Automation: Adding a touch of creativity to IR 4.0 - MIDA | Malaysian Investment Development Authority
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Automation: Adding a touch of creativity to IR 4.0

Automation: Adding a touch of creativity to IR 4.0

10 May 2021

Xteven Teoh, founder and managing director of XTS Technologies Sdn Bhd, is always on the lookout for creative and innovative design engineers. He needs these talents to join his growing team of engineers, who are eager to create automation solutions for clients of all sizes and industries.

He gives an example of a recent bid that the company won over a China-based competitor. It involved a simple task: Automate a cake-flipping process for a client.

“The China vendor had a way cheaper quote but they used a bulky machine. We observed the client’s working space, which was very tight, and installed a robot that can function there without touching surrounding machinery. We also designed a conveyor belt to return the tray to the front baking area after a cake is flipped,” says Teoh.

“We used the concept of gravity instead of electricity to power the conveyor belt. Using the latter would require wiring to be done and is less flexible. Our price was almost 50% higher than our competitor but we won. You need to be very innovative and hands-on in these kinds of projects.”

Teoh is pretty innovative himself. He founded the company in 2010, originally to conduct ultrasonic cleaning solutions for electrical and electronics companies. He then moved on to serve the automotive, oil and gas, food and beverage and the logistics and warehousing industries. 

“In 2015, one of my clients told me that we offer good support and have a lot of great ideas on automation, so why don’t we offer automation solutions? Before that, we were mainly trading parts and putting machinery together for clients,” says Teoh. 

Now, XTS Technologies is known as a systems integrator. It customises machinery to serve the client’s automation needs. The solutions it offers include a smart factory module, assembly or conveyor automation and automatic storage and retrieval systems (ASRS) for warehouses. It counts brands such as DRB-Hicom Bhd, Guan Chong Bhd and Top Glove Bhd as clients.

To meet the increasing demand for automation, Teoh launched an equity crowdfunding campaign on pitchIN late last year and managed to raise RM1,688,400 from 87 investors. 

“Our sales dropped by about 20% in 2020 due to the pandemic, but the demand came back this year. In the first quarter, we had already hit 75% of last year’s sales. Thanks to MIDA (Malaysian Investment Development Authority)’s Smart Automation Grant (SAG), we are also seeing significant interest from small-and-medium sized enterprises (SMEs). We have a lot of enquiries from companies but we don’t have enough manpower to support the demand, which is why we launched the campaign,” says Teoh. 

Customisation needed for local automation

Going into automation is a passion project of Teoh’s. Prior to this, he was earning good margins by trading parts and fixing up machinery for clients. Venturing into this new business of designing and fabricating automation solutions has given him a lot more stress, he jokes. “But this is my passion. I want to help out the industry here and hire local engineers. If we want to become a high-income country, we need automation.”

Demand for automation has been picking up among local companies since the pandemic, given the shortage of foreign workers. Lack of knowledge about how to start and cost, however, is still a barrier to wider adoption, he says.

Another challenge, Teoh says, is that most factories in Malaysia are engaged in high-mix and low-volume manufacturing. This is probably due to the relatively small population size in Malaysia. 

“High mix means that I may have to manufacture cups in sizes from 1 litre to 10 litres in one line. Our machine needs to adapt to this demand. If you buy machines from overseas, they’ll say that this kind of production line cannot be automated because it’s too high mix,” says Teoh.

This requires more customised automation solutions. “In China, you can have one factory line for one type of bottle, so they don’t need as much customisation.”

The size of the market also dictates the amount of money companies are willing to spend on automation. He observes that some companies are more willing to automate their plants in Indonesia, where they have bigger factories, instead of Malaysia. 

That is why XTS Technologies has a footprint overseas as well. Teoh hopes to expand that presence with an initial public offering soon, following in the footsteps of other locally listed automation players. 

At the same time, Teoh is helping SMEs apply for the SAG and bank loans, as well as connecting them to equipment-leasing companies like ORIX Leasing Malaysia Bhd.

“The SAG is easier to apply for than the previous automation grants. We also offer modular solutions by starting with simple machines that cost around RM30,000, just so the clients can see the impact of automation,” says Teoh.

The future of automation

Teoh is confident that the interest in automation among local companies will persist beyond the pandemic, given that issues with foreign workers are likely to continue cropping up. 

Eventually, he thinks that most manufacturing processes may be moved to other countries, and Malaysia will become a strategic operation or distribution hub. This will translate to higher demand for logistics and warehouse automation solutions, which is something that XTS Technologies is focusing on through its ASRS.

“We want to automate the whole process from raw material handling, packaging, warehousing and distribution,” says Teoh. 

The difference between a normal warehouse and an ASRS-equipped one is that the former relies on manpower to transfer and store goods via forklifts. 

“We use RFID (radio frequency identification) in the ASRS to track the location of goods,” he says. The company also uses automated guided vehicles to carry the goods around the warehouse.

Can picking and sorting the goods, which is currently still done by humans, be automated? Teoh says it’s too expensive to be implemented at the moment.

“Warehouses are really in demand in Malaysia now. Huge companies like IKEA and Tiong Nam invested in new warehouses even during the Covid period. We are targeting this trend,” says Teoh.

Source: The Edge Markets