Technology used by EMS manufacturers trails OEM technology by 18 to 24 months. One reason for this is risk averse, habitual thinking in EMS industry further weakened EMS manufacturers have small budgets when it comes to technology spend.
And whenever EMS providers do innovate its because an OEM customer is dragging the EMS partner out of the dark ages, forcing the EMS to invest (after the OEM satisfies the EMS provider’s request for a PO to hedge EMS tech spend liability).
EMS manufacturers are uncomfortable with anything they cannot immediately understand and, prefer doing things the way they’ve always been done instead of investigating and learning something new.
Billionaire Chamath Palihapitiya, founder/CEO at SocialCapital and frequently interviewed on CNBC and other televised and online channels, uses venture capital as a force to create value and change on a global scale. He’s a smart guy with no fear of saying what he thinks. Regarding some large organizations he’s noted for saying, “Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine politics and waste.”
EMS manufacturers large and small are notorious for having unoriginal, stale thinking and, while ERP and materials management should be a cornerstone of EMS customer operations, EMS providers across industry – even the top EMS manufacturing provider – deploy faulty ERP zombie systems, incapable of optimizing supply chain planning and real-time monitoring encompassing their entire manufacturing vendor supply chain. (Read: Corona virus reveals ERP planning insufficiency in manufacturing supply chains)
This glib thinking among EMS manufacturers, coupled with a risk averse corporate culture, causes EMS manufacturers to heavily pad quote pricing in RFQ proposals presented to OEMs. EMS firms are afraid of losing money on a deal because EMS firms don’t know how to properly track their internal costs accurately – and they want to be 100% certain to eliminate any doubt they’ll be profitable with your program.
Understanding the complexity needed to adequately, and accurately, determine and calculate accurate quote pricing of OEM programs, is beyond the capabilities of the vast majority of EMS manufacturing sales and EMS quote teams today.
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.
