Machinery and equipment sector can profit from digitisation

THE Covid-19 pandemic has made it clear that digital solutions are vital for enterprises to remain competitive, especially SMEs.

Our country’s machinery and equipment (M&E) sector is dominated by at least 85% locally-owned SMEs and the majority of them are comfortable with their traditional methods of business management, resulting in little contribution to today’s sector productivity.

This needs to be challenged as more developed nations are becoming increasingly competitive by adopting new technologies and business methods.

To boost productivity in the M&E sector, the M&E Productivity Nexus (MEPN), supported by Malaysia Productivity Corporation (MPC), was established and led by industry associations under the Machinery and Engineering Industries Federation (MEIF) to assist SMEs in operations-related productivity improvement.

However, reaching out to the SMEs of the M&E sector is a big challenge as they tend to keep away from digitisation, thinking that such investment is costly and it comes with complicated processes.

“To invest in technology or new methods of doing business is not something in their cards because to them, they need to invest a lot of money while they are comfortable with their current status and profit, ” said MEIF advisor Mimi Aminah Mohd Taib.

“Some of them are still happy writing invoices on paper and filing the books while the job can be done faster with available software.

“The world is changing and without innovation, sustainability is not possible for them.

“The M&E industry contributes over RM40bil in exports yearly and we need to sustain that by first understanding the challenges faced by the industry players and change their mindset on what digitisation can do for them while at the same time bridge the gap between the public and the private sectors.”

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Over the last two years since MEPN was established, one of the most common issues found among industry players was the fear of digitisation.

“Most of them fear digitisation, with the impression that it is totally about robotics or artificial intelligence and that the costs are surely higher than the benefits, ” said MEIF advisor Yoong Kee Sin.

“But the fact is that it does not always have to be large and expensive solutions. It can be as simple as gathering data for proactive action, just like going to the doctor and getting an early diagnosis for instance, and you will be prepared before your machine breaks down.

“The next important thing is to know how to start, which is a very common question by a lot of our industry players, and because they don't know, they tend to stay status quo.”

Yoong shared one good example on digitisation optimising productivity.

A tyre mould and dye business owner ran out of space buying machines to increase output and was looking for a better machine to replace his old ones when he was introduced to a software to upgrade the existing equipment instead.

And now, the upgraded existing batch can work even better compared to the new one that he planned to buy.

“When it comes to business expansion, many will opt for additonal machines and manpower without considering if it is necessary, ” said Yoong.

“These days, one of the concepts to stay competitive is to be able to operate on lean principles to minimise waste effort and not necessarily lower the cost of labour, which most SMEs are over-depending on cheap labour.”

In addressing the concerns of industry players, the Government has launched initiatives and programmes to help businesses embark on their individual digitisation journey.

As most of the industry players are SMEs, these initiatives did not manage to capture a big portion of them as they have already created a barrier towards digitisation.

To change such mindset, MEPN has outlined 14 projects under four key pillars – talent and manpower; productivity and efficiency; SME empowerment; development – led by industry leaders and subject matter experts.

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“To help SMEs enhance their operations and increase productivity, MEPN deep dives into the issues by using productivity assessment tools and rolling out productivity improvement intervention – grooming potential companies to become world class players, ” said MEIF secretary-general N. Sangaran.

Among the programmes and initiatives launched by MEPN and supported by MPC is Productivity1010 via Business Virtual Mentoring Services to assist companies in developing individual digitisation roadmap.

Meanwhile, Machinery and Equipment Productivity Nexus Virtual Advisory Clinic MEVAC is a one-to-one online consultation to support SMEs in rebuilding the business due to the adverse impact of Covid-19.

The 42 companies which attended a session identified 123 issues related to financing and loans, new market and partnerships, skills and talent development, digitisation and automation, productivity improvement, and business regulations.

MEPN urged the industry players to leverage on the complimentary digital programmes and advisory service to boost productivity growth and sustainability and at the same time, enable them to work towards representing Malaysia as the key contributor to the regional hub for the M&E production and services supply chain.

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