From non-OEM components manufacturing to product finished goods inventory, every electronics manufacturer experiences BOM scrubbing problems. Whether OEM brand owners or, contract EMS providers, problems associated with optimizing BOMs or eBOMs exist on both ends when trying to integrate outsourcing program BOMs with the enterprise product lifecycle management (PLM) system.
This has been going on for years and will continue. Another categorical fact in industry few recognize is the electronics distribution network provides little value and needs constant updating to remain relevant.
To emphasize the points above, take, for example, the Electronic Component Industry Association (ECIA). It is my opinion ECIA does not want BOM pain points to be resolved.
SEE ALSO
How chips companies get on the OEM approved vendor list (AVL)
Why is this? Electronics supply chain confusion and chaos is a primary reason ECIA exists. Years ago Venture Outsource published several research papers for the investment community wanting to grasp the intricate web of relationships and side-deals between non-OEM components manufacturers and OEMs; EMS providers and components distributors.
Findings from that research, combined with feedback from client engagements revealed few sourcing and commodity managers fully understand the delicate supply chain balance and control distributors create by inserting themselves into the supply chain.
If orderly supply chains exist and, if there is no chaos, electronics manufacturers will not need a distribution network. Software vendors have been trying to solve this problem for years, but capability is limited by not fully understanding OEM, and EMS, pain points.
How is this so, you ask?
Currently, electronics components distributors are growing larger and larger in contract EMS industry. They are doing this by buying up every service in the electronics supply chain.
Distributors are componentizing (e.g., taking two separate things and combing them together to create a new thing) sort of like what the pharmaceutical world does – change a molecule – so they can then create a new patent.
Electronics distributors are creating their own IPs by taking other firms’ system-on-chip (SOC) designs and then pairing it with the most miniscule features or functions, and then naming it something of their own accord, branding it, and selling it.
The net result is: no value-add is created in the distribution market in the EMS manufacturing sector.
Think of this way: this type of nuanced chaos worked in the computing space because it was confusing. There are so many types of servers and, each server has different electronics components, different throughputs, because, back then, each company like Compaq, HP, IBM…could not staff enough technical sales people to answer these types of questions. So, they passed the burden onto to VARs to be their sales force.
SEE ALSO
Assessing EMS manufacturer design capabilities
Rethinking EDA tools to unlock electronics value chains
In a similar way, it’s how Microsoft sold into enterprises – by way of ‘partners’. VARs became Microsoft’s support desk.
Back then, partners were given money by Microsoft to market Microsoft’s products and services. Microsoft provided money, free training, free software…
As a result, Microsoft created level-three support and technical support – by way of partners, only.
Rarely does Microsoft show up on-site a client’s location because they have ‘partners’ to do this for them.
This is what has been happening with components distribution.
Get list of EMS manufacturers for your requirements (Its free)
Save time and money. Find quality EMS manufacturers. Fast. Venture Outsource has a massive, global database of contract electronic design and manufacturing capabilities. Speak with a Provider Advisor.
“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.”
— Jeff Treuhaft, Sr. Vice President, Fusion-IO
Advisors tell you matches we find for your needs, answer your questions and, can share EMS industry knowledge specific to your industries and markets.
