Thailand 4.0 Connected Factory, Opportunities & Challenges - Takeaways from AIBP Insights Thailand

ASEAN will grow into the world's 4th largest economic bloc by 2030. Demographics, geopolitical shifts, and government policies provide the foundation for ASEAN states to capture growth in the industrial sector.

Acknowledging this shift, countries in the region have been driving Industry 4.0 initiatives to spur innovation within their local industries. Malaysia, for example, has introduced Industry4WRD in 2018 to provide a comprehensive transformation agenda for the manufacturing sector. (Summary of Industry4WRD discussion). In Thailand, the government is determined to create a value-based digital economy through the Thailand 4.0 initiative over the past few years. This is aimed to unlock a number of economic challenges that Thailand is facing including the middle-income trap.

Contributing more than a quarter of GDP, manufacturing is an important pillar of the Thai economy. As shared by Dr. Djitt Laowattane, Executive Advisor, Eastern Economic Corridor Office (EECO), the Thailand 4.0 initiative aims to further expand the capabilities in mainly 10 S-Curve Industries:

We had the opportunity to bring together our local enterprise partners in Thailand this week, including Fabrinet, AAPICO, PTT, and Zuellig Pharma, to discuss the latest development of digitalisation initiatives in Thailand.

Latest Industry 4.0 Projects

Soknath from AAPICO, a Thailand-based company focusing on automotive parts manufacturing and car dealership, started the session by sharing AAPICO's smart factory vision. He envisions a factory plant where everything is connected with an integrated data platform that combines all information from both IT and OT segments. As a first step, AAPICO is focusing on machine, robot, and PLC monitoring systems through a dashboard that can monitor OEE (Overall Equipment Effectiveness) in real-time.

Ryan Chang from Avalue and Ivan Lee from Arizon both commented on Soknath's presentation, noting that a number of enterprises in Taiwan have taken similar first steps as AAPICO. Ryan shared that visibility on machine performance usually results in reduced overall machine downtime by 70% based on his experience, while Ivan shared a case study on the use of RFID for asset monitoring in Taiwan.

While AAPICO utilises technology to monitor their machinery, Fabrinet, an outsourced process engineering and manufacturing services company, has a different use case. Ampon Rojanabenjakun, Director of Quality, and Ornsuda Narkthewan, Senior BOM Manager, from Fabrinet shared that for them, their latest project focuses on how to utilise technology to reduce material defects that can cost them millions in losses. They implemented a system that integrated their defect monitoring system with their ERP and MES through a centralised application, that can be used to flag any irregularities and assess the potential risks. For the past year alone, the system has pointed out 13 critical issues that would otherwise have cost Fabrinet almost USD$4 million.

Pichet Ketruam, Country Manager, Indochina, Vertiv, applauded the initiatives by both AAPICO and Fabrinet and suggested that other industries should learn how to take the first step of the digital transformation journey from them. Based on a number of projects that he has been involved in, K.Pichet believes that it's imperative for enterprises to identify the problems that they want to address first to maximise the utilisation of technology. Technology should be treated as a tool to help businesses. Rather than being a nice to have feature, it is a means to an end.

Another interesting case study was brought up by Athikom Kanchanvibhu, Vice President, Transformation & Project, Zuellig Pharma. K.Athikom shared his case study that capitalise on blockchain technology to change customer experience for the better -. Zuellig Pharma uses blockchain to connect the value chain in the industry to allow consumers to have full visibility of the medicines/vaccines that they are buying. Consumers will be able to check:

• If the products are genuine or counterfeit,
• Whether it's legally distributed, and
• Where the products are manufactured.

Digitalisation Challenges

The Covid-19 crisis today poses a conondrum: Should companies invest more in technology while their cash is diminishing? Or should they hold off their expenditure on digitalisation?

The panelists agreed that companies should strike a balanced approach at the moment - they can't run away from digitalisation as it has become a necessity while at the same time, they have to optimise their resources.

Witit Tadakittisarn, who is responsible for PTT's digital strategy, brought up an interesting point on digitalisation initiatives during this downtime. He believes that companies should relook at their internal capabilities and focus on how to improve current systems. K.Witit shared that one of the focus within his organisation is to break down functional silos. This includes integrating IT and OT teams, and information seamlessly to maximise their current processes and fully utilise their existing data.

CK Liu, CEO of DSP, echoed this sentiment, saying that internal stakeholder alignment is an important process in digital transformation. In implementing a predictive maintenance solution, for example, he shared how he had to bring multiple stakeholders inside his client's organisation to align their expectations. Usually, it is not an easy feat as different stakeholders have different KPIs too.

Ecosystem Play

In order for Thailand to realise Thailand 4.0, it is crucial that all stakeholders work hand in hand to solve business challenges and explore how technology can offer solutions to these problems. 

The problems faced by enterprises are complex in nature most of the time and fragmented solutions won't make things better, as shared by Michael Chen, Head of International Business of ICP DAS. Dr. Patrick Tsie, Senior Director - Technical Marketing of Qualcomm agreed on this point. Both Michael and Dr. Patrick believe that technology providers should be open to working with each other to deliver solutions that can best fit enterprise end-users' requirements. Dr. Patrick also shared Qualcomm's initiatives to build an IoT ecosystem that can provide solutions seamlessly to the enterprise end-users. This includes solutions from the connectivity layer all the way to the application and security layers.

Listening to all of these leaders sharing their thoughts and perspectives, I am upbeat about the approach that Thai enterprises are taking towards realising Industry 4.0 

As we carry on with our upcoming discussions across Asia, I look forward to connecting with each of the leaders again and explore how we can further create value for their organisations, and reimagine new businesses. Drop me a note at [email protected] if you are interested to be involved.