The request for quotation (RFQ) process plays a pivotal role in kick-starting an outsourcing relationship with your contract electronics manufacturer (CEM). It can be an effective tool in reducing a shortlist of providers down to the one that fits your needs best.
But being clear with your outsourcing aspirations from the outset is vital. A failure to communicate these during the process could risk you partnering with the wrong EMS provider. Preparation is everything, and there is a lot to consider before sending out an RFQ.
Over time, outsourcing has progressed from a short or medium-term operational need to a strategic approach. Increasingly, OEMs are challenging themselves on which business activities are really core to their future success. Manufacturing is often identified as an area that isn't, but savvy OEMs aren't stopping there. Closer consideration is frequently given to functions both before and after the physical assembly process: design support, postponement manufacturing, outbound logistics, repair and rework services.
The supply chain disruptions triggered by the pandemic, the global semiconductor shortage, and the subsequent logistics crisis reinforced this shift. Geopolitical uncertainty, component shortages, and the rising cost of capital have made manufacturing location strategy and supply chain resilience boardroom priorities in a way they weren't a decade ago. Today, the stakes for getting your EMS partner selection right are higher than ever.
So, before sending out an RFQ document, here are five questions to answer first.
1. Who should be in the outsourcing team?
The size of outsourcing projects varies greatly. Some OEMs start by moving production of one or two products at a time. Others quite literally shut down their manufacturing operation and move across everything associated with it: people, plant, stock, and so on. A lot depends on how quickly the OEM wants to see a return and how comfortable they are relinquishing different levels of control.
Regardless, it's often a decision and process that involves more than just one person, and putting together the right project team will be vital for preparing the RFQ. We recommend assigning a project leader from the outset to set and track progress and provide continuity throughout the project. From there, you'll need to determine which parts of your organisation could be impacted by the outsourcing decision and who is best suited to drive through change.
Again, this will vary greatly depending on how far you plan to go, but you'll likely need to involve senior staff from engineering, quality, operations, and finance initially. Where design input or NPI is part of the scope, product management should be involved too.
Getting these stakeholders involved early isn't just good governance. Each function brings a different set of requirements and concerns that, left undiscovered until late in the process, create delays and complications. The RFQ should reflect all of these perspectives. That's impossible if only one function has shaped it.
2. What are we looking to achieve from outsourcing?
What are the strategic reasons for outsourcing? Have they been clearly defined, and does everyone in the project team fully understand them? These may seem like obvious questions, but if there is ambiguity or doubt, the process of finding the right EMS provider could take much longer than necessary.
What does success look like, and how long before you expect to see a return once you place the first orders with your EMS partner? Draw up a list of commercial objectives for the project that you expect the EMS provider to achieve, paying attention to pricing, delivery and any other service requirements that may be important to you, for example, turnaround time for field repairs.
Be realistic with your expectations. While outsourcing can bring significant benefits to your business and have a significant bottom-line impact, it’s unlikely any EMS provider you work with will be able to halve your visible unit cost. That said, it's important to have a clear plan for when you expect targets to be achieved. We recommend working with your chosen provider to agree on these during contract negotiation.
It's also worth discussing the cost of capital with finance. If your business is carrying manufacturing assets on the balance sheet, outsourcing has a different financial profile than it did when interest rates were near zero. The more durable gains from outsourcing often come from freeing up capital tied up in manufacturing assets, reducing inventory risk through more responsive supply chain management, and improving your ability to scale without a corresponding increase in fixed overhead.
3. How will outsourcing affect us?
With the team in place and the objectives clear, start brainstorming how outsourcing could impact each department. Identifying key areas across your company where the supplier will add value gives you the chance to outline these requirements at the RFQ stage, helping you find the right supplier.
Work through each function and ask the right questions. For example:
- Engineering: Do you need design for manufacture support, prototype turnaround, or direct technical peer access from your EMS partner?
- Quality: Which certifications are non-negotiable? What audit rights, in-process controls, and traceability documentation will you require?
- Operations: What are your expectations for minimum order quantities, call-off flexibility, buffer stock, and lead-time commitments?
- Finance: What payment terms, cost transparency, and visibility into material costs are needed to make the numbers work?
- HR: If the scale of the transfer is significant, are there TUPE implications that need to be addressed early?
Mapping the practical dependencies
Beyond these departmental questions, there are practical dependencies to map. Are all of your build packs complete and ready to transfer? If not, who owns that work, and what are the timelines? What are the milestones further along the project plan, and does each team have the resources to hit them?
One area that catches OEMs out repeatedly is the assumption that an EMS partner can simply pick up where an internal team left off. There is always a knowledge transfer period. Factor it into your project plan and be honest about it in your RFQ so potential partners can accurately price and plan for it.
Supply chain resilience has also become an explicit boardroom concern in recent years. As you assess the operational impact of outsourcing, consider whether your current supplier network is geographically concentrated in ways that create risk.
Much will vary with the complexity of your products and the timescales you are considering. That said, it's better to highlight all the pros and cons at the very early stages so they can be addressed one by one, rather than adding them later.
4. What services and solutions are we looking for from an EMS partner?
There is a growing trend for contract manufacturers to take on more responsibility throughout the product lifecycle at both ends of the supply chain. Prior to sending out your RFQ, determine which assembly services you plan to use and which additional services you are likely to want to make use of. For example:
- Would you welcome input on design and innovation from a subcontract partner, and is this critical to your decision-making process?
