Digital Transformation: An Exploring Barriers and Challenges Practice of Artificial Intelligence in Manufacturing Firms in Malaysia

Abstract

Digital transformation has become very crucial in global market. Digital technologies have revolutionized the way industries operate, introducing the concept of “Industry 4.0” or the “smart factory”. Digital technologies have substantially transformed the business and society, bringing fundamental changes through the new emerging approaches of the circular and sharing economy. Artificial intelligence (AI) is now become an essential part in the manufacturing industry to enhance the performance and boost the demand and productivity in the manufacturing firms. However, there are some barriers and challenges face by the manufacturing firms in implementing the AI due to the infancy stage of AI in Malaysia such as lack of talent, lack of incentive and innovation. Therefore, the purpose of this study is to identify the barriers and challenges in implementing AI. In this paper, managers from the manufacturing companies were selected as respondents based on Federal Manufacturing Malaysia Directory. The questionnaires are distributed to the respondents by using the online survey. A total of 93 questionnaires was collected with feedback rate, 23.3%. Descriptive analysis is used to identify the barriers and challenges. The highest level for barriers of AI is lack of talent. The highest level for challenges is no experts in company. This research provide input for manufacturing companies to improve the barriers and challenges for future improvement in implementing AI.

Retaining knowledge workers for effective digital transformation

“…Digital transformation refers to using technology to enhance the customer experience and expedite business processes [1]. The coronavirus disease 2019 (COVID-19) pandemic has accelerated the digital transformation of small and medium enterprises (SMEs) [2]. Knowledge worker's retention hinders the digital transformation process of SMEs in Malaysia post-COVID-19 pandemic [1].…”

“…Knowledge workers are an important key resource for SMEs in developing countries to survive in the wave of digital transformation. The success of SMEs in digitalization relies on the capability of the organizations to place knowledge workers in the most appropriate job positions to formulate a strategic digital blueprint for the organizations [2].…”

“…More than 70% of SMEs have not yet undergone large-scale digital transformation because of their failure to retain knowledge workers who can collect and disseminate information effectively through the application of digital technology [1,2]. They face difficulties in retaining the knowledge workers needed to help achieve the digital transformation goal of the company.…”

“…They face difficulties in retaining the knowledge workers needed to help achieve the digital transformation goal of the company. SMEs lack adequate knowledge workers that can lead and advise them with all-round changes in business strategy, organization, and operation [2]. Most SMEs have a strong desire for digital transformation, but they fail to retain knowledge workers who have clear strategic goals in technology development and business capacity building [4].…”

“…Most SMEs have a strong desire for digital transformation, but they fail to retain knowledge workers who have clear strategic goals in technology development and business capacity building [4]. The knowledge worker turnover rate in SMEs in Malaysia is two times (10.1%) higher than in Japan (5%) [2]. This implies that Malaysian companies are less successful in retaining knowledge workers and tend to lose more productivity and valuable knowledge compared to their counterparts in Japan [1].…”