Electronic manufacturer services deals with an entire industry, as well as a specific company or subcontractor. This term is usually utilized interchangeably with contract manufacturing. In summary, electronic manufacturer services companies offer different manufacturing and engineering outsourcing services of great value. They offer these services to the original manufacturers of the equipment. This allows them to make the operational efficiencies operational and then put greater attention on major activities like development and research.
The market for the electronic manufacturer services is constantly changing. Also, there is an increase in the demand for outsourced manufacturer services and electronic components. According to forecasts, the industry should grow by 7.5% annually from 2018 to 2024.
The increasing demand for electronics, as well as the great advancements in innovative technology, manufacturers have been allowed to capitalize on present opportunities. With the increasing customer demands, as well as the need to keep costs at a controlled level, there may be need for manufacturer to form a partnership with producers offering industry experience and expertise.
In this guide, we will be teaching you those factors that drive electronic manufacturer services, the challenges they face in their application, as well as those factors to look into anytime you are outsourcing your product’s manufacturing.
Let’s continue….
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Electronic Manufacturer Services: General Overview and its Applications
The basis of all electronic manufacturer services originates from designing, manufacturing, testing, and distribution. The electronic manufacturer services provider performs all these functions that include assembly of full systems for the manufacturers of the original equipment.
Providing “box build” and systems integration services, for example, manufacturers can utilize a process in combining the assemblies of printed circuit boards, enclosure fabrication, wire harnesses, testing, etc.
Electronic Manufacturer Industry
This industry is a broad one and is relevant in electronic components (semiconductors, connectors, etc.), industrial products (automation and robotics), health care, consumer use (PC, smartphones, etc.) and government (defence & aerospace). As there is continuous growth in the electronic manufacturer services market, four major driving forces have to be observed.
Market Research engine has revealed that the EMS market’s main driving factors include:
Increasing demand for electronics related to automotive: This sharp increase can be due to safety systems’ demand.
Increasing demand for most consumer electronics: According to a new Frost & Sullivan analysis, the outsourcing trend will be increased due to the increasing demand for most consumer electronics.
Advanced focus and skill on major competencies: Companies are in search for any solution provider offering expertise in the market sector, or a specific field.
Rapid increase in mobile devices: There is a continuous growth of wearable technology, iPhones, and Android devices. According to the annual report relating to mobile traffic by Cisco, about 5.4 billion humans globally, will have bought a phone. However, according to statistica, about 6.055 billion and 6.378 billion people will use phones globally in 2020 and 2021 respectively.
There are diverse and broad applications in the space of electronic manufacturing. Most of these processes are relevant in all industries. Just the way it is specified, it deals with consumer, industrial, and commercial.
Let us consider some applications….
Applications for Electronics Manufacturing
Medical
Medical electronic manufacturer services work with EMS provides, not just to provide standards of high quality and the best possible practices, but they also offer the necessary industry experience and expertise, which can guide the introductions of new products seamlessly via development.
Defence and Aerospace
Safety solutions are very necessary to ensure high reliability and peak performance for applications of harsh environments. Sure, the focus on aircrafts electrification will gain increased focus.
Industrial
Applications in the industries may utilize lots of technologies. The complete lifecycle of the product, which begins from the specification and scope, then the prototyping as well as the testing, and then to the final assembly, are all required to ensure a new product gets to the market.
Telecom
Data processing, as well as telecommunication is complex. There is a need for support offered to the different devices, as well as the network infrastructure that underpins the technology.
A technology company, based on science – BTG labs, has shared some typical applications for the manufacturing of electronics. The Surface Analyst of BTG Labs helps the manufacturers of electronics to build and create a product which will be able to withstand stress from the elements.
For example, if any manufacturer needs a way to make sure the circuit boards are protected, their instruments will reveal the surface’s cleanliness level instantly. By doing so, “this successful bond is created between the circuit boards and conformal coating.”
The manufacturer or producer would successfully cut down on waste and failure, and as a result, will experience successful coatings.
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Comparing both EMS and OEM Providers
The terms utilized in the field of electronics manufacturing are different, just the same way their roles are. EMS is referred to as electronics manufacturer services, while OEM is referred to as the original equipment manufacturers.
Description
OEMs are either components or market products. EMS creates these products for the OEMs, and they offer value-added services.
Volume
Some OEMs sell low to medium volumes, while EMS usually specializes in any of the two environments for manufacturing. These environments are low-volume, high-mix or high-volume, low-mix. The technology’s complexity varies in any of the models.
Rights
OEMs usually have the rights, but EMS providers do not have the rights.
Focus
The main focus of any OEM is on innovation and development of product. EMS on the other hand, deals with repair, management of the supply chain, and support with design. They are also known to manufacture some of the best products in the world.
To explain further, electronic manufacturing services are companies designing, manufacturing, testing, distributing, and providing repair/return services for components of electronics, as well as assemblies for OEMs – original equipment manufacturers.
