5 Simple Elements to Guarantee Outsourcing Success

Reading time ( words)

Outsourcing your procurement, assembly, test and logistics to an electronics manufacturing services (EMS) provider can be a complex process. It's not a decision to be taken lightly and depending on the size of your company, can take anywhere between 6 and 36 months to implement.

So, we won't be covering outsourcing in any great detail in this week's article. But that's OK because there are really only a handful of elements you need to get right to guarantee your outsourcing strategy becomes a success.

Rather than viewing outsourcing as a way to offload unwanted tasks, original equipment manufacturers (OEMs) should spend time carefully selecting and then maintaining a properly managed relationship with their chosen EMS partner. Here are five simple elements we recommend you focus on before, during and after an outsourcing strategy to guarantee it is a success.

1. Choose Your Partner Carefully

Ultimately, outsourcing product manufacturing should improve business performance. OEMs should therefore spend a considerable amount of time evaluating potential partners. In addition to ensuring that your immediate production requirements can be fulfilled successfully, you should also look for demonstrable expertise that the assembly partner can manage your supply chain effectively, improve processes and production, and respond to future changes. Savvy OEMs tend to focus on these aspects rather than looking for the lowest cost proposal. But supplier selection is only the first part of the work that OEMs should expect to do if outsourcing is to deliver its full potential.

2. Verify Your Data

Before any outsourcing project can begin, both companies must work to ensure that manufacturing can transition seamlessly to the EMS partner without suffering delays or process-transfer problems. Typical challenges can include lower than expected initial yield, which usually occurs when critical information has not been documented and therefore not included as part of the original product build information. Rushing the handover can encourage these types of problems which is why you must ensure that your manufacturing partner has enough information to both quote and build your product correctly.

Ensuring up-to-date documentation as part of a fully detailed build pack is the most important first action for any new outsourcing partnership. Other important handover activities include checking that your BOMs have been correctly interpreted to ensure consistent component specifications, as well as making sure that the assembly and test processes are understood. At this stage, structured dialogue between the two companies is vital to help the EMS company absorb the commonly found ‘unwritten’ details. These may include any aspects of the design more sensitive to variations, fine-tuning of process settings, or common failure modes seen during testing.

3. Oversee the First Build

Taking time to ensure the EMS provider understands as much as possible about your product range will contribute to a controlled handover achieving high initial yield and good product quality. A good EMS provider will work with you to complete the first build using what should be a robust New Product Introduction (NPI) process. When visiting potential assembly partners, you should focus your attention in this area and look for suppliers that have standardized sign-off procedures in place to make sure all information necessary to build a given product is shared and understood, and fully up to date.

Once the first build has been completed, a detailed review is then recommended so that any design, build or test issues can be identified and solved. As best practice, the EMS provider you move forward with should ideally collate all of their findings within a full NPI report which is made available to you immediately after the first build.

4. Steady State

In the early stages, our recommendation with any outsourcing project, regardless of size, is always to reach a ‘steady state’ i.e. the same build quality and delivery performance you have been achieving in the past. Of course, you have probably outsourced to improve things, but introducing too many changes in the first few months can be a recipe for disaster. So, resist the temptation to demand an immediate cost saving or a 50 per cent jump in delivery performance from day one. Improvements will come, but they need to be controlled and if the EMS provider is expected to change too many things from the outset you may find you end up in a far worse position than you were originally.

Once a ‘steady state’ has been achieved, the focus for both companies can then move onto continuous improvement. Examples include identifying alternative components, where appropriate, to improve price or availability. This is an area where the EMS partner should be able to contribute high levels of expertise in disciplines such as component engineering and purchasing. The value here lies not only in lower component prices, but also in reducing exposure to lead-time fluctuations and anticipating supply difficulties such as obsolescence announcements.

There may also be opportunities to improve production efficiency by making small changes to the PCB layout for example or to the production process itself. Such Design for Manufacturer (DfM) opportunities should be highlighted to you, ideally during the NPI process, so they can be implemented in time for future batches.

5. Two-Way Communication

Going forward, both parties must exchange information regularly. It is equally vital for the EMS company to keep you informed of the production status, just as they need to receive timely marketing and sales forecasts from you for optimal management of the material pipeline and assembly capacity.  At its most effective, this dialogue allows your assembly partner to avoid overstock situations by promptly communicating downturns in requirements; in effect ‘replacing’ inventory with information. EMS providers that run agile EDI based purchasing systems with their suppliers are able to respond quickly to market intelligence received by you to push and pull the material supply chain as your customers’ requirements continue to change.

So, there it is in a nutshell, the 5 basic elements you and your EMS provider need to get right in order to guarantee outsourcing success. With all of these procedures and communication channels operating properly, your chosen EMS partner should be perfectly suited to deliver improvements to production and delivery of your product.

This article originally appeared on the JJS Manufacturing blog, which can be found here.



Suggested Items

Excerpt—The Printed Circuit Assembler’s Guide to... SMT Inspection: Today, Tomorrow, and Beyond, Chapter 3

04/22/2021 | Brent Fischthal, Koh Young America
Initiatives like the IPC Connected Factory Exchange (CFX) and IPC-Hermes-9852 underpin efforts within the industry to develop standards and help create a smart factory. These M2M communication standards, guided in part by Industry 4.0, are altering the manufacturing process by improving metrics such as first pass yield and throughput by applying autonomous process adjustments.

Excerpt: The Printed Circuit Assembler’s Guide to… Smart Data, Chapter 2

04/21/2021 | Sagi Reuven and Zac Elliott, Siemens Digital Industries Software
Companies have been collecting data in large volumes. Highly varied data from manufacturing operations comes in quickly that needs to be validated, and its value prioritized so that it can be turned into something useful—transformed from big data to smart data. The amount of data available has grown exponentially into big data. Twenty years ago, a PCB work order resulted in 100 data records, megabytes of data; today, it is 10 billion records, terabytes of data. The investment in collecting this data and storing it is high. However, without a way to analyze the data, without analytics, it will not result in ROI.

A New Captive PCB Facility in the U.S.

04/19/2021 | I-Connect007 Editorial Team
Diane Maceri and Jessi Hall discuss how Schweitzer Engineering Laboratories (SEL) has been working with Alex Stepinski of GreenSource Fabrication to build their own captive PCB facility in Moscow, Idaho; the thought process behind that decision; and their involvement in the Managers Forum at IPC APEX EXPO 2021.

Copyright © 2021 I-Connect007. All rights reserved.