Like most niche industries the electronic contract manufacturing (CM) industry has some peculiar ways of conducting business. The following is an actual sample electronic OEM’s letter sent to a CM or electronics manufacturing services (EMS) provider requesting production quote pricing against a bill of materials (BOM) for a specific OEM program.
To put this BOM request-for-quote (RFQ) letter into perspective know the OEM writing this particular RFQ has done previous work with the EMS provider receiving this BOM RFQ letter. Here, the OEM also informs the EMS provider the OEM’s current EMS provider is not aware the OEM program being quoted will be transitioned from the OEM’s existing (current) EMS solutions provider to the EMS provider announced as the OEM program winner.
Dear [EMS provider],
Previously, you provided PCB assembly and box build quotes that were converted into a competitive price matrix for product supply. In addition, several EMS providers with competitive prices are being asked to provide itemized BOM quotes in order to evaluate competitiveness on the procurement of the materials for our product. (Related: Top 10 impacts to EMS/ODM quote pricing OEM programs)
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In summary, we expect your quote submission to have the following:
Several commodities are sourced by us [the OEM], those being custom parts or with tooling investment already incurred. At this time, those products will not require quotation. Printed circuit boards are in the process of being controlled by [OEM]. Gerber files are included in this RFQ package.
Our intent with this RFQ package is to validate the business assumptions on our strategic direction and select the EMS provider to discuss our comprehensive supply agreement for the complete turn key box build assembly of our products.
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Program volumes
We are currently looking at volumes of 1,000 to 2,000 [OEM] [P/N A] and [P/N B] per month (200 to 400 chassis per month.) By the end of [year] we predict to be shipping 4,000 to 5,000 [OEM] [P/N A] and [P/N B] per month (600 to 800 chassis per month)
Program timeline
Target date for quote submittal is [month, day, year, time].
Documentation
[OEM] is providing the following in order for you to get component pricing:
- [OEM] AVL
- Mechanical component drawings such as cables and assemblies
- Gerber data for PCBs
- A consolidated BOM in MS Excel with all PCBA and mechanical components pricing
- Authorization Letter for [OEM] contract prices
OEM contact/information
Please forward all quotes and questions to [OEM executive name] at [OEM].
- Name
- Title
- [OEM company name]
- Address
- Telephone
A detailed quote on the required BOM items per the [OEM] AVL in MS Excel format
A separate detailed quote on the required BOM items using your preferred components using crosses for alternate suppliers.
Special Note: Please be aware and sensitive the current CM has not been notified of this planned change. In discussions with suppliers or third parties please do not violate the spirit of our NDA.
SEE ALSO
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Accompanying this letter would be the following RFQ information:
SECTION I – PCB assembly and mechanicals consolidated BOMs (Format: Excel)
PCB assembly and mechanicals consolidated BOMs with desired format for quoting and levels of total annual volumes for each component. This includes a [OEM] part number and description and actual manufacturer and the manufacturer part number from the [OEM] AVL, plus the annual volume breaks of relative components based on sales volumes. In most instances OEMs will note there may be more than one approved vendor per [OEM] part.
OEMs will instruct EMS providers that, if they can achieve further reduction in BOM cost by using vendors not on the [OEM] AVL the EMS provider(s) should include a separate consolidated BOM with alternate vendor pricing, which also includes a preferred manufacturer, part number, and cost and that all crosses must be an exact match.
- OEM P/N
- Part description
- Lead time
- Manufacturer #1
- P/N for Manufacturer #1
- Annual usage (typically quoted in three different volume buckets w/ volumes pre-determined by OEM)
- Component P/N price ea (also quoted against volumes pre-determined by OEM)
SECTION II – PCBs (Format: Excel)
The PCB section displays a breakdown of the PCBs used in the OEM’s assemblies. Sometimes, PCB vendors are already selected with pricing but OEMs will encourage EMS providers to get PCB pricing and provide the following information with their quote:
- OEM P/N
- Part description
- Layers
- Square inches
- Notes
- Price
- PCB vendor name
SECTION III – Programmables (Format: Excel)
This section breaks down different components requiring programming. Typically, an OEM might request BOM quotes on programmables as materials only and, that for programmables, the contract manufacturer provide either a labor rate charge or outside source charge stated as a per part rate matrix. OEMs will want the following details:
- OEM Programmable P/N
- Programming description
- Component that is being programmed
- EMS provider quote/fee for programming
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