How to Successfully Manage the OEM/CEM Partnership

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The partnership between an original equipment manufacturer (OEM) and a contract electronics manufacturer (CEM), like all relationships, needs to be nurtured, or it will break down. A successful outsourcing initiative is built on trust and communication and both partners need to be clear on what their own roles are, in order to realize the innumerable benefits.

The emphasis here is on the word "partnership". The one between an OEM and CEM is mutually beneficial: the OEM acquires more time and resources to focus on designing, marketing and selling their products; and the CEM gains a new customer.

So, as an OEM, how can you ensure that you get the most from your outsourcing venture?

Give a lot to get a lot

When you decide to outsource, it's important to fully commit to the partnership, which means handing over a high degree of responsibility to your CEM. It can be tempting to hold back – to hand over just a little responsibility – but you stand to gain more by going that bit further. Therefore, the key is to choose the right CEM from the outset.

When you know that you can trust your partner, you will feel more comfortable about letting them take the reins. For example, rather than simply outsourcing product assembly, one of the best decisions you can make is to also allow your CEM to choose your suppliers on your behalf. Cost-wise, it simply doesn’t make sense for both of you to maintain separate supply chains – and the best CEMs will only work with reputable suppliers, who will be well-equipped to meet the needs of both you and your customers. Additionally, the whole point of outsourcing is to lessen the manufacturing burden on your organization, so the more rungs of the outsourcing ladder you climb, the better.

You might also want to consider allowing your partner to take control of testing and then shipping your products directly to your customers. Consequently, you can further benefit from the savings and efficiencies that outsourcing brings.

Establish clear lines of communication

Communication really does lie at the heart of a successful OEM/CEM partnership. From the start, it's crucial to establish who your main point of contact is within the CEM's organization. How often will you discuss the progress of your partnership? What will you do in the case of a crisis?

It's also important to ensure that all of your company's internal knowledge is captured and documented, so that it can be shared with your partner. For instance, your own wireman may know how to wire a complete cabinet assembly off the top of his head – but how would an engineer on the CEM's factory floor know where to start? Documenting these kinds of processes also means that knowledge isn't lost – for example, what would happen if that wireman left, or was off sick for an extended period of time?

Let the CEM do their job

It's easy to fall into the trap of micromanaging your partner when you first set off down the outsourcing path – after all, you want everything to go perfectly. But try to resist this urge. You've chosen your CEM because they’re the right fit for you, so let them do the job you're paying them for.

As your relationship develops, you will enjoy more and more benefits. You will have peace of mind in knowing that your manufacturing operation is in good hands, while you focus on furthering your business. And, as your CEM becomes more and more familiar with your systems and processes, they will be able to weigh in with helpful suggestions and advice that could enable you to gain competitive advantage within your industry. 

Ultimately, the best OEM/CEM partnerships are those that are cultivated. Both sides need to work to ensure that the relationship continues to function and serves the purpose for which it was established. In this way, both partners benefit from the value that outsourcing can bring.

The post originally appeared on the JJS Manufacturing blog which can be found here.


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