3 Common Fears About Outsourcing Your Outbound Logistics

Estimated reading time: 4 minutes

If you have already outsourced elements of your manufacturing to an electronics manufacturing services (EMS) provider, you will be familiar with the benefits. Namely, that outsourcing frees up your time, allowing you to focus on designing, marketing and selling your products.

Many original equipment manufacturers (OEMs) outsource just part of the manufacturing process, like PCB or cable assembly, while others go one or two steps further by outsourcing the complete value chain from supply chain management to product assembly and test, etc. These are all proven strategies for OEMs and, clearly, different approaches suit different companies.

Nevertheless, if you are still responsible for shipping finished product to your end users, you may be facing difficulties that are distracting you from your core activities. Working more closely with your EMS partner could provide you with the solution you require.

By outsourcing your entire manufacturing operation—from purchasing parts, right through to shipping to your end customer - you can focus solely on designing, marketing and selling. However, many OEMs hold back from taking this last step—and who can blame them? After all, it means handing over a large degree of responsibility.

In this article, we will explore three common fears about outsourcing your outbound logistics to an EMS provider and explain how you can overcome these and take the plunge—safe in the knowledge that you are guaranteed a soft landing.

1. Loss of control

One of the advantages of having your EMS provider deliver product to you is you get to see what you have ordered. You can inspect it, configure it and then send it out, safe in the knowledge that it left you in perfect working order. For some OEMs, this level of control and reassurance is very important - particularly if there have been issues with product quality or late deliveries in the past.

However, this approach means that you will be increasing the time for your product to reach the end customer - especially if you are carrying out other processes, such as configuration and testing. Most low volume, high complexity (LVHC) products will require some degree of configuration, and this can be achieved more quickly when carried out during the manufacturing process – i.e. by your EMS provider.

The key here is to only work with a partner that you completely trust, and who you know will deliver your product on time and in pristine condition, to your customers' requirements. If you don't have faith in your EMS provider's capabilities, then you probably shouldn't be working with them full stop.

2. Cost

You might reasonably believe that outsourcing more of your manufacturing operation to your EMS partner will cost more – but this is not the case. Instead, it can save you money in the long run.

This is because you will not need to retain the layer of overheads associated with receiving, storing, picking, packing and then dispatching the goods to the end customer. Also, you will avoid the product being handled multiple times, thereby decreasing the propensity for damage that could result in costly rework and repairs.

Additionally, your partner will be able to work closely with you to ensure that best practice processes are being implemented across your entire manufacturing operation, to increase efficiency and prevent waste.

3. Lack of flexibility

You might worry that your EMS partner will not be able to grow with you. For example, what will happen if you expand into new markets, or your customers' demands change unexpectedly? 

In fact, your EMS supplier should be able to help you to adapt and successfully fulfil these kinds of requirements. They can implement a number of sophisticated systems and processes, including: configure-to-order, late stage configuration, postponement manufacturing, mass customization, supply chain pipelining and agile manufacturing.

Your EMS provider should have created an agile manufacturing environment, in which they have put in place robust systems and procedures to support their highly trained people. Some examples include:

Automated material requirements planning (MRP) systems linked directly to customer forecasts.

Material purchase orders sent and acknowledged in "real time" via electronic data interchange (EDI).

New product introduction (NPI) procedures with feedback reports that document every stage of that product’s journey.

Sophisticated document control systems capable of managing multiple revisions of build data and engineering change notes (ECNs).  

These procedures, plus others, enable the best EMS providers to respond quickly to changes in customer needs while still controlling their costs and quality.

OEMs who outsource part of an assembly, like the PCB or a set of cables, but then carry out the final product assembly, customization, test, packaging and shipping themselves are only benefiting from some of the savings and efficiencies that outsourcing delivers.

By handing over this final responsibility, you can focus solely on designing, marketing and selling your products – your EMS partner will take care of everything else. This is the ultimate "end-to-end" outsourcing solution and, when done right, there is little not to recommend it.

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