Specially-invited IT professionals from Malaysia’s manufacturing & logistics sectors travelled to the Mandarin Oriental Kuala Lumpur on 2nd June 2016 to probe the impact of innovative technological advancements at a special industry vertical event, the Manufacturing and Logistics Forum 2016, organised by Executive Networks Media.
Expert speakers drawn from industry, IT leaders, research bodies and the government such as MIMOS and MIDA offered insights on issues affecting supply chain networks, growth opportunities, changes, and the practical implementation of technology in supply chain management during this second specialist forum.
Highlights included feedback from delegates participating via real-time electronic voting showed that increasing efficiency and reducing costs remained the top drivers for adopting new technology within their organisations. However, insufficient funding and the lack of an overall strategy were impeding their organisations from exploring new technology such as 3D printing and the Internet of Things (IoT).
These technologies were not new but studies showed a significant growth in their influence over industry practices. “3D printing as a method of manufacturing has been around for a very long time, but its impact can be clearly felt now,” said Malaysian Institute for Supply Chain Innovation (MISI) research director, assistant professor Dr. Shardul Phadnis in the first keynote address.
“In terms of cost, traditional methods are still more cost-effective for high volume manufacturing. However, 3D printing has a superior cost performance in the manufacturing of personalised products and small quantities,” he continued. “As personalisation demands increase, smart materials become increasingly available and 3D printing matures, printing capabilities will replace inventory.”
IoT as a game-changer
IoT was another innovation which could significantly improve manufacturing and supply chain performance. “The possibilities IoT provide are limited only by our creativity,” said Dr. Phadnis. “Our research has shown that leveraging on IoT leads to more efficient procurement, lower work-in-progress and raw material inventory, and dampens the variability of orders and shipments. This results in fewer losses and phantom stock-outs.”
“However, the ideal supply chain strategy is not always obvious,” added Dr. Phadnis. “With supply chains undergoing radical changes, organisations have to explore, examine and experiment to find out what works best for them.”
In his keynote address, national applied research & development agency MIMOS Berhad’s senior director and head of corporate marketing strategies, Helmi Halim expanded on IoT’s impact on the supply chain. “With the digitalisation of logistics data, efficiency has been enhanced. Data and insights on processes have resulted in better forecasting in anticipating demand, facilitating zero-inventory manufacturing,” he said.
He continued, “With IoT, we have also seen the ‘Uber-fication’ of logistics with a sharing culture driven by cost optimisation, and the empowerment of consumers as they attain visibility and an ability to dictate the supply chain.”
Helmi shared an IoT example where MIMOS worked with the Federal Agricultural Marketing Authority (FAMA) on tracking the logistics of premium durians exported to China. “Cloned durians from other countries were affecting exports. We designed a tamper-proof traceability system, which could track the movement of the durian from the time it was picked up at the orchard, through processing, packaging, warehousing, distribution and shipping to the end-customer,” he said.
“The system was simple enough for workers to process, and made device-agnostic to allow for better flexibility. As phones could be used to read the Quick Response (QR) code, retailers and customers could trace the durian all the way back to the orchard and even to the specific tree from which the durian originated. Thus, they could be assured that the durians were genuine,” he continued. “Security labels were included to ensure there was no tampering by importer or exporter.”
The resultant analytics also provided positive end-to-end results. “Customers benefited from faster delivery through efficient network planning and product information; suppliers learnt where their market hotspots were, had access to predictive yield analytics and could compile customer profiles; and logistics providers gained insights into the supply chain network beyond distributions centres, resulting in more efficient resource and capacity utilisation,” said Helmi.
Digital infrastructure improvements
Smart solutions which improved latency and security continued to be crucial elements in data centre processing. “With digital traffic expanding annually by 23 percent, there is a need to scale digital infrastructure,” said Schneider Electric business development’s Alex Keng. “Processing certain data intensive applications away from the network core allows for faster processing of data. The data volume decrease reduces transmission costs, shrinking latency and improving service quality.”
“Security is also improved as encrypted data is now exchanged with the network core, reducing the risk of lost data and data corruption,” he added.
