Once a decision has been made to outsource your electronics manufacturing the next step is to find a suitable partner. As an Original Equipment Manufacturer (OEM) there’s certainly a lot of choice; according to the latest Reed Electronics Research report there are circa 250 Electronics Manufacturing Services (EMS) companies operating in the UK.
So finding an EMS partner for your outsourcing project should be easy, right? Not necessarily. Much depends on what you are hoping to achieve from your outsourcing project and whether these expectations match with the EMS provider’s strategy.
In this blog post we highlight some of the questions, checks and balances a good EMS company will carry out before deciding to quote or partner with an OEM. Hopefully by providing this insight you will be better placed to find the right supplier for your outsourcing project.
One of the first questions an EMS provider will try and answer when you make contact is why? Why have you sent this enquiry to them and why now? These may seem like strange questions to ask but unless they are over staffed or desperate for work (both of which should probably ring alarm bells) the EMS provider will want to make sure they direct their quote resource in the right areas.
So let’s look at the why. Have you made contact with the supplier following months of detailed research? Have they been on your shortlist of potential suppliers and you have now satisfied yourself that they have the capabilities you are looking for? Or have you sent the same enquiry out to the first twenty suppliers you found and whoever submits the cheapest price will win the business?
How much of your supply chain, manufacturing and test operation are you planning to outsource? Which elements will you retain and why? What does outsourcing ‘success’ look like to you? Is it so you can focus more on product design, sales and marketing? Or are you looking to consolidate vendors, improve on-time in full deliveries and product quality? Perhaps you have outgrown your existing premises and don’t want to invest in new buildings, equipment or staff?
Whatever the reason, a good EMS provider will want to understand where they sit in your outsourcing strategy, the timescales involved and how you came to find them.
A key thing for OEMs to check when researching potential EMS providers is financial stability. If you’re about to hand over part, or all of your supply chain, manufacturing and test operation you want reassurance they can finance your project. And the same rules apply to EMS providers when potential new clients approach them.
Before committing to any partnership, the EMS provider will run credit checks on your company when an enquiry lands. If they spot any anomalies in your accounts, don’t be surprised if they probe you a little further before committing to starting work on your project.
The majority of UK EMS companies are set up to manufacture in low to medium volumes; although a few have access to low cost region facilities and can offer higher production runs. A quick scan of the EMS provider’s ‘About us’ page should tell you where their ‘sweet spot’ lies and whether or not they have the capacity and experience to manage the volumes you are looking for.
Some EMS companies are set up to support prototype quantities and will be very happy to produce small quantities while you establish the product on the market. However, once your product takes off they might struggle with the production volumes and fail to meet your new expectations.
Other suppliers might prefer to get involved with an OEM once the design is a little more stable and the prototypes have been proved out in the market. That’s not to say they won’t be able to help in the early stages, offering Design for Manufacture (DfM) support for example, but will have set their organisation up to consistently deliver quality product on a monthly basis.
When contact is first made the EMS provider will want to understand how established your product is and an indication of the volumes you are planning to sell, both now and in the future.
On receipt of your enquiry the EMS provider will check what market sector you sell into. The majority of EMS companies advertise on their websites the sectors they have experience supplying into. Some focus on a relatively small number, others cast their nets far and wide.
Our advice to OEMs has always been to partner with an EMS provider that can demonstrate to you they have working knowledge and experience in the same market sectors as you. That’s not to say EMS companies that don’t have existing customers in a particular area can’t help, it’s just that the ‘fit’ might not be quite as good.
Sometimes relationships don’t work out. It’s no-ones fault, it just wasn’t meant to be. And it’s often better to find this out early on before either party commits time and effort trying to get things moving. Outsourcing is no different. Although you may think you have found the perfect EMS provider, your business or long terms goals may not fit with what they are looking for.
The best EMS providers will be clear with you upfront. They will explain why they don’t feel your outsourcing project is right for them. If they can’t see how they can add real value to your business it doesn’t make much sense to continue things further. Although this might not be the response you were originally hoping for, you now have the opportunity to move forward and find someone else that can help.
Hopefully this insight into some of the questions, checks and balances good EMS providers carry out has been useful? In such a competitive environment it’s hard for any EMS provider to turn away business. But business is business, just that, and turning down an outsourcing project is never personal. And of course, as with any relationship things change over time. That one company that originally declined to bid because they couldn’t add value to your business might be exactly what you now need to take things to the next level.
Good luck in finding that perfect partner. There are plenty of assembly providers out there so hopefully it won’t take you too long to find one. In the interim, if you would like to talk through your own project on a strictly impartial basis, feel free to arrange a consultation with us today.
Image by Yoel Ben-Avraham