We enable our customers to build strong relationships with the ideal EMS provider(s) for their business
You may be wondering why we chose the picture of a handshake at the top of this page - when EMS is supposedly all about technical expertise. Without doubt, design, engineering, supply chain and operational capabilities are critical factors in assessing your EMS partner but customers constantly tell us that the ideal EMS supplier is a partner that is "open", takes an interest in their business and helps them to solve their challenges.
EMS sourcing is all about developing strong personal relationships between your company and the key executives at your EMS supplier. Underpinning this is a desire from all parties to understand how the other company works and set processes in place to ensure that there are no "nasty surprises".
One of the key services that we offer to our customers is an EMS Workshop where we use a structured process to allow you to define your EMS sourcing strategy, identify the ideal partner(s) and execute a plan to engage and maintain that relationship. This does not only look at the "obvious" elements but also considers how the ideal partner could help them to grow their business in new ways.
So what are the key questions that you need to answer in defining your EMS strategy ? They will include :
- What is my company culture ?
- Where are my key geographical markets - both now and in the future ?
- Do I have any key components in my product that need to be sourced from a particular region ?
- What leadtime do I need to provide to my customer in each region - and how will this change in the future ?
- What is my target price in each region ?
- Does manufacturing location have an effect on my marketing ?
- How much day-to-day interaction do I need with my EMS partner ?
- What design and engineering support do I need ?
- What supply chain support do I need ?
- How stable is my product from a design viewpoint ?
- How many product variants should I have ?
- How much resource do I want to allocate to manage my EMS supplier ?
- What is my attitude to supply chain risk ?
- What is the relative importance of Quality, Cost, Value Improvement, Cash Cycle and Service ?
- How important to me is the "ease of doing business" ?
Once we have the answers to these and many other questions, we can identify the ideal EMS partner(s) for your business.
One of the key factors often overlooked by our customers is the relative size of their business compared to the scale of the EMS partner. If you are on the limit of being "too big" or "too small" for your supplier, you may be faced with having to move your business. If you are too small, you will not get the management attention that you need and they may even ask you to disengage. If you are too big, you risk the supplier not being able to support your future growth and you lose some of the benefits of having an EMS - where the breadth of their customer base allows them to absorb the ups and downs of any one customer and turn fixed costs of manufacturing into variable costs. Therefore you need to take great care to ensure that they are not constantly having to change EMS partners as this can bring significant costs and risks to your business. If you find that you need to switch your EMS partner, which is usually triggered by changes in your business (such as volumes, markets or product mix) or sometimes by alterations in your current EMS partner's strategy or volumes, then we can help you to assess and minimise those costs and risks - but we cannot eliminate them. Before switching your EMS supplier, you need to be absolutely sure that there are enough potential benefits to outweigh the costs and risks of moving.
So what do you need to consider in choosing your EMS partner ? The list, and the relative importance of each item, will be different for every customer but it will almost certainly include these :
- How does their company culture match with yours ?
- How big are they ?
- Where are they located ?
- How many sites do they have ?
- What is their supply chain strategy ?
- What engineering and design support can they provide ?
- What level of vertical integration do they have ?
- What quality approvals do they hold ?
Once these are defined, we will then support you in your selection process and through the development of the Manufacturing Services Agreement (MSA). Time spent negotiating a good MSA is always worthwhile. It sets the "rules of engagement" and removes the risks caused by a lack of communication or an over-reliance on assumptions. Many EMS relationships have failed because the EMS company was genuinely trying to help its customer but, in doing so, found that it was holding too much of the "wrong" stock. The MSA can be seen, by some, solely as a tool to "allocate liability" between the parties and so they avoid its development. However, liabilities in an EMS relationship normally only occur where there has been no MSA in place or where it has been poorly written and implemented. The reason for developing a good MSA is to ensure that liabilities are not generated in the first place - as each party knows the "rules" and there is no need for "guessing" what their partner needs.
Since we have strong expertise in MSA development, we also understand what are, and what are not, good industry practices and processes. Therefore, we can offer a mediation service to both EMS companies and their customers (where we have not been involved in the relationship up to that point). During this process we can look into why a relationship is breaking down (or has already broken down) and assist both parties to reconcile with each other or, if that is not possible, to identify a fair and reasonable way out of the relationship that minimises costs and risks for each of party.