Smart Factory Policy Needs Shift from Quantitative Expansion to Qualitative Leap

[Asia Economy Reporter Kim Cheol-hyun] There is a growing argument that smart factory policies need to shift from quantitative expansion to qualitative advancement. The Small and Medium Business Institute (President Lee Byung-heon) announced this on the 5th by releasing the SME Focus report titled 'From Smart Factory Distribution and Diffusion to Smart Business Policy.'

Recently, due to supply chain disruptions caused by the novel coronavirus disease (COVID-19), production setbacks have occurred, highlighting the importance of 'reshoring' through smart factories. Reshoring refers to the return of manufacturing to the home country. Smart factories, which aim for locally customized production through automated processes, were previously recognized as a solution by advanced manufacturing countries concerned about job losses and economic damage caused by the off-shoring of production bases overseas. Currently, production disruptions have occurred due to issues in procuring Chinese automotive parts caused by COVID-19, leading to the suspension of domestic automobile assembly operations, and the entry ban on Korean technical personnel in overseas countries where major factories are located has brought smart factories back into the spotlight.

The government is actively promoting policies for the introduction and diffusion of smart factories under the vision of 'Realizing a Manufacturing Powerhouse of SMEs through Smart Manufacturing Innovation.' As a result of the government's continuous and proactive smart factory distribution and diffusion policies, some achievements have become visible, such as increased productivity, employment, sales, and on-time delivery rates in adopting companies, along with reduced costs and industrial accidents. However, concerns and criticisms have also been raised regarding the current policy focus on quantitative expansion of smart factories. The majority of adopting factories are at the basic stage, with only 18.7% at intermediate stage 1, 1.5% at intermediate stage 2, and none at the advanced stage.

Accordingly, the Small and Medium Business Institute urged a transition from quantitative expansion to qualitative advancement in smart factory policies. The policy direction suggested by the institute emphasizes the need to promote differentiated smart factory advancement according to the innovation capabilities of SMEs. The universal support method, which provides support without discrimination to companies intending to build smart factories, was effective for establishing basic-level smart factories in companies with limited investment capacity, but it has limitations for further advancement. The advancement of smart factories in SMEs requires inducing voluntary advancement by providing investment-related incentives to relatively larger companies with investment capacity. Additionally, it is necessary to promote smart business across the entire value chain centered on production processes.

Finally, it is desirable to expand large and small business win-win smart factories into co-growth businesses. Researcher Kang Jae-won stated, "Collaboration between large and small enterprises is necessary for the introduction and advancement of smart factory technologies," and added, "To promote voluntary smart factory adoption and advancement by SMEs, guaranteeing an appropriate level of expected returns is required."