Malaysia’s Lighthouse Project: The Beacon of Malaysia’s Future Industries

Many companies are applying the Fourth Industrial Revolution initiatives in manufacturing. Still, few managed to integrate Industry 4.0 technologies at scale to escape from the inertia of “pilot purgatory”, thus unable to bring manufacturing innovation to realise significant economic and financial benefit. Since 2016, the World Economic Forum (WEF) in collaboration with McKinsey & Company (McKinsey) have been monitoring the progress of advanced manufacturing worldwide to identify leading organisations with key factors that differentiate them as the front runners of the Fourth Industrial Revolution – the “Lighthouses”.

This selected group of “lighthouses” have taken their smart manufacturing journeys from pilot to integration at scale, serving as beacons to guide others in overcoming challenges in their production systems through the adoption of leading-edge technologies such as artificial intelligence, additive manufacturing and advanced analytics.

WEF and McKinsey launched the Global Lighthouse Network[1] in 2018 as a research collaboration to bring together the most advanced factories in the manufacturing world for a cross-company learning journey.

The network identified 44 lighthouse factories; 14 of which are recognised as end-to-end (E2E) lighthouses, integrating manufacturing innovation from their suppliers through to their customers and beyond.

By embracing the principles of the Lighthouse model, industries can jumpstart the current productivity stagnation and reset their benchmarks for operational and financial key performance indicators (KPIs).

In tandem with this, lighthouse factories can create a better, cleaner world through new levels of efficiency in manufacturing and its related ecosystem.

Escaping from “pilot purgatory” remains a challenge for Malaysian companies seeking to achieve the transformational impact of the Fourth Industrial Revolution. The secrets of scaling lie in the fact that the Lighthouses not only create a new operating system that becomes the standard blueprint for the entire company. They also stay focused on innovating and transforming one value chain first, before scaling their capabilities to other parts of the business.

The Global Lighthouse Network includes 44 sites where Fourth Industrial Revolution/ Industry 4.0 technologies are successfully deployed at scale (Source: McKinsey & Co.)

Referencing Mckinsey’s Insights ‘Lighthouse’ Manufacturers Lead the Way – Can the Rest of the World Keep Up?’[2], lighthouses embody several distinct characteristics, which include:

• Technology diffusion that includes both large and small companies Fourth Industrial Revolution innovation is accessible not only to large organisations but also to SMEs, which can achieve transformative impact by focusing on pragmatic solutions that do not require large investments.

• Located in both emerging and developed economies Lighthouse is not an exclusive domain of developed economies. Adoption of Industry 4.0 technologies for smart manufacturing are also paying off in the manufacturing sectors of emerging economies that have been benefitting from low labour costs.

• High impact with the minimal replacement of equipment Lighthouses achieve high impact with the minimal replacement of equipment. Most of the lighthouses were created by transforming existing brownfield operations through optimising existing infrastructure, retrofitting existing machines to be compatible with new technology, and augmenting it with modern machinery.
• Open innovators and collaborators Lighthouses are open innovators and collaborators. They engage in an innovation network comprising the industry, business, government and the social sector, including academia.
• Scalable technology platform Technology adoption at scale can have a radical impact on organisations. Lighthouses would be able to showcase successful integration of several use-cases in an agile working mode, which allows them to do proofs-of-concept in a short time period, improve the solution based on findings and go quickly from pilot to scale-up.
• Injectors of human capital Lighthouses are injectors of human capital. Contrary to widespread concerns about worker displacement, lighthouse factories are not deploying technologies to replace operators with machines, but are transforming work to make it less repetitive and more interesting, diversified and productive.
• Industry leaders that are resetting benchmarks Lighthouses are resetting industry benchmarks for the manufacturing sector as they are prioritising new operational and financial KPIs. Efficiency increases as companies employ different use-cases to transform their operations and lead the broader manufacturing community to accelerate an end-to-end transformation.

Malaysia’s Lighthouse Project aims to accelerate industry transition towards the future of manufacturing by deploying technology,transforming the workforce and scaling an end-to-end supply chain beyond the pilot phase. (Source: MIDA)

As the Government recognises the prospects of local companies in driving the economic growth of Malaysia, MIDA would like to encourage industry stakeholders to take proactive steps to leverage on the available Government support to be trusted suppliers of the Lighthouses’ supply chain network. MIDA is looking forward to having more local companies to integrate into lighthouse operations.

MIDA has taken a proactive step to embrace the Lighthouse initiative by introducing Malaysia’s Lighthouse Project during a webinar session with the National Chamber of Commerce and Industry of Malaysia (NCCIM) on 21 May 2020. The Lighthouse Project aims to reposition Malaysia to be among the top global manufacturing nations through the adoption of Industry 4.0 technologies as well as to assist existing companies from various industrial sectors to transform and emerge as lighthouses.

This also forms part of MIDA’s continuous effort in driving the initiatives of Industry4WRD[3], Malaysia’s national policy on Industry 4.0, towards reality.

This is in line with the current national Industry4WRD policy for industries to adopt the latest digital technologies and further accelerate towards the future of manufacturing by deploying technology, transforming the workforce and scaling beyond the pilot phase. The Lighthouse initiative presents real-world evidence to dispel widespread myths and misunderstandings that pose as obstacles to the adoption of innovative technologies at scale.

Companies and governments can work in partnership to ensure the diffusion of technology and its subsequent benefits. A lighthouse network has the potential to transform factories into creative, entrepreneurial and exciting places to work. If appropriately trained and up-skilled, today’s line workers will play valuable roles as problem-solvers and innovators. This presents the opportunity to create a future workplace that attracts and excites the best and brightest of the next generation.

Companies who are interested in being part of the Lighthouse On-Boarding project are welcome to register their interest at MIDA’s website: https://www.mida.gov.my/home/malaysias-lighthouse-project/ posts/. This project offers an unrivalled opportunity to not only highlight the transformational efforts of advanced manufacturers but also to create a shared learning journey that will help manufacturers of all sizes around the world and across value chains to capitalise on the positive potential of the Fourth Industrial Revolution journey in Malaysia.