The benefits of a good relationship with the right outsourcing partner (or anyone else for that matter) are plentiful:
But, until now, you have only operated by yourself. There has been no partnership, and, therefore, nothing to worry about. Any form of relationship implies risk-we can never know what the future holds, but searching for a compatible partner who has the specific qualities and characteristics that are right for your business is the best way to make an informed decision.
The difficulties of maintaining certified, advanced manufacturing facilities, and sophisticated supply chain operations—which tighten your profit margins—are likely reasons you first started thinking about working with an Electronics Manufacturing Services (EMS) partner, right?
Large-scale industrial operation does not work for every business, as, unless you are a very large operation, it will be difficult to maintain the agility and responsiveness needed to grow. Partnering with an EMS can help you grow as they are able to bring outside expertise to the table in areas such as specialist supply chain management, expertise in industrial design, economies of scale, and have the latest Industry 4.0 technology.
The ability to achieve a partnership based on trust and shared values is key. The OEM and the EMS provider need to see that they can grow together and communicate clearly with each other to know they are moving in the right direction.
Some OEMs might think that partnering with a “Tier 1” provider will solve their problems. This is understandable as Tier 1s are associated with hugely successful companies such as Apple and Microsoft, but they are not the right partner for everyone. They specialise in manufacturing high volume, low complexity products, and, as a result, demand multi million-pound spend levels. Their operation dictates that their focus is mainly on their biggest customers.
This means that OEMs designing and selling low to medium volume, often complex products that are not consumer electronics, can feel as if they are not receiving the attention they think their business needs. These OEMs may sense that they could have a more equal and meaningful relationship with a provider not categorised as a Tier 1 supplier.
OEMs that fall into this bracket might still desire a Tier 1 service but also want the EMS provider to be more hands on and to view the relationship as something that will evolve over time rather than be viewed purely in terms of revenue figures. Being open minded about what EMS provider might be the best fit for your business model and product range is likely to lead to a more fruitful relationship over time.
When you are looking for the right partner who will work together with and compliment your business, really talk to potential EMS providers. Try to get a sense of how they run their business and what you are likely to mean to them. Do they ask you questions that resonate with your business, and, more importantly, do they show an interest in your business?
Also, think about the future. The global landscape has changed so dramatically over the past year-and-a-half and could change again in an instant for any number of reasons— geopolitical, climatic, or economic. Asking yourself, and your potential EMS provider, questions related to the following ever-more important issues will also help you judge if they are the right fit.
The global chip shortage of 2021 has affected supply chains throughout the world and had an impact on products from washing machines to medical devices. The introduction of product allocation means that EMS partners’ knowledge of the supply chain and spend levels will be ever more critical for OEMs.
Question to ask: How will supply chain issues affect my business and how can we address this together?
Personalised consumer products have been around for some time now and this phenomenon is already present in the electronics sector—Samsung bespoke fridges, for example, that are “Designed for you, by you”. To keep one step ahead of the competition and deliver a personalised experience to the end user, OEMs of all shapes and sizes are likely to start requesting several material options for product finishes, different branding styles, and software configurations.
With the supply chain issues we are currently facing, this extra demand could be an additional strain, as the number of 'configurable' options increases exponentially. Instead of the antiquated long-term speculative model, meeting demand will shift to a data-driven tech-led approach. Agile supply chain management in which manufacturing partners have end-to-end supply visibility and the ability to successfully resolve supply chain issues is key.
Question to ask: How will you be able to help our company personalise products and help us enter new markets and grow our business?
The pandemic made businesses invest in new technologies as they sought to keep processes running smoothly and it was largely successful. We rely on technology for everything and so it makes sense for businesses serious about growth to invest and EMS providers are no exception. Their willingness to invest in new technologies will be fundamental to future relationships.
But further than just investing in the latest technologies, manufacturers that embrace the connectivity of Industry 4.0 and the sustainability and human-centred focus of Industry 5.0 will be able to offer advantages over those companies that are reluctant to do so. Digitisation allows EMS providers to be more responsive to customer needs and to behave more efficiently as automation and connected data assist the manufacturing processes.
Question to ask: Do you use smart technologies, and how do you plan on harnessing the potential of Industry 4.0 and 5.0?
Relationships - human or business - can be toxic or they can be fulfilling. It’s all about finding the right partner.
For some OEMs, a Tier 1 provider will be the perfect fit, but unless you meet their (financial) requirements, they might not be interested. Ultimately, you need to choose an EMS provider that is right for your business. Engaging with potential EMS providers, asking them questions, and getting a feeling of how you would both develop a relationship and grow together is sound advice for any company.