The Driving Factors of Readiness for Industry 4.0 Among Manufacturing SMES in Malaysia

Introduction

• Presentation on driving factors of readiness for Industry 4.0 among manufacturing SMEs in Malaysia.

Background

• Industry 4.0 presents opportunities and challenges for manufacturing SMEs.
• Malaysian national policy encourages SMEs to adopt Industry 4.0 for global competitiveness.
• Importance of understanding SMEs' readiness and factors influencing it.

Research Questions

• How ready are Malaysian manufacturing SMEs for Industry 4.0?
• What factors drive their readiness?

Research Objectives

• Explore readiness of Malaysian manufacturing SMEs for Industry 4.0.
• Assess impact of organizational capabilities (finance and technology) on readiness.
• Evaluate institutional support (finance and technology) on readiness.
• Analyze perceived advantages (benefits and market opportunities) on readiness.
• Investigate market factors (customer needs and competitive pressure) on readiness.

Research Framework

• Four independent variables: perceived advantages, organizational capabilities, market factors, and institutional support.
• Dependent variable: readiness for Industry 4.0.

SME Landscape in Malaysia

• 98.5% of businesses are SMEs; majority are micro and small enterprises.
• Manufacturing sector is the second largest after services.
• Characteristics: 83% use some form of ICT, 44% are family-owned, and 7% are young enterprises.

Definitions

• Industry 4.0: Digital transformation in manufacturing through connected technology and smart factories.
• Readiness measured in managerial, operational, and technological dimensions.

Independent Variables Explained

• Organizational Capability: Financial and technological capabilities.
• Institutional Support: Financial and technological support from government/institutions.
• Perceived Advantages: Benefits and opportunities from adopting new technology.
• Market Factors: Customer needs and competitive pressures.

Demographics of Respondents

• 110 manufacturing SMEs surveyed; majority are small enterprises.
• Over half have 50 or fewer employees; many established for 11-20 years.
• Respondents primarily from Selangor, Perak, and Penang.

Survey Results

• Overall readiness: 35% high readiness, over half moderate readiness.
• High managerial readiness compared to operational and technological readiness.
• 11 out of 24 hypotheses supported, indicating key driving factors for readiness.

Key Findings

• Financial capability and support are critical for Industry 4.0 adoption.
• Perceived benefits and customer needs influence readiness.

Recommendations

• Create a conducive environment with digital infrastructure for SMEs.
• Establish a smart SME city as a supply chain hub.
• Implement financial and technological support programs for Industry 4.0.
• Focus on human capital development through education and training.
• Propose mentorship programs with successful companies to guide SMEs.

Conclusion

• Emphasize the importance of understanding and addressing the readiness of manufacturing SMEs for Industry 4.0 to enhance competitiveness and operational efficiency.