Preparing APAC Manufacturers for the Modernization of Manufacturing Practices

James Prestwood from ABI Research shares his insights on technology adoption in Asia Pacific and how that’s impacting the industry at large.

Digital transformation has become a critical driver of competitiveness and growth in the Asia-Pacific (APAC) manufacturing landscape. Companies across the region are increasingly embracing new technologies to enhance operational efficiency, reduce costs, and become more sustainable.

In an interview with James Prestwood, Industry Analyst, Industrial and Manufacturing, at ABI Research, we discuss some of the trends and challenges in APAC manufacturing, as well as opportunities for businesses as they head towards a more digitalized future.

Investing in technology across SEA

While countries in the region are at different stages of smart manufacturing adoption, there is steady growth overall. According to ABI Research, Southeast Asia (SEA) is forecast to see digital spending rise from $101 billion in 2024 to $302 billion by 2028, with top spenders being Malaysia, Thailand, and Singapore.

Prestwood noted that these investments are made against the backdrop of the China Plus One strategy that is seeing China-based businesses increasingly invest in other economies, notably in SEA, helping to drive significant growth in their manufacturing markets and increase adoption of more ‘digitally mature’ production methods.

He said, “The support of governments particularly in countries like Thailand, Vietnam and Malaysia have also boosted the use of technology in manufacturing, and this is great to stimulate change in the industry in the short term. However, in the long run, if manufacturers in these countries want to be market leaders, they must truly recognize and value the impact that digital transformation can have on their operations. This will allow them to push investment and adoption in new technologies, rather than just reacting to government tax breaks and subsidies to drive spending.”

Technology as frontline co-pilots

In APAC, the growing talent gap has become a concern as more companies are faced with an unskilled workforce.

According to ABI Research, common technology use-cases for manufacturers include data analytics and predictive maintenance.

Prestwood highlights that while technology is a critical element for improving production processes, it is not a silver bullet and requires symbiotic change in workplace culture.

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Upskilling workers, encouraging accountability across all levels of the organization, and employing effective change management strategies is half the battle. Without acting, most deployments will fail at pilot, and not achieve the scale required to drive organization-wide impact.

Breaking new barriers with AI

From Manufacturing Execution Systems (MES), Product Lifecycle Management (PLM) and Quality Management Systems (QMS), manufacturers have a wide range of solutions to support and ease day-to-day operations. “These software solutions represent excellent foundations for any manufacturer’s looking to drive systemic change in their production processes,” said Prestwood.

They allow manufacturers to begin the process of linking data together from across their operations, setting the stage for the creation of comprehensive digital threads and deploying advanced tools such as AI.

Furthermore, the advent of hotter technologies like AI and generative AI (Gen AI) will continue to be a game changer, but only for those who are equipped and prepared for it.

Prestwood cautioned businesses against the implementation of Gen AI tools and applications if they do not have a data architecture set up for it. “In many cases, these solutions are reserved for manufacturers who have really got to grips with their digital transformation and data collection. There needs to be strong connections between technologies, workflow processes, and data collection in place to make good use of Gen AI tools, and without these, companies can end up investing a lot for very little payout”.

Find out more about some of the digital adoption realities in the manufacturing sector, and how businesses can overcome these hurdles to achieve successful digital transformation. Watch here.

Published October 25, 2024