In today’s rapidly evolving digital landscape, the manufacturing sector in Malaysia faces both significant challenges and unprecedented opportunities. To delve deeper into these dynamics, we had the pleasure of speaking with Jan Wong, the visionary Founder of OpenMinds. With extensive experience in guiding companies through digital transformation, Jan shares his valuable insights on the hesitations Malaysian manufacturers have towards adopting smart manufacturing and MarTech solutions. He also highlights the crucial role of digital skills, the benefits of embracing digitalisation, and the competitive edge that future-ready manufacturers can gain.
What are the primary reasons you believe Malaysian manufacturing businesses are hesitant to adopt smart manufacturing and MarTech solutions?
Malaysian manufacturing businesses, like those in many developing countries, face several unique challenges and here are some primary reasons for their hesitancy:
1. High initial costs: The adoption of smart manufacturing technologies often requires substantial initial investments in equipment, software, and infrastructure. Similarly, MarTech solutions may involve expenses related to software licensing, integration, and ongoing subscription fees. For many small and medium-sized enterprises (SMEs), these costs can be prohibitively high, especially without clear and immediate indications of return on investment (ROI).
2. Uncertainty about benefits: Some manufacturers may be unsure about the practical benefits of smart manufacturing and MarTech solutions for their specific operations. This uncertainty can stem from a lack of successful case studies within similar industries or from the local context, making businesses hesitant to invest in technologies they are not sure will deliver the promised improvements in efficiency and productivity.
3. Cultural resistance to change: Many manufacturing businesses in Malaysia may have long-established ways of operating. There can be significant resistance from both management and staff towards adopting new technologies, driven by comfort with the status quo and fear of job displacement due to automation and digital tools.
To encourage adoption, businesses should identify key and specific operational areas to focus upon, rather than trying to tackle the entire business as a single unit. This way, martech implementations can be targeted to reduce complexity, technical requirements and cost. Such phased implementations can also help the business to gain more confidence in investing in martech and smart manufacturing solutions.
A significant gap in digital skills is often cited as a major barrier to digital transformation. What do you think about this?
The gap in digital skills is indeed a significant barrier to digital transformation, affecting many sectors globally, including in Malaysia. The rapid evolution of technology means that the skills required to manage, utilise, and innovate with these new tools are also changing swiftly, creating a gap between the current skills of the workforce and those needed to effectively implement and leverage digital technologies.
Let’s take a simple example of social media alone. The requirements and expectations for social media have changed such as preferred media type, content direction, new platforms, algorithms and more. This means that manufacturers have to keep up, but they are reluctant because of the fear of being obsolete as quickly as they acquire the skill. Similarly, as technologies like artificial intelligence (AI), machine learning, blockchain, and the Internet of Things (IoT) become more sophisticated, the skill sets required to use them effectively become more specialised. Organisations often struggle to keep up with these advancements, as upskilling an entire workforce is a massive and continuous undertaking.
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There is also often a lag between technological advancements in industry and curriculum updates in educational institutions. This misalignment means that even new entrants into the workforce might not have the skills necessary for immediate productivity in digitally transformed environments, requiring additional training and onboarding time, thus leading to businesses focusing on what they deem as ‘core skills’ instead; that they can directly benefit the business.
Sometimes the gap is also within the leadership of the business where they too are unsure of how new roles or structures should be created in the advent of digital technologies. For example, jobs that once required manual input or routine tasks are increasingly automated, shifting the job focus to more strategic activities that require digital know-how. This shift can be challenging for existing leaders who may not have the foundational digital skills to make new alignments to cater to changing requirements.
Can you explain to us the benefits of digitalisation and MarTech for manufacturing, such as improved efficiency, streamlined operations, and reduced inventory?
The benefits of digitalisation and MarTech integration in manufacturing are interrelated to deliver substantial efficiencies and strategic advantages, fundamentally transforming how businesses can be run. By automating repetitive tasks and implementing predictive maintenance through data collection and analysis using centralised dataflows or integrated IoT devices, manufacturers are able to achieve significant operational efficiency by reducing human error and potentially minimising equipment downtime.
This automation is usually also supported by integrated systems such as ERP and CRM, which streamline communication across departments, allowing real-time data access that facilitates swift, informed decision-making, especially for managers. Such streamlined operations directly contribute to reduced inventory costs through just-in-time inventory systems and enhanced demand forecasting, which uses analytics to align production schedules with market demand therefore minimising excess stock and associated costs.
Furthermore, these customer-facing technological advancements can extend into marketing and customer engagement to deliver elevated customer experience, supporting targeted marketing campaigns and personalised customer interactions that boost satisfaction and loyalty. This not only helps in cutting down operational costs but also in tapping into new revenue streams by reaching broader markets and introducing innovative product offerings. Overall, the synergy between digitalisation and MarTech in manufacturing not only optimises production and inventory management but also redefines customer relationships and market strategies.
Why do you think that many manufacturers continue to rely on traditional MarTech tools that are outdated and low quality?
The reluctance of many manufacturers to transition from traditional, often outdated MarTech tools to more innovative solutions can largely be attributed to a lack of awareness about what they are missing—essentially, they “don’t know what they don’t know.” This mindset leads to satisfaction with current outcomes and a perception that existing operations are sufficient, despite the potential benefits of adopting newer technologies. This situation mirrors the initial hesitation retailers had towards eCommerce, where concerns about online sales taking over offline revenues made them skeptical about the value of embracing digital commerce. However, just as retailers eventually realized that online and offline channels could complement rather than compete with each other, manufacturers too can benefit from understanding that modern MarTech tools can significantly enhance, rather than disrupt their operations.
