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Are we at Industry 4.0 or 0.4?

Not many people really know about Industry 4.0, be they policymakers, industry leaders or academicians, when it comes to the execution of this transformation.

Let’s audit if we are even at 3.0.

Industry 3.0 = Fully Computerised + Fully Automated Manufacturing System.

Are we there yet?

Industry 4.0 = Big Data + Artificial Intelligence (AI) Deep Learning + Fully Computerised + Full Automation with Robotic Manufacturing System.

Flashback 1994, my first job was already in the environment of Industry 3.0: making medium-density fibreboard (MDF) in Malaysia for export to 40 countries!

With an in-depth understanding of 4.0, I was fortunate to have been exposed to 3.0 for the past two decades in my manufacturing career.

The then-GLC, Guthrie MDF, was already at Industry 3.0 level, and we even had a “Lukki Storage System” which was a fully automated call to locate and grab the stock pallets with a one-click system.

So, how many manufacturing companies are really in Industry 3.0 today?

Or are they still at 2.0, which is Fully Computerised + Semi-Automation? Or 1.0 = Economy of Scale (Mass) Production?

Or are our manufacturing companies at only 0.4, using backyard cottage method to make pineapple tarts by hand and packing them in red-cap round plastic containers without branding and proper labelling?

Most of our SMEs and perhaps big corporations as well are still relying very much on labour. This is still far below the Industry 3.0 level.

In December 2017, I was one of two Malaysians invited to the 4th World Internet Conference in Wuzhen, Hangzhou, China.

The conference featured renowned names in the internet sphere such as Baidu’s Robin Li, Alibaba’s Jack Ma, Tencent’s Pony Ma, Apple’s Tim Cook, Google’s Sundar Pichai, Cisco’s Chuck Robbins, Kaspersky’s Eugene Kaspersky, and Father of Internet, Robert Kahn. The three-day event was attended by 1,500 industry players.

Artificial intelligence

Guess what, no one has talked about Industry 4.0 but the multi-billionaires were elaborating at length on artificial intelligence (AI), Big Data and 5G.

Security at the event was tight with AI facial recognition for checking in and out of the hotel and venue and AI robot security guards. In attendance were AI robot cleaners, and AI medical for the Wuzhen community. It was all about AI!

Without AI and Big Data, Industry 4.0 is just an unrealistic dream. AI is akin to the dough for pizza!

Adopting Industry 4.0 is a call from Germany since 2014, and world giants like Siemens, B. Braun and Adidas have responded well.

It can be called 4.0 when companies adopt full-fledged integration of end-market demand with big-data analysis, cloud-computing storage and AI precision marketing, leading to robotic custom-made production, packaging and logistics.

China with its world mill status and economy-of-scale production has implemented AI in phases since 2008 before the calling of 4.0.

This is where the dough and ingredients are blended to craft the competitive advantage of the products.

Addressing security issues

In an effort to prevent terrorism at the China Olympics in 2008, the Chinese government had adopted vertical and horizontal integration of AI facial recognition for security reasons.

Thereafter, the tested applied technology was adopted widely in the private sector.

We should not get overwhelmed with the blind call of Industry 4.0 as adapting AI 1.0 is more relevant to Malaysia at the moment!

However, not many Malaysians fully know about AI.

I believe the media and community leaders, especially captains of industry, should spearhead awareness campaigns for such applied technology which will enhance our quality of life.

Taking the lead

Again, our government agencies which are supposed to take the lead to improve the efficiency of our production system, should get real and learn what are the essentials of Industry 4.0 and what should come first, like AI.

An agency like Malaysia Productivity Corporation (MPC) should take the lead or be in the forefront in the push for such technology.

I have visited the MPC office in Petaling Jaya a couple of times and spoken to a few officers, but it seems many still do not understand the word “productivity”.

While delivering some methodology to help SMEs in New Finance (crowdfunding, venture capital, etc) and New Bankable Business Model concept, I always touch on the word productivity.

As I always joke on stage, the last man who talked about productivity loud and clear, at least 15 years back, was Tun Dr Mahathir Mohamad during his first stint as prime minister.

Since then, the word productivity seemed to have disappeared.

The sad thing is, not many people know about the existence of MPC.

Productivity target

According to Malaysia SME Masterplan 2020, our target in terms of productivity is RM90,000 per worker per year.

What does this mean?

It means a worker is helping the company to produce RM90,000 worth of output (product/service) per year.

The productivity of Malaysian SMEs are at an average of RM60,000 per worker per year, or RM5,000 per worker per month.

Say, if the gross profit is 30%, it means that the worker is producing RM5,000 x 30% = RM1,500 worth of labour per month.

If our minimum wage is RM1,050 per month (normally it’s the foreign labour wage level) + assuming overtime RM300 per month = RM1,350 per worker per month.

Productivity less worker cost: RM1,500 – RM1,350 = RM150 earnings per worker.

If you have 100 workers x RM150 earnings each, this works out to be only RM15,000 in earnings.

Can you imagine an SME running a business with 100 workers getting only RM15,000 per month? What is the meaning of becoming an entrepreneur?

If we do not understand about productivity but are shouting about Industry 4.0, we are indeed cheating ourselves! FocusM

Neil Foo is the Malaysian representative of APEC SME Forum

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