- Will they be responsible for sourcing all of the components, or do you expect them to manage free issue items on your behalf?
- Would it make sense to use additional services, such as after-sales support and direct shipping, or do you see this as relinquishing too much control?
- If it’s difficult to forecast your likely customer demand, you may require dynamic configuration to order services, such that your EMS partner builds products up to an embryo level and assembles the final configuration once you have firm order call-offs.
Technical capability and assembly services offered can widely differ between EMS providers. While some may specialise in PCB assembly or panel wiring, others look to offer an end-to-end service. If you are only looking to outsource part of a product or process, your options for contract manufacturers are broad. If you are looking for a partner that can offer a more complete service, it's important to be clear about what you need so you can draw up a relevant shortlist with demonstrable experience of delivering the specific services you require.
When considering where manufacturing will take place, nearshoring, coshoring, and offshoring each involve different trade-offs. Offshoring to lower-cost locations in Southeast Asia can significantly reduce unit costs for high-volume products, but requires robust quality management, strong logistics, and clear communication frameworks. Nearshoring within Europe reduces transit times and simplifies compliance with regional regulations, but generally at a higher unit cost. Many OEMs now operate hybrid models: some production near key markets for responsiveness, some in lower-cost locations for volume efficiency.
5. How do I establish a shortlist of EMS providers?
If you’ve answered all of the previous questions, it should be relatively straightforward to produce an initial list of between eight and ten suppliers. Online research will play an important part and will allow you to narrow down this list further by being more specific: by size, location, service offering, manufacturing locations, accreditations etc.
To make the next stage more manageable, you should aim to narrow it down to three or four potential partners who, on the surface at least, feel like a good match. A useful step before submitting your RFQ is to distribute a simple request for information (RFI) document to these candidates. This pre-qualifying questionnaire allows you to compare like with like, and the process shouldn't be onerous for either party. You may find that this quick step instantly reduces your shortlist again to one or two suppliers.
Research and RFIs will help indicate whether a potential partner could deliver your outsource strategy, but now you should go and see them for yourself. You'll want to visit and possibly audit the contract manufacturers on your shortlist. By agreeing on the project team and responsibilities early on, you can, if appropriate, divide this task up. Your engineering and quality team members can assess a supplier's technical capabilities and processes, while purchasing and operations staff discuss supply chain and manufacturing requirements.
Following site visits, your outsourcing project team should meet soon after to compare thoughts while everything is still fresh. While a large proportion of your decision will be based on the facts gleaned from your research, gut feel and instinct from the team are equally important. The EMS partnerships that create the most value tend to be long-term ones built on genuine collaboration. You can usually sense, early on, whether that's possible.
What comes next
Writing the perfect RFQ for your outsourcing project may seem daunting. But to make things simpler, the process should start well before you put pen to paper.
Collaborating with your peers, establishing your objectives, and setting out the boundaries will prepare you well for the task ahead. That way, you can be sure you've thought through every consequence, secured the internal support you need, and laid the foundation for finding the right EMS partner.
And when you're ready to write the document itself, this blog post covers the specifics of what to put in it.
If you'd like to discuss your outsourcing requirements with ESCATEC, get in touch with our team.
Note: This post was originally written in 2016 but has since been updated and republished for maximum accuracy.
FAQs
1. What is an RFQ in electronics manufacturing?
A request for quotation (RFQ) is a formal document sent by an OEM to one or more electronics manufacturing services (EMS) providers, asking them to submit a priced proposal for manufacturing a specified product or range of products. It typically includes build specifications, volumes, quality requirements, delivery expectations, and commercial terms. The RFQ serves as the foundation for the supplier evaluation and selection process.
2. How many EMS providers should I include in an RFQ process?
Most procurement professionals recommend starting with a long list of eight to ten potential partners, narrowing to three or four following an RFI stage, and then conducting site visits before selecting the candidates to receive the full RFQ. Sending an RFQ to too many suppliers dilutes the quality of engagement from each and makes evaluation unnecessarily complex.
3. What's the difference between an RFI and an RFQ in EMS partner selection?
A request for information (RFI) is a pre-qualification tool used to assess whether potential EMS partners meet your basic criteria before you invest time in a detailed RFQ. It covers capabilities, certifications, experience, and financial stability at a high level. The RFQ comes later and requests a priced proposal against your specific product and service requirements. Using an RFI first saves considerable time and improves the quality of the shortlisted candidates.
4. How has supply chain disruption changed how OEMs approach EMS partner selection?
OEMs are now placing considerably more emphasis on supply chain resilience when evaluating EMS partners. Questions around geographic footprint, component sourcing strategies, buffer stock capabilities, and multi-site production options are now standard in RFQ and RFI processes. The cost of supply chain failure, as demonstrated clearly by component shortages in recent years, has elevated manufacturing location strategy from an operational detail to a boardroom priority.
5. What certifications should I look for when shortlisting an EMS partner?
The certifications that matter depend on your sector. ISO 9001 is a baseline expectation for quality management. For medical devices, ISO 13485 is essential. For automotive and transportation electronics, IATF 16949 is the relevant standard. IPC standards for PCB assembly quality are universally relevant. If your product is sold into EU markets, REACH and RoHS compliance should be confirmed. Depending on the regulatory classification of your products, you may also need to verify specific process certifications, such as IPC-A-610, for the acceptability of electronic assemblies.
