The electronics manufacturing environment has changed tremendously in the last 10 years. Firms in various sectors including automotive, medical, and several others are increasingly turning to the services of contract electronic manufacturers or CEMs to help them launch their products at a relatively lower cost and in a shorter time.
So what is so valuable about these partnerships? And what can businesses do to best leverage their relationships with contract manufacturers? We are going to take a closer look at the main supply chain insights that will enable you to make smarter manufacturing decisions.
What Are the Contract Electronic Manufacturers?
They are also specialized companies which
manufacture electronic components and assemblies on behalf of other businesses.
Instead of keeping their own plants, the firms hire these specialists who
possess the equipment, knowledge, and economies of scale that would provide
quality products at minimum cost.
These companies process printed circuit
board (PCB) assembly all the way to manufacturing the finished product, testing
it, and packaging. They can be considered as a continuation of your engineering
and production teams and they can introduce technical expertise and
manufacturing capabilities that may otherwise be too costly and challenging to
develop internally.
Key Supply Chain Benefits
Cost Optimization
Being able to deal with contract
manufacturers would help save a lot of overheads. You save the huge capital
expenditure on production equipment, facility repairs, and special employees.
You pay for production on a need basis instead and transform fixed costs into
variable costs.
Bulk buying power in many clients also
helps many contract manufacturers to negotiate better prices with the
components and materials. Such a common cost structure usually leads to lower
unit costs compared to in-house production.
Scalability & Adaptability
Contract manufacturers are the best at
responding to demand. They have the ability to increase production in peak
seasons or when launching a product. When the demand goes down, you do not have
to occupy the idle production capacity.
This is also applicable in terms of product
variations. Multiple product lines, customizations and design changes are
supported by experienced contract manufacturers without the need to
re-configure complete production systems on your behalf.
Availability of high-tech equipment
To keep up with technology in
manufacturing, one has to invest continuously. These costs are distributed by
the contract manufacturers among numerous clients, so the most advanced
equipment and processes are available to companies that would not have been
able to afford the investment on their own.
Automated assembly lines, sophisticated
testing equipment, or both: when you collaborate with the appropriate
manufacturer, you gain access to features that would require years and millions
of dollars to develop in-house.
Important Supply Chain points
Quality Control Standards
Every CEM does not have identical standards
of quality. Assess quality management systems, certification, and past records
of any manufacturer before collaborating with them. You should look for ISO certifications,
industry market standards & clear testing procedures.
Ask current clients to provide references,
visit the facility where possible, request samples. The lowest price is hardly
the best choice in the long-term when your reputation is at stake due to
quality problems, or you need expensive rework.
Group Work and interaction
Effective joint ventures involve the
establishment of effective communications and co-operative procedures. The
contract manufacturer must be seen as an appendix of your team, who updates
regularly, offers proactive solutions and technical advice during the
manufacturing process.
Create precise reporting, response time,
and escalation expectations. Communication will help avert minor problems,
which will end up causing serious problems that will derail your supply chain.
Risk Management
Supply chain risks could be minimized by
diversifying your manufacturing partners. Welcoming to a variety of contract
manufacturers on a critical part or having relationships with alternative
suppliers on the essential products.
It also concerns geographic
diversification. The recent world events have demonstrated the dangers of the
centralization of manufacturing in one area. Presence of partners in other
locations can ensure continuity of production in the case of regional disruption.
Conclusion
The most effective firms view their contract electronic
manufacturers as strategic partners and not suppliers. This implies
engaging them early in the product development process, disseminating forecasts
and market information, and taking time to develop good working relationships.
Frequent annual reviews, equitable payment
conditions and mutual respect develop partnering relationships that are
mutually advantageous. By trusting the contract manufacturers to know your
business objectives and limitations, they will offer improved services and
creative solutions that lead to success on both sides.
Contract electronic manufacturing presents
some of the most convincing benefits to organizations that are interested in
streamlining their supply chains without compromising on the quality of their
products or responsiveness to the market. The trick is to find the right
partners and how to manage these relationships in a way that will maximize the
long-term value.
If you are looking for a great ECM, then
look no further than OptimaTech Inc.
