This presentation is a Proposal of how Industry 4.0 technologies can enrich the manufacturing SMEs in Egypt by describing the potential, challenges, and recommendations for successful implementation.

1. Pres ent By
Ah med Sob h i Elgazzar
MOT Ph. D. Can d id ate
Nile Un ivers ity, Giza, Egypt
Paper # (49)
IAMOT 2021 Conference Proceedings
ISBN: 978-1-77592-213-1

2. AGENDA
2
• Introduction and Research Objectives
• Research Method and Applied Technique
• Results and Data Analysis
• Proposed Solutions
• Conclusion and Recommendations
• Questions and Answers

3. INTRODUCTION AND RESEARCH OBJECTIVES
3

4. 4
This study is an attempt to contribute to the current researches on industry 4.0 by
highlighting the motivation of technology acquisition among the manufacturing
SMEs in Egypt and how it participates in the economy sustainable development in
the light of Egyptian 2030 vision, and the common challenges that hinder
investments at technology implementation.
Main Points:
• Manufacturing SMEs potential and contribution to the economy growth.
• Manufacturing SMEs motivation in Egypt.
• International economy challenges and dynamic markets (VUCA).
• Smart Factories and Technology Trends.
• Industry 4.0 technologies Application
• Manufacturing SMEs operation challenges and technology gap.
• SMEs scale up process, and technology selection pattern.

5. United Nation Initiative
5
Sustainable Development Goals 2030

6. Egyptian Vision
6
Egypt’s dimensions of sustainable development
Environmental
Economic
Social
Egyptian 2030 Framework and Objectives
Ref. Egyptian Ministry of Planning and Economic Development (2020), Egypt 2030 Vision.
Sustainable Development Goals 2030

7. Egypt
7
Egyptian 2030 Framework and Objectives
1: IMPROVING THE QUALITY OF LIFE AND STANDARD OF LIVING OF THE
EGYPTIAN CITIZENS
2: JUSTICE, SOCIAL INCLUSION AND ENGAGEMENT
3: COMPETITIVE AND DIVERSIFIED ECONOMY
4: KNOWLEDGE, INNOVATION AND SCIENTIFIC RESEARCH
5: INTEGRATED AND SUSTAINABLE ECOSYSTEM
6: GOVERNANCE OF STATE AND COMMUNITY INSTITUTIONS
7: EGYPTIAN PEACE AND SECURITY
8: STRENGTHENING EGYPTIAN LEADERSHIP
Ref. Egyptian Ministry of Planning and Economic Development (2020), Egypt 2030 Vision.
Sustainable Development Goals 2030

8. Egypt
8
Egyptian 2030 Framework and Objectives
1: IMPROVING THE QUALITY OF LIFE AND STANDARD OF LIVING OF THE
EGYPTIAN CITIZENS
2: JUSTICE, SOCIAL INCLUSION AND ENGAGEMENT
3: COMPETITIVE AND DIVERSIFIED ECONOMY
4: KNOWLEDGE, INNOVATION AND SCIENTIFIC RESEARCH
5: INTEGRATED AND SUSTAINABLE ECOSYSTEM
6: GOVERNANCE OF STATE AND COMMUNITY INSTITUTIONS
7: EGYPTIAN PEACE AND SECURITY
8: STRENGTHENING EGYPTIAN LEADERSHIP
Ref. Egyptian Ministry of Planning and Economic Development (2020), Egypt 2030 Vision.
Sustainable Development Goals 2030

9. 9
• World Bank publication (2021); highlighted the essential role of the small and Medium Enterprises
(SMEs) in improving national economies through creating jobs and reducing poverty level.
• SMEs represent about 90% of global businesses and more than 50% of employment worldwide.
• Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.
• Numbers increase significantly when the informal SMEs are included.
• 600 million jobs will be needed by 2030 to absorb the growing global workforce.
• In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs.
Ref. World Bank Group, (2021), SMALL AND MEDIUM ENTERPRISES (SMES) FINANCE
Manufacturing SMEs Contribution To The Global
Economy Growth

