Fierce competition, tightening regulations coupled with pressure to come out with differentiated products are some of the challenges faced by original equipment manufacturers (OEM) today. They are increasingly looking ways to cut costs and manage their working capital more efficiently to stay competitive in the market. These trends have encouraged OEMs to rely on electronics manufacturing services (EMS) for support especially in the areas of designing and manufacturing of high complex, electronic devices.
The main benefits of outsourcing design and manufacture includes:
- They can focus on core activities.
- Cost and time savings in product development.
- Availability of larger pool of skilled resources.
Earlier EMS was engaged only to perform a set of functions of the manufacturing process as specified by the OEM client. Now the stiff competition has made OEMs view their EMS provider as their strategic partner. OEMs expect more than just cost cutting from their EMS partner. They need a partner who can add value at every stage of the product development and require them to involve completely in the process right from product design to manufacturing and even in marketing of the product.
It is anticipated that, in the near future, there will be an increase in the number of OEMs outsourcing design and manufacturing process to EMS provider in order to concentrate on their innovation capabilities as competition and complexities of electronic device market is increasing.
There are certain criterions that an OEM should take in to account while selecting their EMS partner:
- The OEM should first define their outsourcing strategy. They should assess their internal and external strengths and capabilities to identify areas where an EMS partner can add value.
- OEMs should define their long term and short term requirements of the company.
- The OEMs should have a strategic plan to move to the next level of business with the help of their EMS partner.
- OEMs should match the business profile of EMS providers with their product profile. This is because different EMS companies specialize in different levels of product complexity. Hence the OEMs should be cautious to select the right EMS partner who provides specialized services that complement their product profile.
- OEMs should evaluate the EMS providers’ experience and capability. The requirements vary from one OEM to another. Some OEMs may require services of EMS Company in product design and some may require EMS only a manufacturing partner. Hence it is necessary to evaluate the capabilities of EMS provider and match with the needs of the OEM.
- OEMs should try to select a partner that offers a full range of service, which will help them, to grow with a single partner.
- The companies should evaluate the level of flexibility that an EMS partner can provide to them especially in the case of supplying the components at the right time and right place.
Selecting the right partner is often a crucial and a strategic decision. Outsourcing design and manufacturing process by OEMs will pay them better dividends on investment they make and will increase the speed to market these products.