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There are many reasons why an original equipment manufacturer (OEM) might choose to outsource part or all of their manufacturing operations. Perhaps a change in company ownership has resulted in a shift in priorities or a drive to cut costs. Maybe your sales are rocketing, and your in-house capabilities are at full capacity. Or you may simply want more time to focus your attention on other aspects of your business.
Whatever your reasons for choosing to outsource, it’s important to understand that any change in the process takes time and requires careful consideration. In this article, I explore seven key steps to guide you through the process of identifying, shortlisting, auditing, and selecting your electronics manufacturing services (EMS) partner.
1. Assemble Your Team
The first step in the process will be to put together a team of experts who will take responsibility for steering the project. Ideally, aim for as wide a range of skills as you possibly can, inviting input from engineering, procurement, quality, and manufacturing. You’ll want to assign a project leader who can create the plan and see the project through from start to finish.
Involving HR can also be hugely valuable, especially if your proposed outsourcing strategy is likely to result in changing roles or changes to staff numbers. Depending on the sensitivity of your project, it may also be worth getting the members of the team to sign a non-disclosure agreement to ensure complete confidentiality.
2. Set Your Objectives
It’s crucial to set clear goals before you begin the process of shortlisting candidates. For example, are you looking to transfer just one part of your operation? Or are you considering a complete, end-to-end outsourcing partnership?
Reaching a final decision on the right supplier can take time, so it’s important to remain mindful of your original objectives throughout the process and to create specific, achievable, and measurable milestones so that you can plot your progress. You may also find it helpful to begin drafting your terms and conditions (T&Cs) at this early stage to establish and define the criteria for your potential suppliers.
3. Start Your Search
Your search for an EMS provider might initially start with a longlist of 10 or so candidates, but you'll want to narrow this down to the three or four that you think could offer the best potential fit for your business. While online research can be helpful, it can also be hugely time-consuming as you whittle your way through the options. If in doubt, you may find that the tried-and-tested method of recommendation or word of mouth is useful for helping to identify your prospects.
Throughout this initial search stage, it can be useful to keep a few clear objectives in mind. Perhaps you’re after an EMS partner that is located near to your own operation. Or maybe you’d prefer a supplier who has multiple locations or that has manufacturing facilities abroad.
4. Quiz Your Candidates
A pre-qualifying questionnaire can be an invaluable next step in helping you determine the potential fit between you and your prospective EMS partner and to reduce your shortlist down to a final two or three contenders. Their commitment to the business relationship is going to be key. Look for signs that they’re genuinely interested in you and your business and that they can demonstrate that they have the skills and experience to manage the manufacturing of your products.
5. Plan a Site Visit
Once you’ve established your final shortlist, a next logical step will be to arrange a tour of your prospects’ manufacturing facilities. Taking the opportunity to see the business first-hand can provide a vital first impression of the company and its culture. It’s also a chance to put faces to names, quiz them further about their capabilities, and confirm that the people you’re talking to are the actual decision-makers who will be steering your project from start to finish.
6. Submit Your RFQ
Your request for quotation (RFQ) will provide your supplier with all the key commercial and technical information that they’ll need to provide you with an accurate quote. From a commercial standpoint, it’s likely to include estimated annual usage figures for your products—an indication of quantities and the likely frequency of orders. From a technical perspective, you’re likely to need to provide a significant amount of data, including a bill of materials (BOM), parts drawings, production build packs, and manufacturing/test data.
7. Audit Their Operations
An audit of your prospective EMS partner’s operations will likely involve several elements. During the site audit, you’ll be able to talk to the key people who will be responsible for manufacturing your product. It’s also valuable to carry out a quality audit of their processes and procedures to ensure they have a visible structure in place and that they can demonstrate the secure and efficient management of your build data.
If your sales tend to be seasonal or are subject to peaks in activity, then you’ll want to ensure that they can cope with the unexpected. Once you’ve completed all your quality checks and have received all the information back from the RFQs, the final stage in your selection process will be to reconvene your team, weigh up the pros and cons of each candidate, and make your final decision.
Choosing to outsource your electronics manufacturing to an EMS provider requires careful planning and consideration. And even once you’ve made your decision, there may still be things that test you or that don’t go quite to plan. An experienced EMS partner has been there before; they understand the challenges, and they’ll be able to support you through the process to ensure you achieve your goals.
Neil Sharp is the director of marketing for JJS Manufacturing.