Case Study: From spices to IoT - MIDA | Malaysian Investment Development Authority
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Case Study: From spices to IoT

Case Study: From spices to IoT

11 Jan 2021

Gary Gan, managing director of Hexa Food Sdn Bhd, started out selling flour and spices to food companies from a humble shop 16 years ago. He had taken over the company, originally named Krisanya Sdn Bhd, in a joint venture with family members and other individuals.

Today, Hexa has expanded quite substantially and sells, among others, curry powder, herbs, seasonings and ground spices, all of which are certified halal.

By 2015, Hexa was exporting to at least five countries. In the midst of planning its overseas expansion, however, Gan realised that he had to improve his factory’s processes. “One concern when it comes to food products is food safety and quality. If there are any problems, our products will be rejected and we will incur a lot of losses.”

This led him to explore the use of the Internet of Things (IoT) two years ago to address these problems. Instead of relying on manual checking, inspection and data collection for quality control, Hexa could rely on IoT to monitor these processes remotely.

“You don’t need to implement IoT on everything. We have a few key machines and critical points that are digitalised [with IoT]. For instance, one critical point that we have in our factory is temperature. If the roasting temperature is too high, you will over-roast. Weight is also very important. If your recipe is supposed to produce 250kg of output but you generate 260kg, then that indicates that something is wrong. Another factor is the size of the products,” says Gan.

Hexa also started working with Huawei to build a computer vision system that can detect products within specification. Otherwise, the system automatically rejects them from the pile. “You can use it to determine the good chillies and bad chillies [for producing curry powder] by looking at the average size or colour,” says Gan.

So far, the company has benefited from using the technology in various ways. “A misconception that people have about IoT is that they can save 30% to 40% in costs from one single category. But IoT actually brings benefits to various processes. For instance, it increases efficiency by 10%, reduces wastage by 10% and increases profitability by 10%,” he explains.

Starting an IoT team

The solutions were so useful for Hexa that, in 2019, Gan co-founded Hexa IoT Sdn Bhd to offer its IoT solutions to companies that face similar challenges. “We have a good team of people managing the IoT project. If we disbanded them after installing IoT in the factory, it would be quite wasteful. So, we decided to form a standalone unit,” he says.

Hexa IoT is powered by Huawei and aims to empower small and medium enterprises (SMEs) with the latest IoT technologies to improve manufacturing quality. The products include environmental sensors, smart thermal imager sensors and smart weighing solutions. 

“Automation and IoT go hand in hand. Automation enables machines in the factory to run by themselves. IoT allows you to monitor the machines to see whether anything is wrong, and you can get all this information on your dashboard,” says Gan.

How did they start?

Gan knew that IoT and digitalisation were things the company had to embrace sooner or later to make its processes more efficient and accurate.

He started the learning process, which he says takes three to four months, by hiring interns. “We explore new ideas with our interns because they have the time and they are usually very interested in new topics.”

The interns researched how other companies were using technology to solve problems similar to those faced by Hexa, adds Gan. “They scoured for information. The more we knew, the better we would know whether we were moving in the right direction.”

In total, he estimates that the company spent just below RM1 million to implement IoT in Hexa and set up Hexa IoT. The cost for a regular company to implement IoT in its factories could be around RM100,000 or less than that, he says. 

“To be honest, the monetary investment part of it is easier. It’s just a question of whether you have enough resources, and these things become cheaper over time. But the exploration stage, where you have to learn about the technology and how it can solve your problem, takes longer,” says Gan.

Tapping into a nascent market

So far, the take-up of Hexa IoT’s services is normal, Gan says. They receive most interest from players in the food, agriculture and aquaculture industries. Many of its potential clients are still waiting for their grant applications to the Malaysian Investment Development Authority to be approved, he adds.

“Only a handful of companies are expanding regionally. IoT benefits these companies the most. Companies that are expanding regionally need to go into mass production, at which point they will definitely need IoT … They have no choice but to head in this direction because margins are going to become thinner and, if any of their manufacturing processes are not efficient, they will lose out,” says Gan.

What could be done to increase the use of IoT among Malaysian companies? Gan believes more IoT and automation service providers with affordable solutions are needed. “The big enterprises can afford solutions from players such as ABB, Siemens and Schneider. But SMEs are in a bind,” he says. SMEs have to justify whether the cost of implementing a new technology is worth it.

“Even new competitors in this market would be good. This is an up-and-coming sector. We are also trying to work with start-ups to solve problems.”

The government has many good initiatives to help companies adopt IoT and automation, but the timeline of implementation could be accelerated, Gan adds. 

“For many of us, whatever [incentives] we receive to invest [in automation], we eventually pay back in terms of tax. The recipients will pay it back in tax in three or four years’ time, as long as it approves these incentives for the right companies and makes sure there are no leakages.”

Source: The Edge Markets