The SME Association of Malaysia (SME Malaysia) and BIZSPHERE Brand & Marketing Group – a SME branding and business consulting company jointly conducted an online “SME Industry 4.0 Quick Survey” in the month of September 2019. The survey was distributed mainly through emails to over 10,000 business communities. Galactic Advance Engineering was the strategic partner of the survey. The survey findings were shared in the WIIFM Industry 4.0 Business Forum co-organised by SME Malaysia and the Ministry of International Trade and Industry (MITI) at MITI TOWER in Kuala Lumpur.
Understanding the Concept of Industry 4.0
The study shows that 74 percent of the respondents understand Industry 4.0 as the initiative to leverage on data collected from operation to reinvent processes and workflow to make production & processes smarter, while about 12 percent claim that Industry 4.0 is an effort to automate their production processes.
“SMEs should plan for their digital transformation in order to reap the maximum benefits from Industry 4.0” says Ong Chee Tat, Deputy National President of SME Malaysia.
Implementation of Industry 4.0
The adoption of Industry 4.0 is still very low among SMEs. Only 2.7 percent of SMEs are implementing industry 4.0 initiatives in certain processes of their production while 75 percent of SMEs have not taken any action despite some of them trying to understand more about it.
Yap Keng Teck, Managing Consultant of Bizsphere Brand and Marketing Group were not surprised with the findings. ”Malaysian SMEs have always been in the “wait and see” attitude and lack the drive to find out how can this technological trend help them in gaining competitiveness and grow their business” says Keng Teck.
SMEs – Are they ready?
The Malaysian Government has been playing an active role in driving the industry especially among manufacturers to embark into the Industry 4.0 journey. Industry4wrd – the national level framework to drive this initiative was launched by our Prime Minister, YAB Tun Dr Mahathir Mohamad in October last year and MITI was delegated the task for the transformation. One of the key programmes under the inititive is the Industry4wrd Readiness Assessment.
The programme encourages manufacturers to take up a simple online self-assessment. The Malaysia Productivity Council (MPC), the secretariat for the programme, will then send qualified assessors to conduct onsite assessment and produce a report on their status in Industry 4.0, after which they will make recommendations for improvement. Qualified SMEs do not need to pay as it is fully subsidised by the government.
MITI has been running several roadshows and announcements since early of 2019. Unfortunately, according to the survey, 47 percent of SMEs are still unaware of the programme, with only 3.6 percent in the midst of applying for it.
SME Malaysia wasted no time to increase the awareness of this programme and initiated the “What’s In It For Me – WIIFM Industry 4.0 Business Forum Roadshow, co-organised by MITI, with the help of BIZSPHERE.
“There are 3 forums planned. the first was session was held yesterday at MITI Tower, Kuala Lumpur. The second forum will be held at Batu Pahat on the 8th October and the third will be held at Seberang Perai on the 15th October. The participation fee is RM100 but trade associations and its members can apply to SME Malaysia for discounted or complimentary seats.
The event details and ticket reservation can be found at www.bit.ly/Industry4FWD. Should there be any queries, they can contact BIZSPHERE office at 03 78871006 or email [email protected]” Keng Teck explains.
What is stopping SMEs to go for Industry 4.0?
The survey further drills down to what is stopping SMEs from embracing IR4.0. The three main reasons for SMEs not embarking on it or delaying the effort are:
- Industry 4.0 requires massive investment which SMEs cannot afford – 54 percent.
- Not sure of where to start and who to look for to help – 32 percent and
- Unsure whether we they are ready for Industry 4.0 or not – 29 percent
“Most SMEs fear of huge investment. Yet, many SMEs lack the understanding that Industry 4.0 need not be implemented throughout the whole manufacturing process. Instead, SMEs should focus on where the pain points are”. In addition, government offers many incentives which can lower SMEs financial burden.” adds Ong.
The survey also found the top 3 pain points in SMEs manufacturing operations:
- Lack of reliable operational data for business decisions – 58 percent,
- Shortage and rising cost of labour – 54 percent and
- Unpredictable down time – 38 percent
Strategic decisions are based on reliable data. Lack of data may be the main key reasons why SMEs are unable to grow as fast despite with great expertise and product quality in their respective fields. It leads to inability to strategise on where the capability and capacity building to be focused on.
Ong urges SMEs to look into digital transformation as a strategic move to stay competitive. “We can no longer do business ignoring the importance of digital economy, digital operation and transformation.”