Important Considerations while Hiring Electronics Manufacturing Companies (EMS)
The market place is getting more and more populated as the time pass by. And so are the Contract Electronic Manufacturers (CEMs) are seeking more and more business to capture. The selection of a perfect Electronics Contract Manufacturing (ECM) partner for your business is not an easy task. Just to mention that CEM, EMS and ECM are different abbreviations of same thing.
You as an OEM ( Original Electronics Manufacturer) or ODM (Original Design Manufacturer) have to consider many things, before taking final decision.
1- Capabilities and Capacity:
The CEM must be a good fit for your business and you should take a comprehensive interview of the representative of the CEM to get a comprehensive know how about the strength and weaknesses of CEM. Know their setup procedures that are relevant to your business model. Try to evaluate the capabilities and capacity they have in terms of human resource and machinery. Some CEMs are HMLV (High mix and low volume) suppliers while some are (High Volume Low Mix HVLM). The first one means capability to deal with multiple types of products while volume/mass production capability is low. The second one means dealing only in specified / niche products but volume/mass production capability is high.
2- Quality and Certifications:
Check the quality certifications that are relevant to your field of business. Get know how of standard procedures they follow, quality metrics, check the training records they give to their employees to enhance manpower capabilities. Training in electronics domain include RoHS, NEMA, IEEE, ISO and OSHA.
3- CEM's Location:
It is highly recommended that OEM and CEM are located in same country or same city. This is because the language is not the barrier in communication and same cultural trades are easy to share and understand. When the production volume is not so high and you as OEM need prototype may be 5 to 10 pieces then preferring the CEMs in your own country is good option. Most European and US based companies are expensive but it is not the bad option to consider them especially you are also located in same country as CEM. These CEMs are more flexible to give you support even after the final product has been delivered to you. Also you can visit the manufacturing facility of CEM as they are located in your country / city and you can save expenses in air flight tickets and expensive hostel charges to stay in if foreign country based CEM was selected. Although there are more efficient renowned CEMs available in China and Taiwan where labor is cheap, electricity is nearly free, strong supply chain management, components are ultra-cheap. So these CEM can be your option when you as OEM looking for long term partner and greater profit margins with fast supply chain and efficient delivery/shipment methods .
4- CEM with Turnkey Services:
It is always better option to go for the CEM that has complete solution under one roof. This is called Turn Key services. Such type of CEM offers manufacturing, assembly, post manufacturing services. However these companies do not offer design services and that is better because your research and development team can focus on enhancement ofexisting design. Let's say your company headquarter is in USA and your CEM is in China then your engineers and scientist can purely dedicated to research work while at the same time cutting down the risk of Intellectual Property (IP) rights breach or stolen.
The CEM will have a free hand to take the entire project from start to finish and hence reducing cost of manufacturing, ordering parts from reliable and cheap source, dispatching finished/final product to end customers.
5- Financial Stability of CEM:
It is highly important that the CEM you select is financially stable. The net cash flow, assets values and other monetary indicators that may be available publically can greatly help. While many CEMs do not disclose this confidential data, but it is upto the OEM to find out so as to avoid any unpleasant and short term experience with your potential CEM.
6- Cost Management Ability:
To prove to be a long term partner, the EMS (CEM) must have the ability to cut down the manufacturing cost and share the profit earned with their OEM. The OEM must know how its CEM manage target margin, manage production lines, how CEM generates quotations and get to know the price calculator used by CEM.
7- Intellectual Property Rights:
Protecting the copyrights, of your unique invention or research analysis data that you do not want to share with anyone except the key responsible person of your OEM is of utmost significance. Hence you as OEM must make sure that when you hire CEM, they will not share your highly confidential design data with anyone except the selected few employees of CEM who are responsible of converting the design to product shape. Thus in this way your Intellectual Property rights are not compromised. You must check the CEM’s employee hiring methodology, data handling procedures and networking and database security measures they take.
8- Post Manufacturing Services:
It is vital that your CEM will provide you support and services regarding the product repair, service, maintenance, issuing warranty and guarantee to the customers. These are some value added services that CEM has to pay to the OEM’s customers so as to increase “good name” in the market place. 24/7 customer support online, via telephone call and fast and smooth supply chain and shipment procedures of CEM make it on top of OEM’s selection list and can enhance reputation among customers and make it superior over its competitors.
It can be said that as OEM, selecting your CEM partner is the life’s toughest decision if talking about the lifetime business relationship with your CEM. It would not be the wise idea to break the contract with your CEM after a short time and few job turnarounds. Because it will be very difficult to re-hire someone who has more capabilities and who can be more trustworthy. Hence it suggested to OEMs to build the confidence and trust level with their CEMs so as to maintain a long lasting business relation.