Some electronics OEM companies only want to source the electronics portion of their manufacturing programs.
Others see value in sourcing full manufacturing assembly with their EMS partners.
When determining fair pricing of EMS services for make vs buy decisions, OEMs often do not accurately benchmark internal OEM costs.
EMS manufacturing cost inputs and drivers often missing in these internal calculations by OEMs include energy costs, factory G&A, obsolete reserves, and inbound freight, to name a few.
SEE ALSO
How to build EMS manufacturing program costing models (PDF)
The average OEM equipment manufacturer can do reasonably well, when agreeing to pricing of EMS quoted services and fees, provided the OEM can get their program to within a close range of the EMS provider’s combined percentage for S,G&A costs and profit. Much of this can be found in financial statements for public EMS companies.
Having this knowledge, OEMs can then rest, with some assurance, their fees agreed to and paid to the EMS provider are within reason compared to other program pricing that EMS provider has with other customer programs, on average.
These resource pages for EMS request-for-quote (RFQ) tips and EMS quoting guidelines offer additional insight. We also suggest reviewing this page on bill-of-materials (BOM) management and EMS quote pricing estimates.
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