MALAYSIA’S INDUSTRY 4.0 JOURNEY – WHAT AND WHY
Participants at the one-day Industry 4.0, Demystify, Funding & Roadmap Conference at the Petaling Jaya Hilton on 30 April 2019 walked away with a more holistic understanding, not only of the technical aspects of Industry 4.0, but also about Malaysia’s National Policy on Industry 4.0 – or
Industry4WRD – aimed specifically at the comprehensive transformation of our manufacturing sector and its related services and support to assess their readiness, government funds and grants available to them, possibilities for private funding, actual experiences of Industry4WRD-related implementation from professional systems integrators, how to chart their Industry4WRD roadmap and so forth.
The conference jointly organised by the Malaysian National Computer Confederation (MNCC) together with the Malaysia Productivity Corporation (MPC) and P2P Talent Development PLT (P2P) was patterned around Industry4WRD’s strategic five enablers – namely Funding, Infrastructure, Regulations, Skills & Talent and Technology (F.I.R.S.T.).
The Prime Minister Tun Dr. Mahathir launched Industry4WRD towards the end of October 2018 and since then Malaysia has been gearing up for Industry 4.0.
“However, things have been rather quiet since then, so it is time for us to hold more practically-oriented Industry 4.0 event where we will hear from industry experts and solution providers about what is required and how businesses can chart their Industry4WRD roadmap to higher productivity, and MNCC is part of of the productivity nexus”, said MNCC President, Professor Dr. Ahmad Zaki Abu Bakar.
“This is the first Industry 4.0 conference I have attended which focuses on the manufacturing sector, whilst earlier ones I had attended focused on big data, analytics, artificial intelligence and so forth”, said Mano Subramaniam, General Manager at Packaging Sales & Service (M) Sdn Bhd and a conference speakers.
But what is Industry 4.0?
Simply put, it is the 4th Industrial Revolution – the next evolutionary stage following the 3rd, 2nd and 1st industrial revolutions.
The term was first introduced as “Industrie 4.0” in 2011, as a project in the high-tech strategy of the German government, which promotes the computerisation of manufacturing.
The term was publicly introduced at the Hannover Fair that same year. Then, in October 2012, the Working Group on Industry 4.0 presented a set of Industry 4.0 implementation recommendations to the German government. Since then, the revolution has spread to other countries, including Malaysia.
The Nine Pillars of Industry 4.0 are Big Data, Augmented Reality, Simulation, Internet of Things (IoT), Cloud Computing, Cyber Security, Systems Integration, Additive Manufacturing, and Autonomous Systems to help transform the operational potential of manufacturing industries.
Why Industry 4.0?
Malaysia looks towards Industry 4.0 to boost productivity growth, with priority initially given to the manufacturing sector, with future plans to extend it to other sectors.
“In 2018, the issue of Malaysia’s low productivity growth was of concern to us, as the level of productivity growth was stagnant in 2017”, said Hj. Nik Rosdi Nik Yusoff, Deputy-Director for Productivity & Competitiveness Development, Malaysian Productivity Corporation (MPC).
According to the MPC’s 25th Productivity Report 2018/2018 of April 2018, Malaysia’s productivity growth was more of less flat, having increased by a mere 0.1 percentage points from 3.7% in 2014 to 3.8% in 2017, after having dipped to 3.5% in 2015 and 2016.
“So we worked with the Ministry of Economic Affairs on an initiative to boost productivity, especially in the manufacturing sector and engaged a consulting group to conduct as study of this area of concern”, said Hj. Nik Rosdi.
Former Prime Minister Datuk Seri Najib Tun Razak launched the Malaysian Productivity Blueprint on 8th May 2017. It sets a minimum of 3.7% labour productivity growth in Malaysia by 2020, in accordance with the Eleventh Malaysia Plan (2016 – 2020).
The Blueprint acknowledged five challenges to productivity affecting all sectors – namely:-
- Cohesive efforts to develop a strong base of skilled workers to gradually reduce reliance on low-skilled workers.
- Accelerate and support investments in technology and digitalisation, and industry adoption, with greater collaboration between industry and academia needed for greater innovation and industry-relevant research & development.
- Incentives and other financial support which are directly linked to productivity to encourage enterprises to improve efficiency and performance.
- To reform and streamline the regulatory framework and requirements to improve, ease and reduce costs of doing business for enterprises.
- Efforts to raise awareness of the importance and benefits of productivity amongst enterprises and also provide them with guidelines on how to measure and track their productivity.
To address those challenges, are five strategic thrusts – namely:-
- Increase the number of high-skilled workers in Malaysia’s workforce and at the same time tighten up entry of low-skilled workers into the workforce in order to meet the demands of the future economy.
- Strengthen the readiness of enterprises to exploit technology and the advantages of digital (such as Industry 4.0).
- Reduce reliance on non-critical subsidies and link financial assistance and regulatory liberalisation efforts to productivity outcomes and reposition industry towards an emphasis on higher value-add segments of the value chain.
- Address regulatory constraints and develop a robust accountability system to ensure effective implementation of regulatory reviews.
- Embed a productivity culture nationwide and drive productivity performance through an effective government mechanism.
“Strategic Thrust No. 2 of the Blueprint is focused on manufacturers, whilst efforts to promote Industry 4.0 are focused not only on manufacturing activities, but also on manufacturing-related services such as design, logistics, insurance and others, and we want small-to-medium enterprises to be competitive by 2030”, said Hj. Nik Rosdi.
To help enterprises adopt Industry 4.0 and increase their productivity, the Ministry of International Trade and Industry (MITI) provides qualified enterprises with the Industry4WRD Readiness Assessment Grant and the Industry4WRD Implementation Grant.
