So you’ve researched the numerous benefits and made the decision to team up with an Electronics Manufacturing Services (EMS) partner. Now comes the next big decision: which EMS partner?
As you’ve learned, outsourcing comes with significant benefits – but not all EMS providers can optimally provide them. Luckily, there are a number of ways you can narrow down the list of possibilities and land on the best match for your business.
We’ve outlined them in an easy-to-follow, step-by-step guide below.
STEP 1: Evaluating the EMS Possibilities and Narrowing Down the List
First, do a preliminary research to create a shortlist of 5-8 potential EMS partners. As you begin your search, take note of the differences between OEM and ODM, as you will come across these terms often.
- OEM: Original Equipment Manufacturers. OEMs license out manufacturing of an established portfolio of finished products. They may partner with an EMS or electronics contract manufacturer (ECM) to produce the electronic components for the final product.
- ODM: Original Design Manufacturers. ODMs produce a line of completed products. Companies can shop from and brand these products with their own logos, colors, and packaging in what is known as “private labeling.”
In your research, there are several key characteristics of EMS providers you should carefully consider.
- Annual revenue
Depending on the size and scale of your organization, it may be best served by a EMS provider that fulfills larger contracts or smaller, more easily tailored ones. Use the table below as a general guide in your revenue assessment:
||USD 5 billion
||USD 500 million - 5 billion
||USD 100 million - 500 million
||< USD 100 million
- Volume capabilities
The scale of your production run and the number of different products you need produced will determine which volume capabilities you should look for. Note that some EMS providers are set up for both types.
High Mix, Low Volume (HMLV): HMLV manufacturers are set up for multiple different, complex products that are only produced in small batches. HMLVs have the advantage of flexibility for fast and frequent changes of assembly equipment.
Low Mix, High Volume (LMHV): LMHV manufacturers meet the needs of businesses looking for large batch size, with fewer different products. They specialize in ramping up production for a single necessary component over a longer period of time.
STEP 2: Ask the Right Questions
Now that you have a solid shortlist and the foundational criteria in place, you can work toward narrowing your list down further. Ask the following crucial questions about quality, lead time, technology and costs and aim for 2-3 remaining options.
- How long have they been in business?
A EMS provider that has been in business for many years demonstrated financial stability in fluctuating markets. It also means they have solid long-term relationships with a variety of global suppliers and distribution experts, and a strong track record of quality and on-time product delivery.
- What is the total cost of the partnership?
Do not just look at the unit price. Make sure you research the “Total Cost of Ownership” – all of the costs included in your new partnership. These include things like staffing costs and costs of handling on-the-fly changes should production issues arise.
Consider factors like on-schedule history in the total cost as well. A firm may have a lower unit price, but a track record showing late deliveries and poor reliability can cost your company in the long run.
- Do they have access to the most advanced equipment and technology for your industry of focus?
Your EMS partner should be able to function like a supplemental extension of your own team, providing a competitive edge. They should be able to bring additional knowledge and expertise to your operation and more importantly, advanced technological capabilities. Check that the firm has access to cutting-edge IoT, RF, embedded systems, HMI, and telematics design and manufacturing equipment.
- Have industry leaders recognized them through certifications or awards?
It’s important to ensure your new partner delivers high-quality, trusted products. Check to see if the EMS provider you’re considering has certifications like ISO 9001:2015 (awarded for top quality management) and ISO 14001:2015 (awarded for leading environmental management systems) that indicate proven quality and performance.
- Are they flexible and well-prepared for sudden changes?
Unpredictable events like natural disasters or civil unrest can upend a production schedule.
Find out if the EMS provider you’re considering performs extensive scenario planning and what-if analysis to ensure they can adapt quickly to these obstacles and remain on budget and on schedule.
It is also helpful if the EMS provider has opportunities in multiple countries, rather than them restricting to only a region, for an expanded manufacturing footprint.
- Are they focused on offering a high level of customer service?
An EMS partnership may last years or decades. It’s crucial to find a team that understands your specific business and its needs, and is as passionate about its success as you are.
They should be easily reachable and are committed to customer service excellence. For example, do they offer a dedicated account manager for your full production cycle? How easily and quickly can you reach their team should you need support? How involved are their leadership team? If you have access to their leadership team, this signifies that they are committed to ensuring that your product is a success as well as delivering excellent customer service.
- How do they treat their employees?
Not only will a high turnover rate lead to supply chain disruption, it may also be a red flag for inter-departmental working relationships. Find out what employee engagement plans there are in store and if there are established communication streams and work processes amongst relevant departments. This will provide you with an indication on whether the relevant teams are working as one to ensure the success of your product.
- Who has partnered with them in the past and what do they have to say?
Look into their past and existing partners, and the testimonials that their partners have for them. Find out how many reputable OEMs they’ve worked with, who they are and more importantly, what’s the average duration of their partnerships. Having long-standing relationships with established OEMs means your EMS partner has been meeting the requirements of their OEM partners and has been performing to their expectations. Word-of-mouth is a powerful way to determine the EMS’s credibility and past performance.
STEP 3: Conduct Plant Visits and Audit Your Top Choices
At this point, you should have a list of 2-3 candidates in your potential EMS partner list. The best way to assess your options from here is to actually see their facilities in person.
Schedule in-person visits of each plant and take a tour of the manufacturing and assembly floor. This will give you a chance to establish a face-to-face rapport with personnel who will provide valuable insights into the way the facility is run.
During your tour, take note of high-priority qualities like:
- Cleanliness of workstations and equipment
- Clear and visible instructions at all workstations
- Concrete documentation plans at each and every station
- Visible safety measures and plant safety metrics
- Equipment inspection frequency—can they provide maintenance records?
- Live production and quality performance data
- Records of supplier audits and the frequency
- Are employees recognized for above-and-beyond performance? Team morale lends itself to a more efficient operation and better outcomes.
Take this opportunity to make sure your EMS partner of choice matches your corporate values as well. For example, if environmental sustainability is important to your organization, be sure to ask questions like how this firm is committed to minimizing their carbon footprint and what have them been doing to fulfill their corporate social responsibility (CSR).
Finally, be sure to ask for key success statistics such as on-time delivery and scrap and rejection percentages. If a potential partner is unable or hesitant to provide tangible metrics, treat it as a red flag. Transparency and trustworthiness are imperative in an OEM-EMS partnership.
STEP 4: Make the Final Selection
Now, you’re in the home stretch. Review what you’ve learned and seen on each of your tours in addition to your previous research.
Your final selection shouldn’t be based only on the straight numbers and metrics, but on which team and facility you feel is the best cultural fit with your organization.
Again – your EMS partner should feel like an extension of your own team, so it’s absolutely essential to choose a group that matches your team’s communication style, values, and expectations.
The right electronics contract manufacturing partner to work with is not a decision that should be made lightly. Setting up shop with an ill-fitting choice can cause time-consuming organizational headaches and leave you with delayed assembly times and out-of-date technologies. That’s why it’s so important to perform your due diligence before signing on any dotted lines.
On the other hand, finding the EMS you can rightly trust with your product line will be extremely profitable and beneficial for your organization. You will have new access to resources, expertise, and equipment to enrich your production and lower overall manufacturing costs, while your internal team gains significantly more free time to focus on core competencies.
Use the guide outlined here, and you’ll be on your way to creating your powerhouse OEM-EMS team in no time.