There are several compelling reasons why OEMs and EMS providers come together. By using the services of EMS providers, OEMs can utilize their human and physical capital for what they do best – product and market development, research, and brand building. At the same time OEMs gain access to the latest equipment and manufacturing technology. This trend has helped OEMs to reduce time-to-market and remain highly competitive.
Printed circuit board assembly (PCBA) and electronics and communication OEMs are the biggest customers for EMS providers, who have set up business units or dedicated factories to provide OEMs a complete range of supply chain services.
Today, the EMS industry and its OEM customers have built robust processes, with electronic manufacturing services providers handling the entire gamut of manufacturing services on behalf of OEMs, right from pre manufacturing design to end-of-line functions such as remanufacturing and disposal of waste electronic materials. Seeking the help of EMS providers is a viable business model for OEMs due to the lower cost at which they can provide services.
The EMS sector has evolved into a cost-effective manufacturing solution for OEMs and the relationship is based on trust and transparency. Over the years, EMS providers have learned to understand and execute as per the unique business requirements of their clients, while OEMs learned how to reap maximum value from their relationship with EMS providers.
The OEM/EMS partnership:
For OEMs to remain competitive, it is crucial that they delegate a substantial portion of their manufacturing operations to EMS providers. The partnership should be fine tuned to meet the specific demands of the OEMs business needs. Together both parties need to optimize their requirements in the most efficient manner, leveraging each other’s business models for mutual benefit.
Thus it becomes critical for an OEM to choose the right EMS company as its strategic partner for obtaining crucial product life cycle support and to retain a profitable business model. EMS providers are virtual extensions of their OEM’s manufacturing capability. The EMS provider’s industry experience facilitates efficient production of top-quality, cost-effective products.
For a successful OEM-EMS partnership, the EMS provider should develop a focused strategy that retains and helps in the growth curve of the OEM. Towards this end, the EMS provider needs to develop a repeatable, consistent set of management processes. Whenever the OEM acquires new operations, electronic manufacturing services companies should be able to tweak processes to absorb additional product requirements.
During times of economic turbulence, OEMs are more likely to rely on trusted EMS partners, leveraging those partnerships to remain competitive and efficient while meeting changed consumer requirements, market fluctuations and also lowering costs. The future of OEM/EMS relationships depends on how OEMs respond to changing requirements and how EMS providers can expand their capabilities to meet these requirements.