How an OEM Can Outsource Electronics Manufacturing

April 8, 2019 by Web Admin

How an OEM Can Outsource Electronics Manufacturing

Successfully outsourcing electronic manufacturing is not an easy task. The Original Equipment Manufacturer (OEM) will have to analyze several factors to arrive at the best decision.

The greatest risk is the possible loss of control over manufacturing and product quality. Successful businesses are distinguished by the quality and performance of their finished products. After outsourcing, the business will not have the same high level of control over product quality and performance. Hence, this is an area of major concern.

There is immense pressure on outsourcing manufacturing in today’s highly competitive business environment. A focus on manufacturing electronic parts can divert the attention of core business functions. For instance, in the absence of outsourcing, there is the risk that the OEM may divert resources away from R & D. The products can possibly become less competitive.

OEMs must consider outsourcing manufacturing processes to make better use of their limited resources. At the same time, they must address the risks associated with outsourcing.

Benefits of Outsourcing Electronics Manufacturing

An OEM can possibly outsource all of their manufacturing processes. This will conserve the maximum amount of human resources, working capital, and capital equipment. The company can then channel all the resources towards product development and R & D and marketing of the latest product lines.

The OEM can also benefit greatly from the expertise and experience of the electronics manufacturing service (EMS) provider. The EMS provider can offer economies of scale to the OEM.

Issues of Outsourcing Electronics Manufacturing

Outsourcing involves transferring risks and responsibilities associated with manufacturing to another party. This party is the EMS provider in the case of electronics manufacturing.

Therefore, the EMS provider must be capable of discharging their responsibilities and minimizing risks. The OEM needs to be careful about partnering with the most suitable party.

Another problem is that OEMs may be hesitant to transfer all manufacturing processes even to the best EMS provider. This prevents them from experiencing the full benefits of outsourcing.

Even if the OEM is capable of carrying out all of the manufacturing processes, they should still partner with a capable EMS provider. Leading EMS providers have an in-depth knowledge of DFM guidelines. They can, therefore, suggest vital recommendations for design, which can allow product manufacturing in the most efficient and cost-effective manner.

OEMs should identify the right partner in the earliest stage of the design cycle. By involving them from the very beginning, the OEM can gain maximum leverage.

The OEM should make a full assessment of the EMS provider’s production capacity, manufacturing technology, and product portfolio. The EMS provider should also have a history of outstanding performance. The entity should have served the needs of several notable clients.

The OEM should then gradually outsource manufacturing by prioritizing the least risky processes first. When the EMS provider continues to meet expectations, the OEM should transfer more processes.

A judicious and step-by-step approach will help an OEM to successfully outsource electronics manufacturing.