Businesses need to adapt to this new era of the fourth industrial revolution – Industry 4.0 for short – or risk being left behind.

This comes as the pace of technological change is happening at an unprecedented rate in human history, where breakthroughs such as big data analytics, artificial intelligence and the Internet of Things come together to disrupt traditional business models and to create new ones.

Industry 4.0, or advanced manufacturing, combines machines with digital technologies to create what is known as a “smart factory”, which has been identified as a key driver of Singapore's future economic growth.

Jimmy Koh, Head of Business Insights and Analytics, Sector Solutions Group, UOB, identified the rise of digital data as one of the megatrends that will reshape the world.

“Companies are capturing more data than ever with the prevalence of smart devices among the growing middle class and millennials. Data has also evolved from static to behavioural, providing companies with hindsight, insights and foresight. It also enables companies to forecast customer demand and to engage customers more effectively in the digital economy,” he explained.

Mr Koh also added that as companies make use of data, they will need to ensure that they do so in a way that protects customer privacy.

According to Mr Jimmy Koh from UOB, the increasing amount of digital data captured by companies will help them in forecasting customer demand and engaging their customers better. Photo: UOB

Industry 4.0 is part of this transformation as smart factories not only produce data that will enable greater efficiency and productivity, they can also create the ability to understand and to meet customer needs better in the long run.

Data, in today's world, is an innovation enabler and companies will need to learn to use it to their advantage. Nevertheless, many SMEs in Singapore are slowly making inroads on the Industry 4.0 journey, said Mr Koh.

Matter of survival

Jeremy Fong, CEO of Fong's Engineering and Manufacturing, shared how his business looks at disruptive technology and trends each year to ensure it keeps up.

He pointed out: "We used standalone computer numerical control machines which typically required manual loading and setting up. But we have now integrated Industry 4.0 technology – a combination of robotics and industrial Internet of things and services. This enables a machine-to-machine connection, automating most of the manual loading and setting up tasks.”

Speaking at a UOB event in May 2019, Mr Jeremy Fong of Fong's Engineering and Manufacturing shares how automation has replaced manual tasks at his company, and how continuous transformation is needed for businesses to survive. Photo: UOB

“There is no end to it (transformation),” said Mr Fong. “If you don't change, and still use traditional machines, do you think you can survive? You can't.”

For Fong's Engineering, it was not just the introduction of Industry 4.0 technologies, but also an enterprise-wide transformation at the same time.

Formerly, the firm used to serve customers from all types of industries, explained Mr Fong. After a strategic revamp, it decided to focus only on the medical industry due to the potential demand arising from a rapidly ageing global population and advances in medical technology.

As word of mouth spread on the SME's emphasis on innovation and their specialisation in medical equipment, new customers started knocking on their door, he said.

“If you don't change, and still use traditional machines, do you think you can survive? You can't.”

Intentional investing

Gerry Ong, director of SMT Technology, noted that as SMEs typically have limited resources, they need to have clear objectives on why they are investing into Industry 4.0 as such investments come at a price.

“A lot of people questioned the need for Industry 4.0, so we needed to think carefully about the reasons and benefits we can gain to embark on it as we needed to take care of our financials,” he explained. “We have to know why Industry 4.0 and how we can equip ourselves for the changes and challenges.”

To compete against overseas manufacturers that are able to produce large volumes of goods at cheaper rates, SMT Technology took the “high mix, low volume” approach to create a smart factory where even the production of small batches of products can be profitable, shared Mr Ong. The journey might not be an easy one, but SMEs do not need to go through it alone.

Industry 4.0 has been touted as a key driver to Singapore's future growth. Photo: Shutterstock

Sam Cheong, Head of Group Foreign Direct Investment Advisory, UOB, said that the bank recognises the opportunities of Industry 4.0 for SMEs and has been supporting businesses in this area.

To give SMEs a lift on this front, UOB launched an initiative known as the internationalisation and innovation (i²) enterprise programme. The programme connects SMEs to an ecosystem of strategic partners including technology experts, such as those from Enterprise Singapore's Centres of Innovation, to help SMEs upgrade and scale their technology capabilities.

Started in the last quarter of 2018, the programme has helped 15 companies go through various stages of their own innovation and transformation process, said Mr Cheong.

“When you have companies innovating and internationalising, I believe it does not just lead to a one plus one equals two situation,” he said. “It creates a multiplier effect if companies apply it right and that's why we say i², which we hope can lead to exponential growth for our clients.”

This article was first published in the The Business Times on 29 May 2019 and has been edited for context.

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