Entering into an outsourcing partnership may be difficult and always involves some risk. An OEM needs to find a business partner that not only understands its specific needs but – first of all – is able to meet those needs and supply high quality products on time.
This complex task requires vast experience in contract electronics manufacturing, as well as understanding of the specifics of working with someone else’s projects and advanced management skills. What is more, there has to be a relationship between the OEM and the EMS provider, based on good communication, a clear presenting of expectations, a good fit of both sides and, of course, trust.
There is one caveat: in this relationship, which is quite often long-standing, the party that makes decisions is always the OEM and the EMS provider only carries out the electronics manufacturing as ordered, without making any changes to the product on its own.
OEM and EMS – mutual understanding
Every business partnership begins with a contract which – in case of cooperation with an EMS – defines the relationships between the parties, the responsibility for the product, material management and planning and covering the risk incurred by each party. The contract is also based on the understanding that the EMS provider generally offers electronics manufacturing services and does not bear product liability.
It is also important to establish clear rules for how the OEM should provide information concerning demand and procedures for additional production in the case of unforeseen demand growth. Especially due to the fact that in post-COVID times, when lead time has significantly increased and electronics assembly needs to be planned long in advance, the critical point is material management, which is discussed in the text ‘Security of the supply chain when working with a contract EMS (electronics manufacturing services) provider for electronics assembly’.
Both parties also need to realise that while starting the cooperation, specific actions must be taken (as described in this article: ‘The first months with an EMS provider’) and the risk borne by either party must be covered. What is more, while establishing outsourcing relationships, it is crucial to properly select business partners, their needs, specificity of work, organisational culture, and, most of all, competitiveness and size – everything that is specific to a good fit, i.e. a ‘business fit’.
Good communication with the electronics manufacturing services provider
What any well-functioning relationship is based on is communication with a particular focus on regular meetings between the two parties (e.g. teleconferences) and ongoing quarterly reviews. This aspect of cooperation allows both parties to understand their partners’ needs and explain all dilemmas and misunderstandings on an ongoing basis. It also leaves no room for misunderstandings, based on the principle that solving small problems on an ongoing basis avoids the really serious ones.
Therefore, a good contract electronics manufacturing services provider provides dedicated ‘account managers’ for their business partners. What is important is that the managers know the implemented projects very well and the OEM can contact them virtually at any time. There may be several managers, because they are responsible for commercial, operational and technical areas, as needed.
A key issue in communication with the EMS provider is also the regular provision of clear information concerning the forecast for every assembled product, by the OEM. Obviously, this has to be done well in advance, so that the EMS partner can estimate demand levels and adapt the volume of orders to these levels.
This is significant as, due to increasing lead times, incorrect determination of the demand may efficiently prevent manufacturing on time and result in unnecessary tensions and conflicts.
The OEM has to provide the necessary documentation, product specification and plans that help to plan the process of electronics manufacturing properly, make it on time and take into account all Engineering Change Orders (ECO) in contract manufacturing.
To conclude, in a good business relationship it is necessary to work together to solve any problems and make decisions concerning rescheduling. Both parties should discuss any unclear issues and questions on an ongoing basis and provide information on changes in the project (the OEM) and downtime or production delays (the EMS). These issues are more widely covered in this article: 4 tips for a good relationship between EMS and OEM.
Trust is the basis of any relationship and is necessary to achieve long-term cooperation between the OEM and the EMS. That’s why Assel’s motto is: the most important thing we build is trust.
And we really strive not to undermine it.
Long-term partnership with EMS
Cooperation between the EMS and the OEM is certainly a long-term relationship. Finding a proper partner, building mutual understanding, creating communication paths and getting to know expectations and the product takes a lot of time.
That is why it is worth maintaining good mutual relationships. Because even if initially the cooperation is only to be about one product, it is good to leave the door wide open to use the developed procedures for the next project.
Good relationships between the EMS and the OEM are the key to the success of both business partners. If both parties are focused on the same goals, open and honest communication, mutual confidence and involvement, they will benefit from an outsourcing project. This is all the more important to realise that, while the efficient implementation of electronics assembly is the backbone of the EMS provider's business, the OEM also gains a lot from outsourcing production.