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Outsourcing Electronic Manufacturing Services Benefits

Electronics manufacturing services (EMS) companies provide a range of assistance to their clients, which include original equipment manufacturers (OEMs). Outsourcing services may encompass needs related to design, production, and testing. It’s often initially difficult for a decision-maker to determine whether working with an EMS could help a company succeed.

Often, the initial assumption is that no other entity could do a job better than the company considering outsourcing, but that’s typically not the case. Here are some things to consider that can help company leaders become more familiar with EMS benefits and gauge whether they could experience some of those advantages.

Target Weaknesses and Their Effects

Assessing the situation starts with identifying any weaknesses that frequently prevent an OEM from reaching its full potential. Perhaps a manufacturing process could happen faster with specialized machinery that an EMS company has, but an OEM lacks. The lack of in-house resources could also cause longer-than-desired lead times that frustrate current customers and cause rumors of a poor reputation to spread to potential ones.

Plus, long lead times create challenges for accurately forecasting future inventory needs. However, an EMS provider can handle sourcing requirements, minimizing lead times in the process. Additionally, outsourcing certain parts of electronics manufacturing allow a company to devote more resources to its core competencies. It may become apparent that representatives spend too much time on tasks that outside entities could handle and don’t have enough left to put towards innovation or other things that directly connect to business growth.

Identifying a company’s existing weaknesses and examining how they negatively impact profitability and customer perception can help leaders decide it’s time to pursue electronics manufacturing services. People should also keep in mind that working with an electronic manufacturing services provider often provides faster results than other methods of dealing with identified weaknesses, such as hiring more team members with particular specialties.

Measure Product Life Cycle Timelines

A company leader may also realize that extended product life cycles prohibit items from reaching the market fast enough, particularly if an OEM’s clients include many companies that frequently release versions of newer, better products. Then, it’s challenging to stay competitive. Startups are especially likely to have that issue, particularly while in the prototype stage.

That’s why they may use EMS providers, too. Sreeram Srinivasan is the CEO of Syrma SGS Technology, an Indian EMS company. He explained that the organization’s assistance is critical to startups. “Syrma helps startups to quickly convert their ideas into high-quality parts by accelerating their product development life cycle.” He continued, “Quick prototyping support is key to startups for proving their designs or prototypes before they refine their products and flag off bulk production. In this, our support to Indian startups and well-established companies is also critical as it allows them to iteratively refine their product concepts.”

It could also become evident that a company should hire an EMS company if they need design or production support with a particular component of an electronics product, such as a heat pipe to provide passive cooling. The kind most often seen in electronics features water inside a copper envelope. It works within a temperature range of 20 Celsius to 150 Celsius.

If producing that component in-house would slow down the time to market too much, company leaders can get EMS benefits by hiring external assistance. Since EMS companies have resources and expertise at their disposal, it’s easy to take advantage of it quickly and not encounter any more unnecessary delays.

Assess How Outsourcing Could Help Profitability

Company decision-makers may also decide that outsourcing is the best solution when they want to put more resources into the products that generate the most profits while letting another company take responsibility for the products that don’t help the bottom line as much. Intel is a recent example of that. It will outsource 15%-20% of its non-CPU chips to two companies starting in 2022. Analysts believe this decision will let Intel focus on research and development, plus in-house production of its highest-margin chips. Additionally, outsourcing will give Intel more flexibility when making plans for new products.

In some cases, a company may want to put most of its resources into a wholly new product line that’ll almost certainly catch people’s attention. For example, research is underway on flexible electronics. Some tests show they can stretch up to 1,000% of their original size without losing conductivity. People are also switching silicon out for conductive plastics, believing that’ll bring more flexibility with only slightly less conductivity.

When a company wants to put resources into developing a product that’s unlike previous creations, outsourcing could provide more freedom to do that. Similarly, an EMS company can help accelerate the production of prototypes, assisting clients to more efficiently determine what works and what doesn’t as they prepare new products for the market. Those benefits could translate into larger profits due to faster innovation.

Take a Long-Term View of Goals

Considering how EMS benefits may help an electronics business also involves thinking about what stands in the way of the organization meeting its current or future requirements. Perhaps an OEM intends to expand by offering parts that require following strict compliance measures, such as those associated with the medical or aerospace industries. Most EMS providers assist clients across numerous industries and are already familiar with such specifics. They can provide advice that helps a company steer clear of pitfalls that could cut into its profits and extend manufacturing timelines.

In another case, an electronics company may want to massively scale up its production, such as when preparing to move into a new market or meet the requirements of a, particularly demanding client. Then, relying on electronic manufacturing services to assist could make good business sense. However, when thinking about whether to outsource, the service provider’s location is an essential consideration. For example, it may initially seem preferable to outsource to a company located beyond the United States’ borders. Doing that could add to a company’s timeline, though. In one survey, 50% of respondents that used Chinese manufacturing facilities said it took more than 60 days to receive their orders in the United States.

When company decision-makers pinpoint which factors restrict current or future growth, it’s easier to determine if the business would benefit from working with an EMS provider. They should also think about which activities often take the most time to do in-house. Testing a semiconductor requires a minimum of five steps, for example. Outsourcing may get it done faster without sacrificing quality, provided an EMS company has more resources to devote to the task.

Ask the Right Questions to Get Further Clarification

Once an OEM decides to investigate EMS companies further, asking appropriate questions will help them gauge suitability. For example, if the product must meet specific industry standards, it’s necessary to ask whether the EMS company has the relevant certifications. Requesting evidence of the organization’s financial stability is also smart. After all, a company in danger of folding could negatively affect all its clients, too. Asking detailed questions about whether an EMS provider has sufficiently invested in technology is essential, too.

Electronics manufacturing is a fast-evolving industry, and having updated tech will help keep pace with changes. Getting the answers to questions like these and others will guide decisions of whether a company could help a potential customer notice EMS benefits. However, examining the areas above first will help company representatives have a clearer understanding of why many businesses use electronic manufacturing services and how it might be time for their organization to do the same.

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