For this article, we assume your internal OEM engineers completed your product design, you selected your EMS (or ODM) partner and you’re ready for manufacturing with your EMS partner. You determined your AVL and AML acceptable line items. Now you present your design and all appropriate files to your EMS partner. Your EMS provider will offer manufacturing design improvements for more productive manufacturing throughputs.
Your EMS partner will also have suggested changes to both your AVL and AML. For the latter, your EMS partner then takes over management of those sources and you want to assume (hope) your EMS partner already has good relationships with those sources.
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If component pricing was already negotiated by you (OEM), accept that you’ve taken a lot of the power away from the EMS provider. In most instances, its best to let the EMS provider augment/take over vendor negotiations in the supply chain because the EMS provider will have better leverage with suppliers and vendors based on EMS firms always having multiple customers they’re negotiating for and can drive lower volume pricing supported by materials management metrics.
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How to get lowest component lowest pricing for your bill-of-materials
From the OEM product design perspective, especially on electro-mechanical components and sub-assemblies, look to your EMS partner to help identify those electro-mechanical sources that are local to the EMS factory where your program is located.
Mechanical components are more bulky and so transport coasts will be high. Close proximity to the EMS factory will help manage this. Its not unusual to also assume an EMS partner will have opportunity to have created the best supplier relations, especially with local vendors and suppliers meaning you will also have a more evolved, local supply chain to provide you more optimized supply chain visibility.
Looking further upstream in your supply chain for optimization opportunities typically requires a joint effort between OEM and EMS. In these instances its important OEMs are very clear with expectations you have with your EMS partners. Your expectations can be by commodity or even by part number with detailed responsibilities/targets for each so you can manage EMS effectiveness. This can be challenging since its not uncommon to have 10,000 part numbers.
For better management you can group part numbers together by commodity or by supplier. Or you can also manage line items/part numbers based on pricing of part number or parts that make up the biggest value of your bill and materials (BOM) also.
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