Posted by: Mike Desrochers
Finding the right electronic manufacturing services (EMS) partner is an important decision that most OEMs have to make. It can be a daunting process, considering the almost endless number of parameters that have to be factored into the decision.
For instance, which of the contract electronics manufacturing models works best for you? Is it Low Volume High Mix – which produces a wider variety of products with fewer products produced per batch – or High Volume Low Mix – which mass-produces a limited range of products?
How complex is your product? What is your product life cycle? Does your product require aftermarket service including repair or rework support? Do you require product holding and drop shipping to your customers? These are just a few of the questions to consider when selecting the right EMS provider for your organization.
Economies of Scale
Achieving economies of scale is dependent on good processes, with the primary objective of reducing the cost per transaction. You need an EMS partner who:
- Has strong supplier relationships
- Participates in competitive bidding
- Possesses a good Enterprise Resource Planning (ERP) system
- And perhaps most importantly, has long range strategic plans to continually improve
A local EMS partner ensures greater control on quality, security and agility to adapt to changing business conditions. Of critical importance to retain the brand and image of your end user product, it’s important to view your analysis with a lifecycle approach in mind.
The relationships your EMS partner has developed with suppliers is a major contributing success factor, determining the prices and the speed with which parts can be received upon ordering. A valued partner will help you develop a lasting supply chain strategy that fits your product’s component requirements and growth objectives. With an EMS partner in place you have the ability to reduce overhead and costs within your business. It removes the barriers and risks associated to carrying inventory and tying up valuable cash flow. Things to look for to evaluate an EMS provider’s supplier relationships include:
- Supplier Agreements: Is your EMS provider able to hold inventory on your behalf? Is your EMS provider working with suppliers to secure supply. Is your EMS supply chain agile enough to quickly adapt their processes and policies to meet supply chain sourcing challenges such as allocation, or respond to tariff challenges.
- Price stability: Is your EMS provider able to leverage their buying power to negotiate stocking programs with their suppliers? Does your EMS provider continue to negoatiate down costs on your behalf and find way to keep costs low? Does your EMS provider work closely with their supply chain to develop SRM programs to generate increased communication with strong supply partnerships to increase purchasing efficiencies to reduce costs?
- Supply Chain Functional Excellence- Does your EMS provider have a dedicated strategic sourcing team to leverage and find innovative solutions to mitigate risk in the supply chain? How does your EMS provider embrace digital transformation to drive down costs and understand market trends?
- Security of Supply: Is your EMS provider able to identify risk in terms of counterfeit parts and risks within the global supply chain.
- Visibility: Does your EMS provider work transparently with suppliers, providing visibility into their actual demand?
This is a requisite for most manufacturing relationships, especially considering customer emergencies that may arise.
- Your EMS provider must be flexible enough to accommodate different customers, timelines, product types and manufacturing needs. They must offer a range of services such as printed circuit board assembly, testing, box builds and electromechanical assembly, etc.
- They must have supplier agreements in place to minimize inventory issues.
- Their production line must have the ability to absorb rapid and frequent changes (depending on the nature of your manufacturing needs).
- They have automated and manual processes capable of handling a diverse range of products.
- They must be willing and able to help you transition from one manufacturing model to another.
- They offer value-added services such as aftermarket support including repairs or refurbishments.
When qualifying an EMS partner, be cautious not to reduce the value of your product with price per unit. Numerous factors need to be considered in aligning with a partner to build your design. Keeping in mind that price is the number one objection in the absence of value. The checklist below summarizes some of the important attributes to analyze during your evaluation process:
- Expertise: Do they possess the required technical knowledge to meet your manufacturing needs? What industry certifications and credentials do they carry?
- Capacity: Do they have the capacity to handle your volume and timelines?
- Experience: Have they delivered projects similar to yours?
- Processes: What are their manufacturing, testing and quality management processes and procedures? Are they optimized for production efficiency?
- People: Who are on the EMS team that you will be working with?
- Technology: Do they have the latest technology and reliable equipment to deliver the project in a cost- and time-efficient manner? Do they maintain and calibrate their equipment regularly and document these events?
- Regulatory experience: Do they have knowledge of the laws and compliance requirements in your local, regional, national or global target markets?
- Location: Where will the final assembly and testing of your products take place? Is it domestic or overseas? Will you be able to visit them if required for inspections and/or discussions?
Based on your unique organizational and product requirements finding a fit with an EMS provider comes down to defining your priorities. You want an EMS provider that complements your company in terms of strategy, approach, ethics, build volume and complexity as well as overall company culture.
The August Partnership
We realize it is challenging to evaluate an EMS provider for best fit. We hope this blog post offers you some additional insights to tackle the process logically and systematically.
At August, our clients have benefited from our flexible approach in providing partial or full turnkey manufacturing services. We have an unwavering commitment to ensuring top quality, reliability and consistency of your manufactured products through our well-established quality management systems and processes.
Whether you are evaluating your current EMS partner or seeking to evaluate new prospects, we are happy to help you with your decision. We’d love to chat, contact us today.