By Karamjit Singh October 8, 2020
Digital News Asia
- The path to I4.0 for SMEs is to take baby steps with simple, affordable solutions
- Continuous technology development a core activity in becoming top class company
Achieving Industry 4.0 status for local manufacturers is the big Malaysian tech dream but with many small medium enterprises (SMEs) still sitting between Industry 2.0 and 3.0, Malaysian Technology Development Corporation (MTDC) has its work cut out for them. Yet undeterred, Norhalim Yunus, chief executive officer of MTDC, embraces the task ahead of him. “This is something we have to do. We cannot keep making statements all the time that our SMEs lack technology.”
At the same time, Norhalim also makes clear that the solution is not about just giving SMEs technology and hoping some magic will happen that will make the companies more efficient, productive and innovative. “When they are able to receive the tech, operate it, and then of course, we want to see companies innovate on their own.”
There are three stages for any meaningful technology transfer and development to happen, Norhalim shares. “First thing is that the SMEs especially must be assisted to develop the requisite skills to receive the technology.”
This is to ensure they are able to competently use the incoming technology. But beyond that, the second stage involves optimal operation of the technology. Only when these two factors are in place, can we then expect the SMEs to move on and eventually innovate themselves – the third stage.
When Norhalim speaks of innovation for SMEs, he refers to their willingness to strive further. “Because to be an I4.0 company, it is not only about the machines. It’s about people, processes and also business model.”
Any technology adopted also need not be new, sophisticated and costly, Norhalim emphasises. “For instance it could be about the existing machinery being upgraded.” This observation is particularly pertinent as Norhalim shares a common view held among SME associations and bodies in Malaysia. “Most of our SMEs are at Industry 2.5 stage and you cannot simply jump to Industry 4.0 based on acquiring any cutting technology or even within one to two years of acquiring that technology.” A combination of factors are at play which include people, process and business model.
With this in mind, MTDC along with MEDAC (Malaysian Entrepreneur Development & Cooperatives Ministry) decided to pick 100 companies yearly, at varying tech levels and “just explore what we can do for them.” This involved looking at the pool of entrepreneurs MTDC already works with and picking “the simpler solutions for them to adopt.” Forget about talking on VR or Digital Twins. The micro to small SMEs are really not interested, Norhalim states.
Simple solutions to meet SME needs
The objective is to assist SMEs, some of which are behind the curve to move up the value chain to becoming Industry 4.0 companies. “We invite SMEs of different stages of technology readiness and explore what we can do. Last year, we had 200 companies apply and we took in 100 companies – some of which know nothing about innovation.”
As part of the programme, MTDC gathered some simple solutions from its network of entrepreneurs. Here again Norhalim reminds that it is not always the most advanced solutions that fits SMEs best. “The key question to ask is, ‘what is something manageable for them’? For example, we look at data in the form of sensors. We encourage them to learn first. Perhaps install some sensors in their factories, collect data and see what we can do with the data.”
These small wins act to encourage the entrepreneurs that there is value in adopting technology and that it need not be complex and expensive. It also starts the entrepreneur’s journey to understanding technology, noting that entrepreneurs may not necessarily have the knowledge or appreciation of technology.
The enthusiastic response from companies, especially since it does not incur large cost, is encouraging. When it comes to SMEs, money is point to consider and the lack of internal expertise to run sophisticated systems. “The solution has to be right for them – the right technology level, the right training that they can afford and it can be shown to have returns and add value.”
Norhalim emphasises the need for such affordable solutions to come from local technology companies. “There have been too many cases of people buying technology, especially hardware, from overseas and it’s not maintained well because the product is sold through a dealer who is long gone after a few years.” Yet these are quality machines that the owners want to extend the lifespan or to “sweat their assets”.
“We have been approached by SME owners to help them,” says Norhalim.
In this light, MTDC aims to work with local tech players who can automate and upgrade these machines. The goal is to build a critical mass of companies that can assist SMEs with simple tech solutions to meet their needs. “To buy new machines could cost up to RM300,000 but to retrofit an existing machine will cost below RM100,000 for sure,” he says.
But Norhalim has a bigger goal as well. “The idea is that these tech companies start local and then we help them go regional as SMEs is other countries, especially Indonesia, will be facing the same issues as their Malaysian counterparts.
Role models within Malaysia’s tech ecosystem
While most SMEs have a long path to tread to Industry 4.0, there some Malaysian tech companies worthy of recognition. Norhalim highlights three such companies: Greatech Technology Bhd, TT Vision Holdings Bhd and Heng Hiap Industries Bhd. “I think if you look at these companies, one thing that is prevalent is their continuous technology development as one of the core activities within the company.”
Greatech is a world leading automation solutions provider supplying to multinational corporations (MNCs) worldwide with a 200-strong Malaysian workforce. Meanwhile, TT Vision it specialises in the development of automated vision solutions. “While we [Malaysians] are obsessed with world-class MNCs. We must remember that those who work with them as part of their supply chain are also world-class,” Norhalim points out.
He also stresses that MTDC works with small to large companies to help meet and fill any gaps they may have in terms of technology, talent, strategy and regional expansion. And with its track record of working with entrepreneurs for over two decades, it now has an ecosystem of strong home grown companies it can tap for technology and knowhow in expanding regionally, to meet the needs of the next generation of entrepreneurs who want to blaze their path.
Kiran Kaur Sidhu contributed to this article.