Industry 4.0 Readiness Assessment Using Weighted Sum Model for Malaysian Micro, Small and Medium Enterprises

Abstract

Industry 4.0 brings significant productivity gains and competitive advantages through the integration of the Internet of Things (IoT) and Smart Manufacturing. In Malaysia, micro, small and medium enterprises (MSMEs) account for approximately 97.4% of total business establishments, contributing substantially to national employment and GDP. However, many MSMEs still face many challenges and lack of direction toward industry 4.0. Existing frameworks, such as the Ministry of International Trade and Industry’s (MITI) Industry4WRD are not specifically designed based on the challenges of MSMEs. To address this gap, this study develops the Industry 4.0 Readiness Assessment Model tailored for Malaysian MSMEs. The model organises readiness into five thrusts: Planning and Strategy, Finance, Technology, Skills, and Data Digitalisation and encompassing by thirteen specific dimensions. The Analytical Hierarchy Process (AHP) is used to determine the priority weight for each thrust and dimension, while the Weighted Sum Model (WSM) aggregates the self-assessment scores into an Industry 4.0 readiness score. The model was implemented and verified through a case study involving a Malaysian F&B manufacturing MSME. The analysis revealed that ‘Planning and Strategy’ and ‘Finance’ emerged as the most critical thrusts for MSME readiness. The case company achieved an overall readiness score of 2.16, corresponding to Level 2 (Beginner). This result demonstrates the model’s ability to pinpoint specific gaps, particularly in automated infrastructure and data integration, providing a structured basis for prioritizing transformation initiatives. The developed assessment model offers a practical and systematic approach to help Malaysian MSMEs plan and implement Industry 4.0 transformation more effectively.