Improved technology had also reshaped backup and availability options. “Backup is a legacy solution; availability is what is required for forward-thinking enterprises,” said Veeam Software Malaysia technical director, Asia & Japan, Raymond Goh. “Eighty-two (82) percent of CIOs say there is a gap between the level of availability legacy backup solutions provided and what end-users demand. This gap results in loss of business and reputation, unplanned downtime and its related costs.”
“The questions organisations have to ask themselves when choosing what they need for recovery is how quickly they can recover what they need, how they can reduce the risk of data loss and how to improve risk awareness through better visibility,” said Goh.
Business opportunities in logistics and manufacturing
Improving the local logistics industry is a government priority with Malaysia seeking to strengthen its position as a competitive regional and global operation base.
“Malaysia has a strong manufacturing base but that in itself is insufficient,” said Malaysian Industrial Development Authority (MIDA) deputy director, Regional Establishment & Supply Chain Management Division, Masri Zohaini Idris. “Logistics is an integral part of the manufacturing process. It is part of the overall infrastructure which includes transportation, airports, ports and roads. There is little use in manufacturing goods if these cannot be shipped out quickly and efficiently,” he said.
Incentives for local and foreign logistics company to set up their centres in Malaysia recognised the vital role played by technology. “To encourage the adoption of IT, the incentives favour integrated logistics services using IT as a growth driver. IoT expands the entire logistics value chain including warehousing operations, freight transportation and last mile delivery,” said Masri. “Through it, companies can monitor the status of assets, parcels and people throughout the value chain in real-time.”
One company which has received MIDA support in its growth is Alliance Contract Manufacturing (ACM), a Penang-based precision opto-electromechanical specialty contract manufacturer. Established in 1998, ACM now has a presence in Singapore, China, the Netherlands, Czech Republic and Canada.
“ACM recognised the importance of IT as an enabler of our business early on,” said ACM senior manager, head of IT, Erik Looi. “We focused on ACM’s business processes and the role IT could play in accelerating its implementation. To be able to support successful projects and to innovate, we needed to have good systems in place.”
He continued, “The whole model facilitates the collaboration within, and amongst the ACM group of companies, with the ability to collaborate with external partners such as our key customers and suppliers.”
“Technology becomes obsolete very quickly and business processes change. Therefore, enterprise systems have to allow for innovation and flexibility,” added Looi. “We work with technology which allows us to grow. In the age of growing data volume, our systems have to be able to handle data analytics as data without analytics is of no use.”
Changing the mindset to accept digital technology
As technology evolves, so too must human behaviour. In a speech read on his behalf, Malaysian Trade and Industry Organisation Berhad founder and president, Dato Raj Arumugam pointed to a study by the Manufacturing Leadership Council Report in 2015.
“Many manufacturers are paralysed by consumers requiring them to use IoT in the supply chain. Such fear is a result of the perceived loss of power or ability to add value via their previous levels of expertise. To overcome this fear, organisations should not just look at implementing technology but also design enriched job opportunities,” he said.
“Being able to adapt to your changing business environment is important,” agreed Monier Asia principal consultant Kelvin Kumar in the panel discussion wrapping up the forum. “Digitalisation is not driven only by technology, but starts with adapting the mindset to accept how technology changes processes. Digitalisation drives data. There is a demand for individuals who are trained to make skilled analysis of manufacturing data and how it can be applied to drive the business. Providing manufacturing-as-a-service is an area Malaysia could specialise in.”
“When it comes to manufacturing and logistics, order fulfilment and how you provide such services are the way ahead,” said MIMOS’ Helmi. “Manufacturing is no longer just about creating products, but how you combine different components in fulfilling the order faster and better when delivering it to meet customer requirements.”
“Our logistics industry is still fragmented. This is a big handicap when it comes to competing regionally and internationally,” he said. “Knowledge is power, but we are not sharing information. The industry needs to work together to define, understand and play to our strengths if we wish to become a manufacturing service fulfilment centre, and not just a manufacturing centre. We need visibility to focus on business improvement.”
Being prepared for technology changes is vital for success. “Businesses must always look to the future and be ready to move forward. Manufacturing is moving towards customisation and we must be able to respond to that,” advised ACM’s Looi. “Explore new technology; if you wait for the technology to become mainstream before you look into it, it will be too late. Ensure that your board of directors and your people are familiar with upcoming technology and are ready to make that change.”
Source: MIS Asia