These market segments are categorized into four tiers. This is done with respect to their revenues. For tier 1, their revenue is greater than $5 billion. For tier 2, revenue is from $500 million to $5 billion. Tier 3 revenue is from $100 million to $500 million. For Tier 4, it is less than $100 million.
What is Outsourcing Manufacturing?
The evaluation of outsourcing options starts with having a good knowledge about the things you do exceedingly well. Immediately that aspect is well understood, then you will partner easily with a provider offering more experience and expertise in other areas.
Determining the Right EMS Company for you
Choosing an EMS provider could consume a lot of time. It could be frustrating too. However, if you can ask the right questions, then the process could be less daunting. Below are the questions to ask.
Does this EMS have a good experience and history in the industry?
Choosing a partner for manufacturing could be a difficult choice to make. One important factor to look into is credibility or pedigree within that particular industry you want to grow or penetrate.
EMS providers, which remain operations throughout many decades and years successfully, have survived due to their ability to give customers the satisfaction they deserve.
Will they be able to add some value to you all through the process of the design?
Most EMS companies provide some support via DFM – Design for manufacturing processes. OEMs must be alert for EMS partners that are very proactive with the leading toolsets in the industry, clear and great design guidelines, as well as an accessible and knowledgeable staff that demonstrates the necessary skills to bring your desired product to the market much faster.
Have they invested in modern equipment and advanced technologies?
You must be sure that your manufacturing partner will offer some support for your business using advanced testing and manufacturing technologies. This partner must also show some great commitment to any ongoing investment.
Do they make improvements to meet all industry standards?
Leading companies usually have high certification. This means they have the latest specifications and standards across all the major market sectors of customers. To achieve and maintain this certification in sectors that requires time, investment, and adhering to strict business controls and processes. This is relevant most especially in the Aerospace, Defence, and Medical markets. In turn, this shows some commitment to industries that are focused, coupled with dedication to improvements.
Is their offering for product testing comprehensive enough?
The discussion for the product testing has to be done very early during the design. For some particular products, which must function in harsh environments, reliability and environmental testing has to be utilized to ensure your products will meet the requirements of your desired application.
Will your needs be taken care of after the fulfillment of the order?
You will be rest assured when you know that you have a team that is dedicated to support the requirements of the aftermarket. This includes product remanufacturing and service demands.
It is very vital they provide full support during the product life cycle, engineering management services of the component and obsolescence management of the component.
Do they have transparent and effective communication?
The communication you have with your partner has to fall under three rules. These are collaboration, communication, and consistency. The information flow is very important. This is because it determines the partnership’s success. This ensures an active and open dialogue to make faster and easier business decisions.
All EMS partners have to focus on compliance and ethics. Making use of the best procedures and practices in their role as the supply chain, then these efforts will be supported.
Will they be flexible enough to handle the revisions and changes to your product quickly even if the existing production is affected?
High-Mix Low-Volume businesses have to demonstrate business and systems processes that will be able to react to any dynamic changes. This includes making changes as the production is on.
Is there an introduction process for new products in place?
Introduction of new products encompasses the whole process involved in bringing new products to the market. The manufacturers are guided by the engineers. Also, they communicate all through the whole development process of the product.
The chosen EMS partner of yours must comprehend the way the process is supported. This partner will add great value from cost awareness, volume ramp, product qualification, and design reviews. Having a fully-dedicated NPI team will come as an added bonus.
Are these manufacturers cultural fit?
Having the idea that your supplier speaks a similar business language just like you is great. Now, include the experience that supplier has, in that specific market sector of yours has a lot to say. The best fit as your manufacturer will comprehend those requirements needed in order to get this job done on time.
They will also possess the required certifications, and at times, the legalities to work on some programs or products. Search for manufacturers that will offer customer testimonials, which will go on to demonstrate that they can deliver the best support and class.
Does their manufacturing footprint go with your long and short-term needs?
Whether you need support or local engagement for your global market, the manufacturing partner for your electronics has to be appropriate for your long-term and immediate strategic goals and demand. This helps in building the relationship both long and short-term.
Is there any system for preventing counterfeit and/or lifecycle management of a product?
A management program, which supports the phases of design and development of a product, is very important for great product success. This includes obsolescence management, which considers the lifespan of components utilized. This is done because they have a plan to get the parts replaced as it transforms into a problem or while they age.
Whatever EMS provider you choose has to fight electronic components that are counterfeit through prevention. This can be achieved by ensuring the parts got are from someone and somewhere reliable. Also, before the EMS provider can be seen as true, they must be committed to the customer after the production. Also, they include aftermarket repair services of electronic devices.
How is traceability handled?
Traceability is vital for the supply chain because it allows the recalling of products and components. They also do great in matching replacement parts and track production. It brings together the required information by the distributors, suppliers, and manufacturers.