Also, the perceived complexities and costs of transitioning to advanced technologies often seem daunting. Manufacturers may view the integration of new MarTech solutions as a cumbersome and risky overhaul that might not yield sufficiently differentiated results to justify the effort and expense. Yet, this perspective often overlooks the strategic value that such tools can bring in terms of increased efficiency, better customer insights, and enhanced competitive advantage.
Addressing these concerns involves demonstrating that the learning curve and transition costs can be effectively managed. This can be achieved through comprehensive feasibility studies and strategic planning, ensuring that the selected MarTech tools are precisely tailored to the manufacturers’ specific needs. As such, proper implementation can avoid unnecessary redundancy, reduce confusion, and minimise disruption.
In your opinion, how has OpenMinds Malaysia been instrumental in aiding digital transformation within the manufacturing sector?
OpenMinds has helped hundreds of companies globally in the past 12 years in achieving digital transformation not only within the manufacturing sector but across retail, F&B, hospitality, education, FMCG, property development, automotive, plantation and many more. While the industries may seem different, the process does not differ too much. OpenMinds has always been focused on helping companies define clear digital transformation strategies that align with their business goals through a detailed audit process that involves key stakeholders, managers and employees. This could involve identifying key areas for digital upgrade, such as process automation, digital marketing, CRM, data analytics and competency improvement.
By using a data-driven approach, OpenMinds help manufacturers gain valuable insights into their operations, optimising processes like supply chain management, inventory control, and customer engagement through data-driven decisions. This way, we could help play a more effective role by encouraging the adoption of emerging technologies such as IoT, AI, and robotics, and providing tailored technology solutions that fit the unique needs of each manufacturing client, ensuring that new tools and systems integrate smoothly with existing processes. Also to ensure sustainable transformation, OpenMinds provides training programs designed to enhance the digital literacy of employees within the manufacturing sector to help build an internally capable team that can manage and advance digital initiatives so that companies can be less reliant on external service providers when managing their internal assets, which promotes better scalability and growth.
In short, OpenMinds is not about selling ready-made solutions or forcing companies upon cookie-cutter solutions. Instead, we have a strong focus on strategy building and have always helped companies bridge the gap between traditional manufacturing practices and modern digital capabilities, driving efficiency, scalability, and growth through well-crafted digital strategies.
Looking towards the future, if most manufacturing businesses in Malaysia adopt smart manufacturing technologies, what competitive advantages could they gain?
Adopting smart manufacturing technologies could provide Malaysian manufacturers with a host of competitive advantages, transforming their operations and elevating their standing both locally and globally. By integrating automation and AI-driven systems, these manufacturers could significantly boost efficiency and productivity, enabling better understanding of their customers, increased customer engagement, and higher quality outputs with fewer errors. This increased efficiency could also lead to substantial cost reductions by minimising labour requirements and optimising material and energy usage. Moreover, leveraging advanced data analytics through IoT and big data technologies would allow for real-time data gathering and analysis, enhancing decision-making in areas such as predictive maintenance, production planning, and inventory management.
Enhanced and centralised tracking of data also enables manufacturers to achieve agility and flexibility when engaging their customers. For example, when dataflow is integrated across channels, manufacturers can extend additional features to their customers that include order prediction, disseminate relevant educational information based on past purchase behaviour, launch advertising campaigns based on demand prediction, and even provide different platforms such as mobile apps or web-based platforms for a better experience.
The combined benefits can elevate Malaysian manufacturers to meet international standards, reducing human-related errors while increasing productivity through synchronised operations and data, making them more competitive globally. This will aid their expansion into new markets and become more competitive to drive economic growth.
Considering your extensive experience and passion for entrepreneurship and digital transformation, what advice would you give to manufacturing businesses that are just beginning their digital journey?
As with every strategy and plan, it is very important to start with a clear vision. Ask, “What am I intending to achieve with digitisation?” and lay down clear goals of what that would look like for your organisation. Try to stay away from vague goals like “increased sales” or “increased customer satisfaction.” It helps to identify areas that are complex, confusing, and perhaps already problematic and describe what the best version of that area looks like and what the desired outcome would be.
After which, conduct an internal audit of your current capabilities. This involves a thorough audit of your existing systems, processes, and workforce skills. This assessment will help identify gaps and areas that need immediate attention, facilitating a more focused approach to digital adoption, and will help you identify areas that require investment towards training your workforce to handle new technologies and understand digital workflows. This not only helps with a smoother transition but also empowers your employees to contribute to innovation. Most digitisation efforts fail due to employee resistance; therefore, making them understand how they play a role in the process will greatly help during the implementation phase.
Finally, choose the right technologies and implement them in phases. Remember, not every digital solution will suit your needs, and not every solution needs to be developed and implemented on a grand scale. When in doubt, seek out reputable experts that you are able to trust and consult with. Select technologies that align with your specific business goals, not how extensive or branded that tool is. Whether it’s IoT, AI, automation, big data analysis, or cloud computing, choose solutions that offer scalability and can grow with your business. Start small with pilot projects to test how digital solutions work within your operations. This phased approach allows you to manage risks better and iterate based on feedback and initial results before a full-scale rollout. Throughout the phases, remember to leverage data to drive decisions. Implement systems that not only collect data but also analyse it and turn it into actionable insights. Data-driven decision-making is key to enhancing efficiency and competitiveness. Always make sure that data is being collected and that you are able to use it meaningfully to achieve your goals.
