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Ronnie Darroch, regional president in EMEA with Plexus, outlines why many companies are moving towards outsourcing and offers some key guidelines when it comes to selecting an EMS partner

Ronnie Darroch, regional president in EMEA with Plexus

Intense competition, ever­increasing regulations and the continued pressure

to drive down prices and produce a differentiated product are the challenges that OEMs have to tackle in today’s electronics market. Cost constraints and lower order levels mean that an OEM has to manage its budget and working capital more efficiently. Increasingly, companies are turning to an electronics manufacturing services (EMS) partner for support, especially for high­complexity, low­to­mid volume electronic devices that are seen in defence, aerospace, medical and industrial applications.

Whilst an EMS can be engaged to perform a set function at one

specific part of the manufacturing process, today more companies look for an EMS that will add value at every point in the product realization process from design through to manufacturing and after­market solutions.

The next decade is expected to see larger numbers of OEMs partnering with EMS providers as the electronic device market increases its complexity, becomes more regulated and many companies turn to specialisation to increase market share.

What should an OEM look at when selecting an EMS partner?

Firstly it must know its own outsourcing strategy and perform an internal assessment of the strengths and capabilities of the business and its key differentiators. Then it will be able to identify the main areas where an EMS partner can add most value.

Some companies elect to focus on their core intellectual 28 | February 2014

property and marketing and will look to an EMS for support with both the design and manufacture of their products. With the right plan in place, an OEM will reduce both its time to market and fixed costs. The selection process for an EMS partner can help define both the short and long­term requirements of the company, which is the foundation for all good business models.

The second step is to make sure the EMS partner’s business

profile is a good match. EMS companies specialise at different levels of volume and product complexity, so it is essential to choose an EMS partner with core specialisations that complement the product profile. Selecting a partner that excels at building millions of mobile phones to build a mid­volume complex product is likely to create challenges, specifically in areas such as the supply chain.

Next, an OEM needs to understand the EMS’s level of capability

and experience. Each EMS provider has different areas of expertise. Few have the breadth and depth of solutions and services that include conceptual design through system assembly and direct order fulfilment and beyond. Since each OEM’s requirements vary, it is essential that the company’s needs match the EMS’s capabilities. Some may want an EMS to drive solutions and provide support with the device design, but another may seek just a manufacturing partner for PCB or product assembly.

When contemplating partnering with an EMS, an OEM needs to

look for a partner with the relevant experience in its industry and the necessary regulatory standards in place. By selecting an EMS partner that offers a full range of services, an OEM will be able to grow with that single partner as its future requirements change.

Finally, consideration has to be given to the level of flexibility that the EMS partner offers. Flexibility is essential in the

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