Many contract electronics EMS manufacturing providers have low productivity asset turnover. This is due to poor use of assets to generate sales. In many instances, the problem starts with EMS manufacturing sales and marketers. They have trouble differentiating themselves from competitors. We rate EMS survey responses on differentiation here.
One EMS sales person’s view on differentiation, “[We’re] Flexible from low to high volumes, offer full consignment and turnkey solutions.” Unfortunately, 1000s of EMS manufacturers can claim the same. EMS sales and marketers can do better. Here are suggestions to start.
Part of challenge in EMS industry’s heavy use of manufacturing reps. We go in depth on the rep issue here.
OEM risk: EMS manufacturing cost models
Cost models for EMS (and ODM) services have low pricing power but can still mask true, internal costs when EMS providers present quotes to OEMs. Poor EMS/ODM management of costly IDL contributes.
Add to this, large numbers of short-term EMS/ODM-customer contracts can apply pressure on margins long-term causing EMS/ODM firms to remain exposed in soft economies due to high fixed costs.
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EMS high operating leverage can cause any upcoming revenue shortfalls to be magnified on EMS books, so EMS/ODM often need to tap revolving lines of credit. Here, key points choosing EMS/ODM partners.
SEE ALSO
OEM best practices for EMS during quote pricing
Contract manufacturing consulting services
Ways to determine fair, ‘should cost’ for outsourcing of EMS/ODM product design and manufacturing services can be found here.
To further help OEMs when selecting EMS and ODM partners, take a look at ways to evaluate EMS manufacturing finance due diligence here.
For EMS manufacturing operations due diligence, we go into detail here.
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
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