Any significant impact on a manufacturer’s profitability can result in many outcomes, including missing quarterly forecasts, declining stock price, layoffs, and closure.
The manufacturing request-for-quote (RFQ) phase, sometimes called request-for-proposal (RFP), is important to any manufacturer. Managing RFQ expectations early with the right tools, processes and procedures helps lay the groundwork for how your company is positioned, and perceived by electronics solutions providers, when negotiating pricing (your cost).
The ever-changing contract electronics services landscape
The hyper-competitive contract electronics manufacturing services (EMS) industry is always facing new challenges. Whether the electronics solutions provider is EMS, CM, CEM, ODM or JDM, technology understanding by contract electronics industry is typically 18 to 24 months behind understanding by their OEM prospects and customers.
And while sourcing contract electronics services saves OEMs costly investment in manufacturing plants, property and equipment (P,P&E) and can drive faster ROI, vertically integrated solutions providers have higher fixed costs than providers not vertically integrated, and both are constantly facing rising costs for obtaining capital amid challenges servicing revolving lines of credit common in industry. And, as providers take on more leverage, higher costs are passed on to customers.
But no two contract solutions providers are the same. Each factory has its own cost basis (staffing, overhead…), its own circuit board assembly line and work cell or workstation distinctions. You may have heard the term digital twin, whereas solutions providers state that any two locations/factories for the solutions provider have exactly the same assembly processes and lines in place. But this is deceiving. Every workstation, which is a stage for the entire production process, contains its own labor costs. Costing of workstations is directly related to outsourcing program (accurate) pricing and services fees.
This includes costing for both supplier direct labor, and costly indirect labor. So is F,G&A, S,G&A, and, even sales commissions are often included, in some cases, into a workstation costs – all tied to your supplier quoted pricing.
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“Was able to very quickly find details on the important elements of setting up EMS and ODM partnerships, talked with an advisor for personalized info on quality providers matching our requirements while getting up to speed quickly about the industry and connect with key staff from like-minded companies and potential partners. Great resource.”
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