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We all do it. In an attempt to stand out from other electronics manufacturing services (EMS) providers, we include a range of statistics on our websites. We assume original equipment manufacturers (OEMs) like yourself find these helpful and use them to make decisions on whether or not we could be the right partner to outsource to.
But are we kidding ourselves? Do any of these really matter to you and how far do they go in influencing your decision?
You may be wondering how I came up with this list? In order to give you a rounded view of the industry, I have looked at over 35 different EMS provider's websites, including our own, which range from multibillion dollar Tier 1 suppliers down to those just starting out in the electronics manufacturing sector.
So now you know where they have come from, let’s take a look at ten common statistics EMS providers list on their websites and consider whether or not they pass the "so what?" test.
1. % of customers that would recommend us
Frequently shown as a doughnut chart or, in some cases, a sliding scale. You can almost guarantee that, regardless of how the data is presented, the number will range between 99 and 100%. However, without understanding which questions have been asked and how many customers were included in the sample I’d argue the figure on its own is meaningless.
2. Number of surface mount components placed
These statistics always look impressive as they often run into the millions. Some websites I've looked at even display the information in real-time with the count increasing while you’re on the page. Unfortunately, without having supporting efficiency and quality data alongside these numbers, I’m not really sure what they tell you - apart from the fact the machine is switched on. Does a higher number prove that the EMS provider is more reliable? This kind of analogy doesn't ring true when you think about the mileage on a second hand car. So is this a useful statistic for EMS providers to display or just a gimmick?
3. % right first time quality
Often displayed on the "reasons to choose us" page, this statistic can be difficult to interpret. For instance, over what time period has the data been captured? Who is responsible for deciding what is right first time – the customer or another department? As an example, the first pass yield (FPY) rate for the surface mount department could be very poor but after excessive amounts of rework the customer is shipped a working unit. Providing the OEM doesn’t open the unit up or have a field failure later on, the customer could report this delivery as right first time. But what does this FPY rate say about the internal build process? Is it set up to consistently deliver a quality product?
4. Factory size
A favorite of mine and something nearly every EMS provider across the globe proudly displays. For example, if you were to look at our website you would see we have two 40,000 square foot facilities. Whilst this number may sound big to some, when compared to someone like Jabil it’s actually tiny – apparently they have 37 million square feet worldwide! So what does this figure prove? Would you choose to work with someone that has an extra 10% of floor space over someone that hasn’t? How much floor space will your production and test requirements consume? If it's only a small part of their factory does it matter to you how much real estate they have? You need to feel comfortable that the EMS provider you partner with is big enough to help deliver your strategic objectives. The square footage of their factory gives you an idea of scale but it’s what takes place inside that really matters.
5. % on-time delivery
Clearly, on-time delivery is a key metric and one that EMS companies should be geared up to consistently achieve for each customer and each product. However, this figure is rarely reported under 99%, which I guess is hardly surprising. But where is the supporting data? How many shipments have been made and over what time period? How many different products is the EMS provider shipping each month and how complex are they? Who is responsible for determining the on-time element? Is this measured against the original customer request date or the EMS provider's acknowledgement? Quite often there will be a difference between the two.
6. Number of staff employed
A large workforce might help show you scale and capacity. But how important is the number to you? Is an EMS provider with 80 staff less attractive to you compared to one with several hundred? The BBC recently reported that Foxconn were replacing 60,000 staff with robots. How would that make you feel as a customer? Perhaps some of the softer elements like company culture, staff engagement and experience levels are more important to you when looking for a good "fit"?
7. As the old saying goes: turnover is vanity, profit is sanity and cash is reality
Unfortunately, this hasn’t stopped market research papers using turnover figures as a way of segmenting the EMS market. But how influential are these figures to you? If everything else was equal would you choose to move forward with an EMS provider turning over ten million compared to one reporting a seven million figure?
8. Number of surface mount machines
This number can vary wildly between manufacturing partners and much depends on their service offering. You could argue that only having one surface mount line might impact the EMS provider's ability to deliver finished tested product on-time in full – so how many do you need them to have? Unfortunately, I'm not sure there is a magic number. Much depends on your own product, run rates and how much surface mount capacity you require each month from your assembly provider. The other factor to consider is the quality and efficiency of their production line equipment. Would you rather work with a partner that has a large number of secondhand placement machines requiring constant maintenance or one with a smaller number utilizing the latest technology?
9. % of customers that return to place further orders
Another statistic that you can almost guarantee will be reported as 100%. Unfortunately, we don't know from this statistic how many different customers the EMS provider has, the complexity of their products or the nature of their supply agreements. Outsourcing is a strategic decision and, as such, very few OEMs make impulse purchases for electronics manufacturing services. So even if a relationship doesn't work out, I would argue that most, if not all, OEMs would have had to commit to at least two or three follow-on orders at the start of the relationship. There's your one 100% right there, regardless of how satisfied the OEM is.
10. Number of years established
Finally, the statistic that proves how experienced the EMS provider is and how well placed they are to satisfy all of your outsourcing needs. Older equals wiser right? Maybe. In what is a very competitive environment, those EMS providers that remain in business today, having established themselves several decades ago, certainly deserve some credit. But how have they performed during this time? Have they consistently grown, invested and developed? What about their customers? Do you know if they have managed to achieve their strategic goals as a result of outsourcing to the EMS provider?
So there you have it: 10 statistics a large proportion of EMS providers throughout the world display on their websites. Unfortunately, without understanding exactly how these numbers are calculated, particularly those relating to performance, many are left open to interpretation. So while we recommend OEMs begin to compile a list of potential EMS providers using the Internet, you still may have to dig a little deeper into some of the statistics on show before you put together your shortlist.
The post originally appeared on the JJS Manufacturing blog which can be found here.