Smart factory technology helps manufacturers save costs

KUALA LUMPUR: Local manufacturers, particularly small and medium enterprises (SMEs), need to move from their traditional systems and adopt smart factory technology to reduce stockholding and factory overhead costs.

Information and technology (IT) solutions provider YGL Convergence Bhd chief executive officer Yeap Kong Chean said the conversion from a traditional factory into a smart factory could result in stockholding and factory overhead costs saving of at least 20 per cent, and as high as 70-80 per cent.

“The range that can be saved is very different from one manufacturing factory to another depending on each business,” he said after signing a memorandum of understanding with eight partners to provide IT solutions that would drive digital transformation in the domestic manufacturing sector.

Yeap said as an example, the installation of smart factory technology on one of its client resulted in the reduction of stockholding days from 150 days to 70 days, significantly reducing costs.

Knowledgecomm Sdn Bhd (KCOM) chief executive officer S.T. Rubaneswaran said the adoption of factory automation would ultimately enable companies to maximise resources and produce higher-quality goods more efficiently.

“If local manufacturers don’t adopt the fourth industrial revolution (IR 4.0), they will lose out on market share. Based on our survey, smart factories can enable the Malaysian manufacturing industry to immediately increase their return on investment in overall productivity within 6.0-12 months.

“Smart factories can also reduce capital and inventory costs compared with traditional factories,” he said, adding that cost of adopting the technology was between RM200,000 to RM500,000, depending on the requirements.

Rubaneswaran said in total, stockholding and overhead cost saved can be as much as RM500,000 and that could easily cover the installation of smart factory technology.

According to a KCOM’s study, 85 per cent of more than 2,000 manufacturers in Malaysia are expected to see cost reductions and revenue gains from digitisation efforts in the next five years.

Despite the fact that many major corporations have embarked on digitisation, less than 5.0 per cent of SME manufacturing companies have prepared for the adoption of IR 4.0. — Bernama