How Singapore’s Manufacturing Small and Medium Size Enterprises Embrace Industry 4.0

Abstract

Industry 4.0 adoption is expected to profoundly impact the entire spectrum of industries, especially in manufacturing. By using a confluence of automation, data, and digitalisation, Industry 4.0 aims to radically transform how organisations operate presently while increasing productivity, enhancing flexibility, reducing costs, and improving efficiency. More companies are strategically embracing Industry 4.0 approaches to leverage opportunities arising from newly connected computers and increasingly autonomous automation systems (e.g., robotics), equipped with intelligent machine learning algorithms that control the robotics without much human input. In these 'smart' factories, cyber-physical systems (i.e., independently operating systems that self-optimize and communicate with each other, and ultimately optimize production) monitor the physical manufacturing processes and play an increasingly important role in terms of decision-making. Industry 4.0 signifies three mutually interconnected factors, namely digitisation and integration of any technical-economic networks, digitisation of products and services, and new market models. At the core of this new smart manufacturing paradigm is the Internet of Things that drives the conversion of traditional factories into a 'smart' manufacturing environment called "Industry 4.0", resulting in an increasingly intelligent, connected, and autonomous factory with dynamic capabilities. Smart manufacturing technologies include big data processing, machine learning, advanced robotics, cloud computing, sensors technology, additive manufacturing, and augmented reality. By using predictive big data analytics, deep learning, or sentiment/image analysis, business leaders can identify patterns and trends in vast reams of big data. It allows them to make 'smarter' decisions (e.g., about the loss of customers or the necessary service inspection of equipment) and potentially to become more competitive in real-time. Based on case study research on small manufacturing firms in Singapore, we explore how local SMEs adopt Industry 4.0 solutions. We shed light on the drivers and barriers of Industry 4.0 adoption to better understand current business dynamics, potential human issues, focus areas, and initiatives to smoothen this implementation. The study is part of a wider Industry 4.0 study of key specialists and decision-makers across Government agencies, Institutes of Higher Learnings, suppliers of Industry 4.0 technology, business associations, etc. Technology push by the Government with robust funding and training support, skilled labour shortages including imported labour dependence, productivity issues and the pressure to innovate business models due to increased competition are propelling SMEs to adopt Industry 4.0. Some challenges include high investment costs, ROI concerns as well as capability and mindset issues. The paper contributes to the minimal Asian management literature about Industry 4.0 matters in Asian SMEs.