Is Flex above all the rest? Recent Wall Street analysis on top-tier electronics solutions provider Flex differentiates the Company in industry citing a wide range of service capabilities and the Company’s “sketch-to-scale(TM)” marketing tag line .
Flex offers a wide range services in industry and the Company does serve a range of industry markets.
But many other electronics solutions providers offer similar engineering and design services complete with depth to explore product concepts supported by in-house materials research, components design and selection and processes that help optimize electrical systems design, firmware development, and create mock-ups (sketch) and performance simulations leading to real innovation and prototypes and ultimately NPI followed by ramp-to-volume production (scale) for their OEM clients. (Read more about design and prototype development and NPI time-to-market challenges)
Like Flex, there are also many other providers serving the same range of industries as Flex while supporting their customers with dozens of design and manufacturing locations across the globe. Flex can count more engineers than smaller firms (and some tier-1 providers) but having more engineers with a broader range of capabilities does not automatically equate to better service.
What are you doing specifically to measure management and worker productivity, minimize inefficiencies and waste across departments and, hold EMS employees supporting production of my programs accountable?
— OEM
Electronics solutions providers will talk to their range of services and technology capabilities when courting OEM prospects, but this does not always mean those capabilities are available to customers once the deal is signed.
RELATED
Measuring EMS WIP (as % raw materials)
Many electronic solutions firms (including Flex) have proprietary technologies and licensed software to internally help customer programs with quoting, product design, manufacturing optimization and supply chain management.
These technologies are many times marketed to prospects during site tours and in management meetings as differentiators for the solutions provider. (Read: Solutions provider financial due diligence for OEMs)
What matters
The Flex Wall Street report also cites the importance of early co-development between OEMs and solutions providers. Other companies offering early co-development like Flex include Jabil, Foxconn, Sanmina, Celestica, Plexus, Benchmark plus, a gaggle of others (big and small).
The Wall Street report also cites; “Execution will be paramount [for Flex].” Provider quality issues and lack of execution can typically be traced to a particular provider factory/location. Based on feedback we hear from OEMs over the years, every provider has at least one factory with a poor reputation when it comes to execution.
Where everything else is equal between competing providers, execution is differentiation. There are more providers than not who have lost a customer to a competitor due to lack of execution. Therefore, OEMs should focus a good portion of their due diligence on understanding and assessing management competence when seeking electronics solutions partners.
Why EMS providers lose customers
Knowing the real reason why a customer leaves is important to every provider. Many OEMs switching providers typically share their reasons for leaving with us when asking for lists of alternate providers matching their program needs. (More here)
Flex is not immune to losing customers and in all fairness to Flex, OEMs have asked us to suggest alternatives to hundreds of providers small and large.
OEMs don’t contract electronics services with the corporation, they contract with a specific factory or series of factories. To minimize OEM risk decision makers should find out from prospective providers which specific factories their programs will be committed to. Get the provider to also put in writing the names of specific managers/management teams and other key employees important to your success the provider will assign to your program (with advance notice any of these folks leave the company or the majority of their time is re-allocated to another customer. (Read: Outline for selecting electronics solutions providers)
OEMs can also benefit from better understanding operations internal electronics solution provider factories — how internal functional groups support production and how/why departments can sometimes build silos for protection when fingers start pointing because a production line is down or shipments were missed… Choosing suitable EMS partners is important considering the cost of making decisions without adequate information.
Finding real differentiation
The EMS industry has billions of dollars of working capital tied up in inventory and operations due to hundreds (thousands?) of small and large inefficiencies. OEM due diligence meetings should ask potential partners; What are you doing specifically to measure management and worker productivity, minimize inefficiencies and waste across departments and hold EMS employees supporting production of my programs accountable?
Responses will range from various software / dashboard systems which do nothing more than report historical data or claim to buy parts at the best price, provider windows into demand and scheduling, to name a few. The leaders in this area are Flex and Jabil but neither has a real solution or full technology stack. Nobody else in EMS has anything even close to artificial intelligence, despite what some provider websites are claiming.
Most providers in industry have no idea what it takes to manage their operations to this degree. (For more on this read: The thin margin myth in EMS)
Whether electronics solutions providers have dozens of facilities or just a few, OEMs should go into discussions knowing not every provider factory or internal functional department is firing on all cylinders.
Custom list of providers
Electronic OEM professionals reading this and wanting help locating contract electronic service providers matching your program and end market, Venture Outsource offers a free service. Speak with a Provider Advisor. Advisors have access to detailed information on listings in our global database and can help you compare provider service capabilities to better match your program needs. You can also click the button below.
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.
