Smart factories represent the culmination of digital investments, where cutting-edge technologies converge to transform production processes. They are highly automated and interconnected facilities that leverage the Internet of Things (IoT), artificial intelligence, robotics, additive manufacturing techniques, and real-time data analytics to optimize operations. Most advanced manufacturing entrepreneurs in Southeast Asia are based in Singapore, notably due to the Singapore government’s strong support for Industry 4.0 developments and having a highly skilled labor force. In the region, the smart factory advancements are led by not only the local governments but also large companies.
Thailand’s manufacturing sector has begun to adopt the smart factory concept. Such movement has been predominantly influenced by large multinational companies and conglomerates. The country is shifting its focus from labor-intensive factories to more sophisticated methods of production. Key shifts include the evolution of its traditional sectors, closer collaborations with component manufacturers, government-backed investment in emerging industries such as aviation maintenance and medical tourism, and investments in infrastructure improvements for smart factories. The government is also incentivizing small and medium enterprises with tax breaks to adopt more competitive manufacturing practices.
Southeast Asia is a prime candidate for new factory locations because it offers a blend of low costs, specialized skills, and relatively free access to Western and Asian markets. In terms of productivity-adjusted wage rates, ASEAN economies such as Indonesia, Malaysia, the Philippines, and Thailand rank among the most competitive in the world. Boston Consulting Group (BCG) estimates that ASEAN manufacturing output grow by an additional USD 400 billion to USD 600 billion a year by 2030. However, it has been reported that over 45% of Asia-Pacific manufacturers struggle to outpace competitors due to a lack of innovation, skilled workforce, and technology. According to Rockwell Automation’s report, 44% percent of APAC manufacturers plan to adopt smart manufacturing by next year. However, the biggest barriers to adopting smart manufacturing are employees’ resistance to technology adoption and change lack of skill set to manage and implement the technology, and lack of clear definition of the value and the return of investment of the implementation of smart manufacturing. As a result, 88% of APAC manufacturers plan to maintain or grow employment due to technology adoption.
According to Precedence Research, the global smart manufacturing market is projected to grow at an impressive CAGR of 16% during the forecast period 2023. The global smart manufacturing market size was valued at USD 226.3 billion in 2022 and is expected to reach USD 985.5 billion by 2032. The market growth is driven by increasing demand for connected supply chains and knowledge-based manufacturing that are equipped with advanced modeling, sensing, control, and simulation capabilities. With the advent of the Internet of Things (IoT) revolution, there has been a significant transformation in the manufacturing sector in the form of automation and digitization. Further, cloud technology, the Industrial Internet of Things (IIoT), and industrial analytics are anticipated to play an important role in the proper growth of the market.
The Asian Pacific smart manufacturing market size was estimated at USD 83.73 billion in 2022 and is projected to surpass USD 364.61 billion by 2032, growing at a CAGR of 15.9% from 2023 to 2032. Moreover, the Asia Pacific region holds the largest market share of around 37% in 2022 and is also predicted to hit as the fastest-growing region over the forecast period 2023 – 2032. Smart manufacturing has been gaining momentum in the Asia Pacific region in recent years. In addition, industries face increasing regulatory demands concerning product safety, quality standards, environmental impact, and data privacy. Smart manufacturing technologies play a crucial role in helping manufacturers adhere to these regulations through real-time monitoring, traceability, and quality control mechanisms. As a result, government initiatives and compliance to support digitalization are expected to drive significant growth in the smart manufacturing industry in the region.
Conclusion
The challenge to begin may seem daunting. As ASEAN countries consider how to build their smart factory, they can begin with investments with a focus on specific opportunities. Once identified, digitalization and insight generation fuel actions that can drive new value. Building and scaling the smart factory, however, can be as agile and flexible as the concept itself. Manufacturers can get started down the path to a truly smart factory at any level of their network creation can begin with the scale from a single asset, and use an agile approach to iterate and grow. It can be more effective to start small, test out concepts in a manageable environment, and then scale once lessons have been learned. The solution can scale to additional assets, production lines, and factories, thus creating a potentially exponential value-creation opportunity.
Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech