Posted on 15 Jun, 2017 by Neil Sharp
Outsourcing your electronics manufacturing can be a complex process. It usually forms part of a much wider strategy, and researching potential partners who can offer the right solution takes time. So why do some Original Equipment Manufacturers (OEMs) try and shortcut this process or approach things from the wrong angle?
Is it because they see all Electronics Manufacturing Services (EMS) providers as equal? Perhaps they don’t understand all the complexities involved? Or maybe they have never had to outsource before and don’t really know what questions to ask?
Unfortunately, like any relationship, starting off on the wrong foot can quickly trip you up and become painful in the long term.
Regardless of the ‘why’, we thought we’d share with you some good examples of what not to do when first approaching a potential EMS provider. This way you can make sure you, or a member of your team don’t end up wasting valuable time and effort finding the wrong EMS provider for your business.
It’s worth mentioning that the examples below are ones we have experienced ourselves during the past 12 months. Of course, we won’t be naming names, and whilst some advice, I’m sure, you will view as common sense, we thought we would share them with you regardless.
This approach usually involves an e-mail being sent into the sales team with minimal project details. For example, no indication of what the product is, what it does i.e. its application, incomplete data and technical files, lack of quote quantities required and no obvious sign of when a quote is expected back.
The ‘best’ email I’ve seen recently was from an OEM that told us they ‘might have a project for us, it wasn’t massive, but were we interested?’ With such minimal information (and let’s be honest, on the surface of it, not the most tempting enquiry) this approach is almost certainly going to result in the EMS provider needing to ask more questions. Which of course is going to result in either an email or phone call back. Perhaps a better approach would have been to phone in and give a brief overview of the project to gauge our interest before sending a more detailed email?
Most EMS providers will struggle to provide you with a meaningful proposal until they have at least some basic information and more importantly, at this stage, they will be trying to assess if they can add value to your business and that you ‘fit’ their offering.
Outsourcing is very much a two-way thing. Keeping too much information close to your chest can delay the process unnecessarily, lead to assumptions, and ultimately end up failing to meet either side’s expectations.
Why us, why now?
As an EMS provider, these are two key questions we like to be able to answer before committing resources to new projects. So if it’s not clear from the outset what the OEMs’ outsourcing strategy is, or why they have approached us, we will want to understand things a little further before we invest time in preparing a detailed quote.
In the past some OEMs have been taken aback by this. They have assumed that we would immediately start work on the request for quote (RFQ) and submit a price, no questions asked. Of course, there are plenty of suppliers out there prepared to quote new business even if deep down it doesn’t make commercial sense.
But that’s not our approach, particularly when we are looking to work with OEMs over several years on long-term partnership agreements. We have to be able to see real value in the partnership, otherwise it’s questionable what benefits the OEM will gain from outsourcing. What pain points will be removed?
So what sort of responses to the ‘why us, why now’ question concerns us?
Well, being told the enquiry is a benchmarking exercise with little or no prospect of future business doesn’t tend to go down too well. We also have worries when we hear the words ‘we are looking for the cheapest supply partner’. Or that the same enquiry has been sent out to a large number of EMS providers. And finally, being asked to quote on a number of annual quantities – ranging from one to several hundred thousand in increments of ten – suggests there isn’t a firm grip yet on future demand.
With so much information available on the web, it should be relatively easy for OEMs to compile a ‘shortlist’ of potential providers that appear (online at least) to offer the right solution. We often advise OEMs to start out with up to ten potential providers and then narrow this list down to three or four through their own research. After this stage, we encourage OEMs to start sending supplier questionnaires, conducting site visits, and triggering the RFQ process.
A necessity or a nice-to-have?
Many OEMs will use some form of supplier questionnaire or checklist during their research phase. This approach can make sense and allows the OEM to compare (on paper at least) multiple suppliers at a glance. The downside of using these types of questionnaires or checklists is that they are often generic in design, which don’t always take into account the services being supplied.
Although it takes a little more time, we would always recommend tailoring any questionnaire or checklists towards manufacturing service providers. If some of the questions are not relevant to the service being sought, why ask them? The danger is that you could receive conflicting information, particularly if the EMS provider is not entirely sure how to respond, which could then lead you to making the wrong decision.
Quality standards and approvals are areas we often see confused. At a recent exhibition we were asked if we held >ISO 13485:2016. When the sales team explained that we didn’t have the standard the conversation with the OEM started to tail off quickly. Before the prospect left the exhibition stand one of the sales team probed them further and asked why having the standard was important to them. At this point the buyer explained that they didn’t actually need the EMS provider to have the standard, but he had spoken to a couple of other providers that had it already so they decided to add it to their own checklist. To us, this made no sense at all, particularly as the OEM was risking dismissing the right EMS provider for them just because they couldn’t tick an irrelevant box on a form.
Finally, as we have touched on throughout this post, communication is critical to the outsourcing relationship. During the early stages, it’s likely that this communication will be heightened as the OEM and EMS provider try to establish whether or not there is a good fit between both parties.
In order to achieve your quote turnaround expectations, the EMS provider will therefore need you to respond to any queries or questions they have in a timely manner. Any delays will impact their ability to meet your target dates or result in a number of assumptions being made.
So please don’t go silent on any of the EMS providers you are contacting. Although you might find they are the only ones asking the questions, it doesn’t necessarily mean the other providers won’t need the same information at some point.
And you could argue that if there is no communication or questions during the first few days, has the EMS provider really understood what you are looking for? Perhaps they didn’t want to pester you so have made some educated guesses in their proposal which they will then try and resolve with you once an order is placed? What would you prefer – questions upfront or after you’ve placed your order?
And the best way to make a bad first impression with an EMS provider? Send them an e-mail enquiry and when they try and make contact with you ignore them altogether. Even if you’ve decided that they are no longer the right solution, your situation has changed, or you find your perfect partner early on, letting them know takes very little time and allows the EMS provider to redeploy their quote resource elsewhere.
As I mentioned before, all of the examples used in this blog are ‘real life’ ones, and as you will have seen, a number of the issues come down to effective communication. Hopefully, these points have re-emphasised the fact that regular dialogue between the OEM and EMS provider needs to take place throughout the relationship and particularly during the very early stages, in order to ensure the most successful collaboration between the two.Image by B Rosen