News

Outsourcing of EMS Service by OEMs

21 june
In today’s manufacturing environment, it’s common to outsource some or all of the process. An OEM (original equipment manufacturer) selects a contract manufacturer to manufacture its parts. As a company grows, outsourcing work can save time and money compared to manufacturing every part in house.

Contract manufacturing services in the electronics industry are widespread and range from printed circuit board design to end of life management. An OEM can opt to outsource only the specific product manufacturing or employ the additional services of various subcontractors to help in the distribution or logistics of getting the product to the end consumer. Regardless of what types of contract manufacturing services the OEM chooses to use, the design and ownership of the product still resides with the OEM and not the subcontractor.

OEMs must be cautious when selecting a contract manufacturer to work with. Every step of the process must be executed efficiently and contributes towards the quality of the final product. If the outsourced EMS company isn’t performing their task at a high level it will affect the entire system. If the process is slowed or halted entirely, it can translate into higher costs and delayed output time. OEMs need to remember that it is their name on the line when it comes to customer satisfaction and delivering quality products which means that they need to be working with contract manufacturers that are up to the task.

When selecting an EMS company, there is more to consider than the quote per unit manufactured price. Are there any additional fees and charges that you will see later on? Selecting the cheapest option could come back to haunt you. The lowest price can also mean the lowest quality product. An OEM needs to take the time to properly research a company before outsourcing any work to them. This includes checking references, reading case studies, etc. If an OEM is having trouble deciding what contractor is the right one to work with, they can turn to a contract manufacturing agency for help. These agencies are experienced in researching and interviewing contractors to find the right match that meets the company’s demands.

The relationship between the CM (contract manufacturer) and OEM should be viewed as a partnership. The CM is essentially an extension of the business. The OEM can’t hire them and then disappear from the equation. The OEM needs to routinely be checking in and keep the CM in the loop with any business news, process changes, etc.