Many EMS manufacturers of all sizes (including tier-1) face debt:equity exposure considerably higher than EMS industry average. This can effect many aspects of the EMS provider’s business, including unfavorable terms borrowing against rotating lines of credit.
This over-leveraging also places OEM customer supply chains (from EMS business liquidity to OEM customer FGI deliverables…) at risk.
Contributing to this concern, EMS providers don’t typically manage their procurement, pipelining and management of materials on a granular level, despite EMS claims otherwise.
OEMs can force their EMS manufacturing partners to identify the EMS provider’s materials exposure by asking EMS firms to report (measure) ‘materials work-in-progress (WIP) as % raw materials‘ across various levels: corporate, customer, program family, board level… to help convey to you that your EMS provider is paying attention to details when managing your program.
Additional metrics and EMS management best practices can be found here and here.
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