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UPGRADE TO INDUSTRY 4.0 - Part 2

Indonesia Industrial & Manufacturing Upgrade Problems


Today, from my point of view, we have a problem in Indonesia engineering ecosystem. The technology are increasing but the price of the material also increasing. Upgrade system to a newer system doesn't mean it will overcome the common problem. Why?



New Technology = Long Time Research = High Equipment Price?

Everytime the new tech for industrial out to market, it always have a high price than previous technology.Those guy, that invented the new technology are doing lot of research, waste their time. So its enough to pay them high. But when we buy the tech, did we and others are joining to pay them? to pay the effort? If 25 techologist doing great technology then 25 thousand factory will pay for it because 25 million people gonna get the result. So what the problems here: The bridge between the 25 technologist and that 25 thousand factory are in questions?


High Equipment  Price = High Investment to Upgrade

During my travel to lot factories, the enginering always ask the same question: "which you prefer to buy a new machine or upgrade old machine?". The answer will be back to what sales technical call as BEP or break even point. This BEP are the main weapons for sales when they try to makes the factory owner to buy their products. Who want to buy if it doesn't make a thing changes? People want to improve. If the price of equipment are too high, people will re-think to  use the newest technology. 


What is the improvement? 

From stakeholder point, what they call an improvement are a profit. So how we get the more profit? more sales? more marketing 20sec in media? Nop. From industrial point, we only improve the system (upgrade or buy newer tech) based this points:

  1. High Operating Cost -> Old system got high operating cost (rare sparepart, high downtime, etc.).
  2. Loss Production Quantity-> high downtime are reducing profit.
  3. High Efficiency -> New proposed tech system makes high efficiency (this could be increase production speed and/or lowering operating cost).
  4. Loss Quality-> Common problem that reduce quality that can makes lost of trust from client.
  5. Regulations -> Investor/Goverment Compliance Requirements like GMP tracing & logging in pharmaceutical or food industries or Environment Gas Analysis Data (ie. coal power plant stack).

So if the new tech to be applied need rethink twice. Do the application can improve the actual production? How long the BEP can return? Do it can makes the system follow the regulations? Do you upgrade just to impress the fund raiser?  or you want to upgrade it because you want to spending end of year budget so the next year can get same or more budget ? :D


Implementation Point

In my opinion, the upgrade of system MUST have positive impact. Start from above three point. With the high price of newest tech, it shoud overcome common mistakes/problem.

In example, the data entry boy always wrongly typed or put the barcode code for a product pallet. In result, the logistic guy always send the wrong products to wrong client. This can make client lost trust, time, and makes they switch to competitor. Problem is who responsible? the data entry guy said it was the other wrongly put but the other guy said it was wrong typed? in the end, they blame it to the logistic guy take the wrong pallet. Meaning it  lost quality.

Now how the automation can help to overcome this common mistakes? We can use integrated RFID tag or card. The system automatically put the RFID tag into a pallet after wrapping. When it enter the warehouse, the data entry guy use reader and it automatically keep in IT database and then when it ready to send, the logistic guy make sure it was the ordered products pallet. The system itself only around  $5000 with a 100 tag. If we compare to a lost of quality, it still affordable.

So implementation of new tech hopely can increase above points. If the price are too high, people will reconsider to upgrade /buy to a new system. The implementation should be reasonable and have positive impact to a process/manufacturing system.


Automation for Production Point

Logically, the improvement of system can bring production to positive implementation. The increasing efficiency ie. speed, quality, and uptime are increasing. This means more order, trust, and profit from the client. The implementation of Automation can lower production cost while maintain the quality. Lower price  means lower  the sales price. Same Quality means keeping client trust.

So the lower price doesnt always  mean low quality. The good production system improvement can make the efficiency to lower the price while maintain the quality. This is the purpose of business improvement in quality management.   


Ask the principle, don't ask stockist

I was once working for a stockist. The management didn't allow us to design using newest technology. They want to sell old stock because they said "old over stock are dead money". I dont agree with this, the problem are the management had stockpiling the wrong items, he dont ask the engineer or client.

That is why, only upgrade with experiences and specialist. Sometime, the industrial can get the wrong person that main purpose are to achieve his own sales target or sale the over stock in supplier warehouse  while forget the purpose to help the manufacturing  & plant to improve. It is not a secret that most stockist buy automation part to stock it and sell it with higher cost.

My advise is to always contact the automation part manufacturer for their support. It similiar to invest and buy a house and wait the land/house priceto increase in the next years. The strategy like this must be stop and you need to invite engineering firm that sole purpose not stockist and not investing.


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