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."
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