10. SMES IN EGYPT
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 In 2018/2019; Egypt has 2.5 million SMEs enterprises, representing 99% of the total non-agricultural
Sector.*
 Mobilize small individual savings as 78% of these enterprises did not receive any banking finance and
depended on the personal funding.
 In 2020 ; SMEs hired over 5.8 million Egyptians workers what represents 43% of the total number of
workers in the official sector.
 85% of SMEs believed their revenues will grow and hold steady over 2021, with 68% projecting an
increase.**
 SMEs provide opportunities to export their products and thus the acquisition of foreign currencies and
improving the balance of payments of developing economies.
 Increasing the percentage of the nationally manufactured products and the subassembly processing that
serves the national economy.
* Ref. World Bank Group, (2019), SMALL AND MEDIUM ENTERPRISES (SMES) FINANCE
**Ref. MasterCard MES Confidence Index 2021

11. 11
SMEs Roll In Achieving Economy Sustainable Development
Typically
Flexible and
Agile
Developing
Rural
Communities
Investment
Capital
Positive
Impact on
The
National
Economy
• Reducing unemployment.
• Improving the natural resources
utilization
• Building and improving labor skills
• Increasing the level of education
• Minimizing poverty
• Do not burden the banking system
• Depend on personal savings.
• Only seek loans under tough
conditions.
• Less over heads
• Fulfill the national demand of products
and services.
• Introduce substitutes of imported products
and services. (save hard currencies)
• Potential for export (generate hard currencies)
• Improve the national monetary cycle.
• Operations are simple
• Faster decision-making process in
comparison with large-scale
enterprises.
• Open for innovation and flexible for
adaptation.

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ECONOMY GROWTH MOTIVATIONS IN EGYPT
 Following the vision of “Digital Egypt” the MCIT in Egypt introduced strategy focused on the digital
transformation of core government services in the different areas such as education, healthcare, and
government services.
 National infrastructure upgrade (e.g. roads, industrial cities, communication, etc.)
 Building new Industrial cities , and free economic zones across the nation.
 Mega-investment in energy generation projects such as electricity, solar and wind power generators and natural
gas as essential requirement for manufacturing.
 Massive human power with lower wages compared with the western countries.
 Central Bank of Egypt directed national banks to increase financing programs to SMEs from 20% to 25% of
banks’ investment.
 Existence of several small and micro funding formal entities under supervision of Central Bank of Egypt.

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Volatility
Uncertainty
Complexity
Ambiguity
V
U
C
A
• Rapid change and fluctuation in demand and supply.
• Unexpected Challenges and Timing cannot be predicted
• Situation of inability to predict the future due to political, natural, and
economic changes.
• Lack of key information .
• Change is possible but not given
• interconnected factors that complicate the analysis and prediction
processes in order to reach rational conclusions.
• Overwhelming amount of information.
• Capacity planning challenge.
• lack of clarity and interpretation for changes due to the lack-of or
misleading information that cause inaccurate conclusions and
decisions.
International Economy Challenges and Dynamic
Markets (VUCA)

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VUCA status imposed a new nature of the business environment that
necessitates that enterprises should be more agile and innovative to
achieve growth.
Meanwhile, the adoption of effective and latest technologies becomes
mandatory, not optional.
This can be achieved via the adoption of the latest industrial
technologies and motivate SMEs to implement them through a set of
strategies that outline a specific roadmap regarding advancement
towards Industry 4.0.
International Economy Challenges and Dynamic
Markets (VUCA)

15. 15
Ref. Industry 4.0 Evolution, Source: https://www.gslab.com/industry-4-0
Industry 4.0
Industry 1.0
Industry 2.0
Industry 3.0
Industry 4.0

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• Represent leap forward from more traditional automation to a fully connected and
flexible systems.
• Support the transformation from the Mass Production Operation to an Agile Production
Operation to achieve the Market Fit objective.
• Provide data stream and connection between operations and production systems to learn
and adapt to new demands.
• Avail market analysis and changes prediction.
• Support the value chain fully integration.
• Achieve lean manufacturing process and Operation cost optimization and control.
• Quality improvement and controls (Proactive and Corrective plans).
Benefit of Smart Factories

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Big Data: Generate analysis insights for making several real-time decisions
from heterogeneous sources.
Cloud Computing: is the on-demand availability of computer
system resources, especially data storage (cloud storage) and
computing power, without direct active management by the
user.
AI ( ML & DL): Enhance production capability and efficiency to
a great extent at reduced costs. Robots are capable of
interacting with each other and can learn things eventually.
IIOT: Enrich devices with embedded computing that allows devices to
interact and communicate with each other as well as centralized and
decentralized controllers for real-time response and decision.
Connectivity and Communication Protocols: Enhance accessibility in Industry 4.0
and connectivity required for the value chain.
Industry 4.0 Technologies’ Application