Traceability can retain records. This is great, especially for those that have some specific and special requirements. Solutions offered here can start from the lot traceability to the entire traceability of the component level.
Does your product match with their production mix?
Whenever you are choosing a partner for your manufacturing, understanding the infrastructure and business portfolio setup will help you make a great informed decision. Below are some questions you should review while the process is on.
- Will they be producing cell phones and computers, while you may just be interested in products requiring 1000’s or just 100’s every year?
When you are choosing your manufacturing partner, make sure you have some understanding of the strategies used in their business and the areas where they focus in the market.
- Is the model of their business built on agility and flexibility or on velocity and volume?
Is there a customer program monitoring the service levels?
VOC – Voice of the customer programs explains the feedback of customers regarding what they have experienced, as well as what they expect for your services or products. This focuses on expectations, customer needs, product improvement and understanding.
Ensure you form a partnership with EMS providers always striving hard to offer world-class services at all stages of the process.
Can they be trusted as brand ambassadors?
To partake in outsourcing manufacturing, there must be enough trust. Being a brand ambassador, it becomes their responsibility and duty to support and execute the promises made by the brand. Also, they have to be committed to delivering high-quality standards. This is possible by offering technical skills and hands-on approach necessary to meet even specifications that are most critical.
Do they wish to align your business with theirs strategically?
The leadership should have a free and open mind to having a forum that identifies a roadmap for true partnership. It is important they engage in the designing process early. They should also collaborate in all the aspects concerning the partnership.
This partner also has to offer their expertise in product design and industry insights proactively. This will guide clients to enjoy innovative solutions.
Advantages of Electronic Manufacturing Outsourcing
One major reason why manufacturing companies do outsource manufacturing is to reduce their costs. Another reason is to maintain or gain competitive advantage. This is achieved by improving its speed to the market.
Now, let us consider the advantages of electronic manufacturing outsourcing
- Conversion of investments on fixed costs to models of variable costs
- Mitigation or reduction of risks
- Quick deliveries to the market
- Improvement in productivity
- Provision of more agility
- Increased competence and experience in each manufacturing process
- More global and much broader supply chain
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Barriers and Challenges of Electronics Manufacturing
For a while now, we have been discussing the benefits of EMS. However, the equation always has another side. Let us consider some of the challenges that electronics manufacturers face.
- There is an increase in labor costs
- There must be a robust management system for your product lifecycle. If you don’t have one, then manufacturers may make some misinformed decisions. These decisions could affect the product.
- Globally, there is a lot of competition
- E-waste disposal and how it impacts the environment
- Issues related to compliance and traceability
- Investment in support systems and infrastructure to manage highly-rated and complex markets such as defence, aerospace, and medical
- Automation is needed
These are not new challenges. However, these challenges keep growing. The advanced technology and electronics value chain assists in breaking the barrier.
Low-Volume High-Mix Manufacturing
Environments for manufacturing that are regarded as low-volume high-mix deals with large different products. These are often manufactured in little quantities. The benefits of this market are two-fold. This relates to lower inventory and customer demand requirements.
The expectations of customers usually change. Most times they prefer choosing products that are more customized. This involves the transferring of your manufacturing into a low-volume high-mix scenario, which puts additional dynamics in various manufacturing systems.
The building of complex products in little quantities could become a challenge for original equipment manufacturers. This is why most people prefer to go for low-volume high-mix production to ensure providers get more expertise and experience in a specific field.
When you outsource production, this could lead to less expensive errors. It also frees up resources and internal engineering, as well as enables you to have a great control over finances.
Future Opportunities and Trends for Electronic Manufacturing
The sector of electronics offers electronic equipment for both industrial and consumer industries. Globally, there has been a growth in the semiconductor, attaining a worth of $400 billion, in 2017.
There will be a continuous search for innovative automation solutions
These needs are well understood. This is one good reason why KUKA is responding quickly to get new solutions to ensure robotic automation is cost-effective and easy in the market.
Increasing Consumer electronics demand in both developing and developed nations
With this, smart electronics demand will increase. The robot revolution is another great and innovative advancement in technology.
Continuous push for manufacturing solutions that are more eco-friendly
As the statistics of climate change keep mounting, the pressure continues to increase from all possible areas – governments, businesses, and consumers to search into additional manufacturing solutions that are eco-friendly.
New methods will surely be developed as an industry to help in producing devices which consumes less energy
The reduction of the consumption of energy is a very good way of cutting down costs. This leads the consumers and businesses to choose electronics that are energy efficient. The manufacturers have this pressure to adopt processes of green manufacturing while producing electronics simultaneously, which are less expensive to utilize. This is happening, thanks to reduced energy demands.
Conclusion
The manufacturing of electronics is always evolving and goes at a fast pace. Solution providers that are flexible, and also work with rapid changes can make sure their customers achieve success.
