This article was originally published in The Business Times on June 11th 2020.
Creating the Singapore Advantage in Industry 4.0
It usually comes as a surprise to many to learn that as of 2019, 20.9% of Singapore's GDP is owed to the manufacturing sector (singstat.gov). Ensuring this mixture is maintained in the future requires enhancing the strength of this sector against a growing regional and global competitive market. This competition is heightened naturally due to high costs such as talent and real estate – which, in Singapore makes maintaining a strategic competitive advantage difficult. Although there are great benefits such as a skilled workforce, strong IP protection and technology/research capabilities, it can be argued that regional countries are pushing and striving heavily to topple these advantages. At some point, other nations will catch up. This means that these current advantages will be less compelling for manufacturers to consider when locating production in Singapore or purchasing parts and components from Singapore.
Another competitive battleground is centered on automation, robotics, and analytics to keep production in Singapore. This often comes in the form of buying/purchasing this advantage. However, these same advanced solutions such as AGVs, Cobots and 3D Printing can just as easily be moved to a regional country where costs of operations/workforce, real estate and sourcing of raw materials is much more competitive. This leaves Singapore in a challenging situation and we must start looking beyond a "purchasing" style of competitive advantage. Instead we should capitalize on what put Singapore on the map for manufacturers in the first place: infrastructure. We need to look at building a competitive advantage in digital infrastructure that cuts across industries and provides a benefit that cannot be easily matched.
National Digital Infrastructure as a Competitive Advantage
Just as Singapore invested heavily into reliable electricity, clean running water, roads and seaports to ensure manufacturers can put down roots and flourish here, we need to invest into the next infrastructural requirement which is data.
Imagine a situation where every manufacturer, logistics firm and supplier is connected to a real-time digital network. Production processes are reported in real-time down to individual stations and items that are being produced. Materials in transit on land, in the sea or in the air are tracked down to the square meter. Suppliers in Singapore and around the world are fully synchronized to ensure things arrive on-time, built to the right quality, with the right specifications/credentials and completed in compliance with the best sustainable requirements.
Imagine the power and advantage any new manufacturer coming into Singapore will have. They can instantly plug-in to a digital ecosystem of suppliers, solutions providers, and integrate into a digital supply chain right from the start. This competitive advantage transcends individual industry sectors and puts Singapore on a standing of digital manufacturing prowess that other nations will envy.
Brick by Brick, Byte by Byte
Building this advantage comes at a cost. This requires the next level of digital infrastructure to be constructed. Just as it was difficult to build the roads to transport goods, to flatten the land for air cargo to land and to dredge the ports for container ships to dock, the construction of this nation-wide digital network will not be easy. It requires an unbiased, open, secure and real-time system. No one player nor vendor can do it all and this requires the participation of every manufacturer, solutions vendor and supplier to collaborate. More importantly, it requires businesses and operations in Singapore to realize that maintaining a competitive advantage is no longer about strengthening one's own organization, but opening up to build a Singapore digital manufacturing brand instead.
Selective data sharing, inter-organizational collaboration and leveraging data as the means of communication needs to be the new norm. A mindset change is required of every SME, LLE, and MNC to connect, share, coordinate and optimize. This is a monumental shift from doing business as usual and requires that we look beyond a singular facility and realize that in order for manufacturing to thrive in Singapore, a cohesive and optimized ecosystem is required to maintain competitiveness.
Digital Ecosystem for Innovation
Just as roads, airports and seaports brought businesses to Singapore, a National Digital Infrastructure would bring a domestic innovation hub for startups, academics and budding entrepreneurs. Of the vast number of deep tech companies focused on machine learning, artificial intelligence, optimization and analytics, funding is only one aspect of the keys to success. The other aspect is having the vast data vaults and real-time data streams to drive those analytical engines, algorithms and models. In this scenario, both funding and data would be readily available to any able and passionate innovator and entrepreneur to start their journey in Singapore and have something that no other country can provide in the field of Industry & Supply Chain 4.0.
This National Digital Infrastructure ecosystem would sprout digital and traditional innovations as well. Real-time production data from all manufacturers in an area can be used to optimize the best timings for delivery pickups to minimize costs and reduce carbon emissions. A new startup can come up to analyze the breakdown patterns of equipment across every manufacturer in Singapore to better predict the failure rates of machines and perform preventative maintenance. Raw material consumption rates of competing companies can be pooled together to optimize ordering costs for restocking. New startups can be founded to help facilitate excess capacity in factories to sell to global markets for parts/components production. The list of new solutions is endless when the infrastructure is there. If you build it, they will come.
Sustainable Competitive Advantage for Singapore
The competitive market for manufacturing globally will only get tougher over time. It is inevitable that certain manufacturing sectors in Singapore will see their industries sunset. As consumer behaviors shift and buying cultures evolve, manufacturers must then change and adapt. As these happen, can a manufacturer remain competitive in Singapore? How will manufacturers survive as costs, talent and expenses increase? The answer is to embrace an open National Digital Infrastructure to ensure that even as businesses and manufacturers ebb and flow, the digital infrastructure stands firm.
Some will call this concept of a National Digital Infrastructure wishful thinking and a wild dream. The hurdles for traditional business to open up are too high. Mindset of business owners are too closed off. The number of objections can be staggering, but it will ultimately be a decision for Singapore and Singaporeans to make.
At Arcstone, we continue to champion the importance and need for a real-time data drive manufacturing ecosystem. Even as COVID19 is sending the manufacturing industry on a roller-coaster ride, Arcstone is driving the digital transformation and the creation of a National Digital Infrastructure. We have released the Singapore Unity Program and help manufacturers go paperless on the production floor with arc.lite. Let's work together to build that digital competitive advantage.