terminologies.

“We believe the industry is not so much reluctant [to adopt Industry 4.0] as it is ignorant [don’t know how to do so], and so it’s our aim to give them knowledge to do so, depending on their needs,” he said at the sidelines of the forum.

The ITAP 4.0 Forum is a precursor event to an upcoming exhibition of the same name that is to take place in Singapore from Oct 22 to 24, which is organised by SingEx Exhibitions and Deutsche Messe. The Forum guest of honour was Deputy Minister of International Trade and Industry (MITI) Ong Kian Ming.

Raja acknowledged that the fear of jobs being replaced amongst SMEs is real but argued that this need not be so. Certain jobs will be revamped giving rise to new jobs but that does not mean existing workers cannot be retrained to do the new jobs, he explained.

“There is also a lack of information for SMEs to discover more about Industry 4.0 and this adds to the challenge of adoption,” he pointed out. “What we’d like to see as an association, is for MITI to be a one-stop centre for SMEs to discover how they can move into the era of Industry 4.0.”

Concurring with these views is James Boey, executive director for industrial & urban solutions, SingEx Exhibition, who said that these fears experienced by Malaysian SMEs aren’t new or unique.

“In my experience, countries first faced with Industry 4.0 did not easily embrace it initially,” he said. “Countries such as Singapore, as well as other Asean countries faced common challenges and so Malaysia is not alone in this journey,” he said, claiming that even an advanced nation like Germany – who coined the term – had resisted Industry 4.0 initially.

“These problems are unique to decision makers who want to transform but workers may be frightened to,” he added.

To help solve these challenges, Boey said there must be a few key measures undertaken. The first is to ensure that there is the right information disseminated to SMEs.

“For example, when an SME embraces Industry 4.0, it doesn’t need to spend millions to do so as it can approach Industry 4.0 in a ‘bite sized’ manner and upgrade only what is needed to make that first step.

“And it certainly does not need to completely upgrade from scratch but more to augment or retrofit equipment with the relevant components and take a step-by-step approach. This will help allay an SME’s fear of costly investments in Industry 4.0, ” he explained, noting that SMEs may not know this and may shy away as a result.

Boey said the second key measure is to ensure that they are able to experience what Industry 4.0 is all about by showing them what it can do for their business.

“This is the reason why we’re organising ITAP and going on a roadshow in Malaysia to get SMEs interested in our event come September,” he said.

Boey also said the industry – through bodies such as the Malaysia Industry 4.0 Association – has to not only showcase success stories for others to learn from but also failure stories.

“SMEs must read about how others have done it and how some have failed and why they did so, in order to learn,” he argued. “At the end, it’s a journey of discovery.”

As far as being worried about losing jobs is concerned, Boey said it’s never too late to re-educate oneself with new skills in the Industry 4.0 era, something that 64-year-old Chan Ban Kiong of Singapore-based Mencast Marine did when he was retrained to use a 3D-printer instead of moulding propellers by hand.   

Raja added, “There also needs to be a cultural mindset shift in SMEs, as they should not think about how they have done business in the past but how they are going to do business in the future,” he argued. “Put simply, transformation is no longer an option because if SMEs don’t embrace Industry 4.0, they risk being overtaken by the competition and may cease to operate in the future.”

Government’s role

Earlier in his keynote address, MITI deputy minister Ong noted that SMEs may be slow to adopt Industry 4.0 as there is a confusion of what the terms mean in general. Ong said from the government perspective, the term ‘The Fourth Industrial Revolution’ differs from the term ‘Industry 4.0.’

The former describes a larger, overarching trend that encompasses all industries, while the latter is a more specific term that refers to the fourth industrial revolution efforts undertaken particularly in the manufacturing sector.

“We’ve come through a number of industrial revolutions in the past – from steam engines to the computer age. The fourth industrial revolution is about how different devices are all being connected, with more data being transferred at much higher speeds.

“As far as the government is concerned, the fourth industrial revolution affects every single ministry and sector. In the agricultural sector, people are using drones to capture topological information and embedding sensors in the ground to mine for information; in the healthcare sector, there are devices to capture data to improve diagnosis.”

Ong explained that from the government’s policy perspective, the fourth industrial revolution in the agricultural sector will be managed by the Ministry of Agriculture, while any healthcare efforts will be managed by the Ministry of Health. Other similar sectors will be managed by their respective ministries.

“Insofar as MITI is concerned, we are [only] in charge of the manufacturing sector,” he explained. “That’s why when the Industry 4.0 policy was launched by the prime minister last October, it was only focused on the manufacturing sector,” he said, noting that the term ‘Industry 4.0’ used by the government in this limited context refers only to fourth industrial revolution efforts undertaken within in the manufacturing sector.

Ong said to help SMEs move towards Industry 4.0, MITI has rolled out a Readiness Assessment Framework, where three government bodies – Sirim, Mimos and MARI (Malaysia Automotive Robotics and IoT Institute) – will assess how ready SMEs are to undertake these efforts.

“SMEs will have to apply to get assessed. We have a budget to accomodate 500 SMEs but to date, we’ve only assessed about 60 SMEs,” he said. “After the assessment, an SME will be provided a comprehensive report to help them decide what to do next.”

Ong said to further help SMEs, MITI will provide a matching grant of up to RM500,000 to qualified SME applicants on a 70% (MITI) to 30% (SME) basis to help them kickstart their Industry 4.0 efforts.

“We are also going to organise our own Industry 4.0 exhibition later in October, where we can bring in service providers and they can pitch their services to SMEs,” he said. “This is how MITI is doing the business matching – we provide the grant and the platform for SMEs and service providers to meet each other.”

As for the centralised dissemination of information, Ong said he agreed with Raja and Boey that there isn’t a structured way of doing this as yet.

“This is one area where MITI can do better in terms of coordinating and compiling information and putting it on a website so that different SMEs in the manufacturing sector can undertake Industry 4.0 in terms of their own expansion plans and explore possibilities relevant to them.”