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3D Printing: Enables the mass-customization process in a faster and cheaper way due
to its extended capabilities to fabricate objects with advanced attributes associating
with 3D modelling
Cyber-Security: Provides a reliable and secured communication
channels and essential authenticity management systems.
Augmented Reality: Virtual Reality that simulate the manufacturing
process and provides information through smart devices to make
decisions regarding the selection of objects.
Digital Twining: Allows the manufacturer to simulate experiments or
modifications real-time on virtual platforms replica before deployment
on physical objects via interconnected sensors. (CLONE SYSTEMS)
Industry 4.0 Technologies’ Application

19. RESEARCH METHOD AND APPLIEDTECHNIQUE
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Methodology Qualitative analysis (Delphi Method)
Objective 1. Define manufacturing SMEs challenges at present.
2. Assess the awareness of Industry 4.0 technologies and benefits for SMEs.
3. Define obstacles and challenges of technology acquisition.
4. List organizations’ scale-up and technology selection criteria.
Participants 20 subject matter experts with academic and hands-on experience with
average experience 15 Years for each
Field of
Experiences
• ICT Experience
• Manufacturing Engineering
• Industrial Consulting
• Quality Management
• Executive Directors
• Entrepreneurs
• Business owners.
Tools - Survey – Results discussions (2 rounds) –Final report
Research Method and applied Technique

21. RESULTS AND DATA ANALYSIS
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Reference to conducted survey; experts categorized the Manufacturing SMEs based on the manufacturing
phases and also potential industries that have national and internal demand (highly expected revenues with
the lowest investment) as following:
① Manufacturing SMEs categorization and Potential
Industries:
Industry
Manufacturing Phase
Plastic
Furniture
Food
&
Beverage
Chemicals
Textile
&
Fabrics
Clothes
&
apparel
Healthcare
&
Cosmetics
Metal
Electronics
Electrics
Automotive
Leather
Raw material conversion H H M M L - L H - - - H
Components manufacturing H - M M - - - H M M M H
Subassembly processing M M L M M M M H M M H H
Assembly processing -final
products
H H H M H M H H - - - H
H: High Profit Potential, M: Medium Profit Potential, L: Low Profit Potential

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Manufacturing SMEs’ current challenges
Note:
• Such challenges lead to lose the market share and revenue as well as customer dissatisfaction.
• Some of the SMEs went bankrupt or went out of business due to their inability to compete.
② Manufacturing SMEs’ Operational Challenges:

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• Ability to predict the market demands effectively.
• Effective supply chain management and integrations with suppliers and
distribution channels.
• The effective manufacturing process and waste management.
• Proper management for the scarce raw material and waste control.
• Accurate monitor of the set key performance indicators across the operation
process.
• Data analysis and insight across the value chain will support the real-time
effective decision-making.
• Supports the innovation of the products or processes.
• Decisions based on real data analysis and forecasts.
③ Industry 4.0 Technologies Benefit for SMEs:

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challenges of
technology
acquisition
SMEs’
Organizational
Factors
Technology
Providers’
Factors
Governmental
Factors
④ Obstacles and Challenges of Technology Acquisition:

26.  SMES’ ORGANIZATIONAL FACTORS :
26
• Knowledge gap about available technologies, applications, and providers.
• Availing the time required for technology implementation and training activities without
affecting the time for the operation.
• Change the regular and current operational processes.
• The cost of technology adoption CAPEX/OPEX and budget priorities.
• Labors commitment and capability for training and digesting new technologies.
• The cost of hiring skilled labor and training budget.
• Expected work stress and overload at the initial phases on technology implementation
till the go-live phase.
• The difficulty to measure the proof of the value of acquired technologies at early stages.

27.  TECHNOLOGY PROVIDERS’ FACTORS:
27
• Technology providers usually target the big scale enterprises with their complicated
operation processes and financial capabilities.
• Offered technologies and solutions are usually complex and require high skilled users.
• The licensing and operation costs don’t fit or match the SMEs' budget limitations.
• Unavailability of simplified orientations and training programs for SMEs to raise
awareness about different technologies and their capabilities.

