Original Electronics Manufacturers (OEMs) often decide to outsource to Electronics Manufacturing Services (EMS) providers to reduce costs and free up resources so they can focus on core competencies, like design and strategy. In doing so, many also find that they achieve some level of competitive advantage.
After all, more time and funds to put into designing new products and boosting your marketing efforts can help you to gain more customers and even increase your share of the market.
We take a closer look at how working with an EMS provider can help you to gain a competitive advantage.
Unleashing the chains
In-house manufacturing often impacts the creativity of the R&D team, who get tied up in designing products based on the capacity of the manufacturing facility and the equipment they have available. Outsourcing to an EMS provider is a way of freeing you from these restraints.
EMS providers will typically have much wider capabilities due to building a broad range of products across a variety of sectors. Now you can start designing the products your customers really want and secure an advantage over your competitors. Besides, with fewer funds tied up in managing physical manufacturing and logistics, you can free up your working capital to invest in R&D.
When manufacturing in-house, your capacity and resources are also usually limited to specific volume orders. This means there may be times when you have to refuse orders or provide late deliveries, which can be disastrous for your reputation. By outsourcing to an EMS provider with the right production capacity, flexibility, and network of suppliers, you’ll avoid these risks.
New talent, new capabilities
Manufacturing your products in-house has its benefits. Greater control, for one. But it can be limiting, not only because of resource and space restraints but also in terms of skill and expertise.
Attracting new talent into electronics manufacturing remains a challenge. And then there’s the ongoing time and cost of regularly training staff. But when you outsource this responsibility is transferred over to the EMS provider.
By making the decision to outsource, you will immediately have access to a whole team of experts from production staff to engineers, purchasing professionals and customer service representatives. A team with extensive experience working across multiple products and sectors, who can bring a knowledgeable perspective to your operation. And a team well-versed in overcoming different challenges and obstacles. So when issues arise, you know you’re in capable hands.
Foolproofing your supply chain
Choosing to hand over management of the supply chain to your EMS partner can bring additional benefits. An EMS provider will have long-standing relationships with many different suppliers. So if there’s an issue with one supplier, they will have a catalogue of partners to fall back on to save the day. The problem can be resolved long before any talk of having to let down customers.
Handing over supply chain management to your EMS partner also spares you the day-to-day ‘place and chase’ mentality of tactical purchasing, so you can switch your focus to longer-term goals and more strategic activity. Keeping abreast of suppliers to find the best materials for the best price can be a colossal task, but your EMS partner will be used to keeping tabs on what is available from where. You may even be able to access a greater range of solutions, which can offer technical benefits you may never have considered before.
Increasingly, OEMs are seeking the support of EMS providers for more than just manufacturing. Services such as design for manufacture (DFM) and direct ship fulfilment provide opportunities to help you improve your products and grow your business.
With DFM, your EMS partner will take your design and suggest small tweaks here and there to make production more efficient and reduce lead times, resulting in more profits you can invest in what you need to thrive.
Likewise, using your EMS partner’s direct ship fulfilment services can deliver significant savings and efficiencies. By handing over more responsibility, you can reduce your overheads, downsize (or completely remove) your factory floor, and invest money that you might previously have used to purchase capital equipment into innovation.
So, are you ready?
When it comes to deciding how much to outsource, the best-case scenario is to outsource as much as possible - because this is how you will gain the most benefits. However, there may be some technical aspects of the build that you need to keep in-house. For example, if any part of the process requires specialist test equipment you have already developed, it could be costly for your EMS provider to replicate it.
What’s for sure is that outsourcing continues to be on the rise. Many existing OEMs have handed over part or all of their electronics manufacturing operations in a bid to drive increased sales. Many new start-ups are also opting to outsource to EMS providers from the very outset rather than choosing to manufacture themselves. And if your competitors are outsourcing their manufacturing, shouldn’t you?
If you're ready to take that next step, you may find some of the following blog posts useful in helping you prepare for initial conversations with potential EMS providers:
- When is the right time to speak to prospective EMS providers?
- 8 details an EMS company needs to quote (& 3 they can't do without)
- Getting a quote from an EMS provider. What could go wrong?
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