The Readiness Assessment determines an enterprise’s readiness to adopt Industry 4.0 technologies, identifies the gaps and areas for improvement for Industry 4.0 adoption as well as opportunities for productivity improvement and growth, and develops feasible strategies and plans to perform outcome-based intervention projects for the enterprise.
Interested companies can register online through the MPC’s website here
Funding of up to RM500,000 is available for Industry4WRD Readiness Assessment of qualified small-to-medium enterprises, whilst tax deduction for Industry4WRD Readiness Assessment costs are available to small-to-medium enterprises, limited liability companies and multinationals which do not receive funding.
The selection criteria includes small-to-medium manufacturers with between 5 and 200 employees and an annual sales turnover between RM300,000 and RM50 million or to small-to-medium providers of manufacturing-related services with between 5 and 75 employees with an annual sales turnover between RM300,000 and RM20 million.
Priority is given to companies in the Electrical & Electronics, Chemical, Mechanical & Engineering, Aerospace, Medical Devices, Automotive, and labour-intensive industries such as food & beverage and furniture.
By 2025, The Industry4WRD initiative aims to increase productivity per person by 30% up from RM106,747; Raise the contribution of the manufacturing sector to the economy from RM254 billion to RM392 billion; Improve Malaysia’s ranking on Global Innovation Index from 35 into the top-30; and increase the proportion of high-skilled workers in the manufacturing sector from 18% to 35%. Its focus is 50% focus on technology, 30% on processes and 20% on people.
A 4th generation of industrial revolution
“The 1st Industrial Revolution which began in Europe in the late 18th and early 19th centuries saw machines replace human power and handicraft workshops replaced by factories”, said Ricky Sio, Industry 4.0 / Digital Transformation Advisor at Sanwei Consultancy.
The 2nd Industrial Revolution (Industry 2.0) saw the introduction of electric machines into factories and the introduction of the production line which further replaced human power, further reduce costs and enabled lower priced goods in the market.
The 3rd Industrial Revolution (Industry 3.0) saw the introduction of intelligent electronic and computerised control of production and control machines using PLCs (programmable logic controllers), microcontrollers, microprocessors, computers and so forth, which even further reduced the need for human labour, reduced costs and enabled production volume to surpass consumption.
“Industry 4.0 involves the connectivity of cyber-physical systems (CPS) where existing and new production machines are fitted with sensors which collect lots of relevant data, use QR codes or RFID tags to identify different products. For instance, and RFID tag can be use to uniquely identify a bottle of Coke, including all related data, including its contents, its customer and so forth and communicate it to a back-end server or the cloud, which can control or advise what needs to be done next”, said Ricky Sio.
“A CPS supports the Nine Pillars of Industry 4.0, which I see 4.0 transforming production processes from very rigid and manual to automated and agile”, said Ricky Sio.
It enables products to be mass-customised (according to customer requirements), enables faster time to market, enables the decentralisation of factories, the system can collect data from the intelligent production machines which is then analysed to let management know what is happening, it can interact directly with customers, can dynamically make decisions, is more cost-effective, is disruptive of established practices and it enables the introduction of new services.
“Industry 4.0 enables production cost reduction, shortens product development lifecycles, enables better product monitoring, enables better production schedule planning and helps businesses in crease their profit margins” said Mano Subramiam.
Artificial intelligence (AI) analyses data from sensors and equipment to identify developing problems to enable predictive maintenance to be performed before it breaks down, thus reducing downtime and optimising asset utilisation.
Sensors in Industry 4.0 systems can alert technicians about problems wherever they are and they can use an iPad or an Android phone to analyse and possibly rectify the problem remotely.
Know what’s happening
“We need to be aware of what’s happening around us” said Raja Segaran, Head of Strategy & Research, Corporate Strategy, Malaysian Digital Economy Corporation (MDEC).
As an example, he cited farmers in India who were able to increase their yield by 30% by monitoring clouds, changes in climate and so forth more accurately from text messages (SMS) received on their feature phone (not smartphone), whilst in healthcare, AI (artificial intelligence) can identify 10,000 attributes of a heart attack, whilst an experienced cardiologist can identify about 10.
Right now, information and communications technology contributes 8.3% to Malaysia’s economy, whilst manufacturing contributes 32%. However, digital technology affects other economic sectors but is still very small, so government agencies need to play a role to sell the idea and incentivise businesses to embrace digital technology.
“We still have a long way to go and need a structured approach to help businesses answer questions as to whether an expenditure is an investment, whether they have the right people and whether they want to embrace a technology which they regard as too complex”, Raja Segaran said.
To help businesses, MDEC works with partners to help businesses with their structured approach. For instance MDEC has worked with the Federation of Malaysian Manufacturers and needs suppliers to help clients make use of systems to achieve positive outcomes.
They need to start with a strategy and define their objectives and how to get there. It includes identification of their objectives, conduct a pilot project,identify the pain points and so forth, as some problems are not technology but people and processes related.
“We worked with Top Glove (the world’s largest medical gloves manufacturer) on how to reduce their rejection rate on a production line and they managed to totally eliminate unplanned downtime and reduced quality-assurance rejection on this line by 57% through the use of technology”, said Raja Segaran.
However, businesses still wonder whether it is worth their while to spend RM1 million to improve their productivity,which is why it is necessary to incentivise them.
Also talent is essential to the the success of Industry 4.0 and MDEC is working with MITI on the need to develop talent in areas such as data networking, software engineering, big data, data analytics, web design and so forth.
In Part 2, we will look at some early practical examples and solutions in Malaysia’s Industry 4.0 journey.
Note: Charles F. Moreira is also a MNCC Council Member