28.  GOVERNMENTAL FACTORS:
28
• Absence of dedicated or comprehensive strategy for industry 4.0 implementation and
clear defined roadmap covering the manufacturing aspects and deployment processes.
• Lack of customized orientations and training programs pointing the SMEs targets and
matching their objectives and provide solutions.
• Lack of financial incentives or funding programs to encourage the technology acquisition
and adoption.
• No designed internship programs with industry leaders to consult SMEs and guide them.
• No formal agreements with technology providers to avail light version of their solution at
affordable cost.

29. PROPOSED SOLUTION
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A. Enterprise 6-steps scale-up roadmap:
ORGANIZATIONS SCALE-UP ANDTECHNOLOGY SELECTION
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Vision and Mission Objectives
Technology
Selection
Document
Implementation
Project
Measurement
and Control
From the mission
statement, several
specific objectives
are to be
developed with
clear and
measurable KPIs
for the target for
the processes
•Prepare the Long
term vision (5:10)
years
•Prepare the Short-
term mission (1:3)
years for what the
organization must
accomplish
Experts to review and
select the Ind. 4.0
technology that will
help the enterprise to
achieve set objectives
and improve their
performance
considering type of
industry, operation
process and Tech.
availability
•Form a tiger team
from managers and
employees to
manage and facilitate
the implementation
activities.
•Prepare incentive
program for users.
•Prepare Use Cases for
scoped processes.
•Document the target
processes ,
operations and their
controls to ensure
the consistent usage
of the embedded
technology.
•Measure the output of
implemented solution
or technology and
compare with the set
objectives and KPIs
• Adjust if necessary
and repeat the cycle.
❶ ❷ ❸ ❹ ❺ ❻

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1) Have a friendly Graphical User Interface (GUI).
2) Support the integration capabilities with other solutions.
3) Contain the information security functions (InfoSec) to keep data secured from unauthorized
access and alterations.
4) Available successful proof of concepts and best practices.
5) Get the management and internal stakeholders involved in the selection and implementation
processes to guarantee the success of implementation and avoid future resistance and failures.
6) License and operation cost is affordable with upgrading capability.
7) Solution capability for phasing and agile implementation
8) Available training and after go-live technical support
B. Technologies and Solutions Selection Concerns:
ORGANIZATIONS SCALE-UP ANDTECHNOLOGY SELECTION

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• Introduce orientations for SMEs’ management and entrepreneurs to their raise awareness
about different technologies and their capabilities.
• Customize light version that suits the basic needs and essential processes for SMEs.
• Light versions must have the capability of expansion and upgrade according to business
growth.
• Cloud based solutions will be preferable and valuable for effective pricing [Pay As Consume
Model]
• Customize attractive SW package and licenses for SMEs considering the type of industry.
• Prepare customized and simplified training programs, hands on and bilingual user guides.
• Provide after Go-Live technical support and reachable customer services hubs.
RECOMMENDATION FORTECHNOLOGY PROVIDERS

33. RECOMMENDATION FOR GOVERNMENT
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• Prepare a dedicated Framework and strategy for Industry 4.0 Implementation with clear
roadmap including (Governmental Entities, Banking, Universities and Researching
Organizations)
• Alignment with industry leaders for knowledge transfer and best practices.
• Provide attractive financial incentives such as tax discounts and funding programs to
encourage the technology adoption.
• Conduct deals and agreements with technology providers to provide light versions of
their solution with affordable cost.
• Build technology hubs or clusters jointly with technology providers per industrial city to
provide the technological services [comprehensive Industry 4.0 Technologies services
hub over cloud].
• Link SMEs with trading agencies for regular statistical reports, potential markets,
regulation changes,,etc.

34. CONCLUSION AND RECOMMENDATIONS
34

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 Manufacturing SMEs in Egypt have great potentials for growth and
development.
 Industry 4.0 Technologies is the key word and vital for SMEs to
achieve their goals growth.
 Forward leaps can be achieved by SMEs through serious
collaboration of government agencies, financial institutions,
technology providers, and leading corporations to assist SMEs
overcoming such challenges.
 6-Steps Scale-Up Roadmap and Technology Selection Criteria as
described will help SMEs achieve their potentials and become
strong competitors nationally and internationally.

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QUESTIONS?

37. 37