There are many reasons for an original equipment manufacturer (OEM) to outsource production to a subcontractor.
It could be because costs need to be lowered and partnering with a contract electronic manufacturer (CEM) will help achieve efficiencies across the board. Or demand has increased and now your existing capabilities are unable to cope with the upturn. Alternatively, it could be because specialist help is required for a complete production redesign or a prototype run.
However the decision is reached, it is likely to be one of the most important choices that a company will make. Entire systems will have to change and ramifications will be felt across the entire business. So, it is vital to enter the process with a clear idea of what you want to achieve by outsourcing production.
Once you have determined what it is that you would like to achieve by outsourcing, attention should then turn towards choosing the right CEM for your needs.
It may be tempting to rush this decision, especially if timescales are tight, but doing so would be detrimental. You will need to weigh up both the positives and negatives of a number of CEMs to start, before homing in on a select shortlist of preferred candidates.
In order to help you on that path towards finding the perfect CEM, we suggest taking the following eleven points into consideration.
There are certain things that you may want to prioritise – location and cost, for example – but the topics that we have listed are (we feel) universal when it comes to selecting the ideal partner.
Does the CEM have the expertise, equipment and processes in place to successfully manufacture your products?
This is an obvious question to ask yourself, but it’s an important one that can often get overlooked during whirlwind sales pitches. Your checklist may include the capabilities to place small 0402-sized components or to see whether the CEM has facilities that allow staff members to work on specific tasks such as loom wiring and cable assembly.
You can widen your checkpoints out to include value-added services that could be of benefit to your business and your product but aren’t exactly critical. This could be a dedicated procurement team that can oversee the sourcing of all parts, for example.
Has the service provider shown a willingness to work with you?
You can find out a great deal about a company during initial communications with them. Have representatives (be it sales or customer service personnel) been amiable during opening discussions? Have, at any stage, people appeared to be aloof and disinterested? If so, then it might be wise to give them a wide berth.
If they aren’t invested in the partnership and your project at this early stage, then ask yourself what could happen if the same can be said when it comes to the assembly and manufacturing processes?
During these early talks, you’ll be able to get a good feel for how your potential CEM operates and what strategic services they can offer you. By highlighting how they can help you from the get-go, it shows that they are listening and paying attention to your specific needs.
Are they capable and ready to adapt?
Each product that is manufactured will have its own quirks – as we say; no two projects are ever alike. When you are discussing just what it is that you require from a manufacturing partner, it is valuable to ascertain if they are willing to adapt certain processes to your needs.
This could be something as simple as offering a tailored delivery schedule to help improve your operation from a logistical standpoint. Alternatively, they could point out how they’d be able to support design work or offer a bespoke prototyping service to iron out any potential problems long before deadlines start to loom on the horizon.
Again, if they showcase that they are willing to adapt to you, then you know that they are interested and invested in what it is you are trying to achieve.
"By highlighting how they can help you from the get-go, it shows that they are listening and paying attention to your specific needs"
Can the service provider supply a list of references?
It is important to undertake some due diligence and conduct some additional background work into your potential partners. Ask about their previous history when it comes to electronic manufacturing and discuss what steps they have taken previously to help other businesses when it comes to production.
Marketing literature such as company presentations, case studies and testimonial pages are a great place to start. From there, you can reach out to the right people and continue building a rounded picture of exactly who it is you’ll be working with in the future.
Treat this stage like a job interview: You have spoken to the candidate, heard all the right things and now it is time to speak to previous employers and colleagues to find out if what has been said in the interview is an accurate representation of their strengths and weaknesses.
Have you been invited to their premises?
An open, transparent and reputable contract electronic manufacturer will have no qualms about inviting you over to their premises and giving you a tour of their facilities. If the company is against the idea, then that should set the alarm bells ringing.
During the visit make sure to see their production facilities. Is it as described? Are the staff wearing the correct safety equipment and following industry standardised protocols? Away from the assembly line, how is stock held and checked? And is there a clear process when it comes to the inspection of component materials to ensure their legitimacy?
Site visits are an important part of the learning process and can go a long way to make and break relationships. By taking a day or two to have a look around the CEM’s manufacturing space and having an additional meeting whilst you are there, you will gain a better understanding of how the company operates and if they are a fit for your business.
Of course, a site visit may not be appropriate for every new build or project. There are factors as to why it might not be beneficial (distance, for example) but the offer should either be put on the table by yourself, and accepted, or put forward by the CEM’s representatives.
Does the CEM have previous experience in your industry?
Although we stand by the adage that every assembly is unique, there will be some shared characteristics amongst projects from similar industry sectors.
For example, if you are looking for an EMS provider to help with the design and creation of a high-tech video board for medical purposes, then it would be beneficial if they have relevant, practical experience in that field.
Even if it is just to give you peace of mind, always check to see what kind of sectors that the company you are approaching is familiar with. More often than not, prior experience in certain fields and on specific assemblies indicate that the CEM will be aware of certain, industry-specific demands and know how to incorporate and accommodate them into the production schedule.
"If they aren’t invested in the partnership and your project at this early stage, then ask yourself what could happen if the same can be said when it comes to the assembly and manufacturing processes?"
What accreditations does the EMS provider have?
By finding out if, for example, the service provider has ISO 9001:2008 certification, or follow the best practices laid out by the IPC, then you can get a good idea of the standards they adhere to and whether they are dedicated to improving the quality of their work.
Also, enquire about other policies that they should have, such as their anti-counterfeiting process (a must if they are going to handle procurement).
Can the service provider handle the procurement of the necessary materials needed for production?
A lot of component pieces are required to make one completed product. From casings to rocker switches, field grid arrays to bare PCBs, you’ll need to check whether the service provider can manage your supply chain. If they are looking after the purchasing of parts, then this could free up personnel and cash – resources that could be better spent on more profitable areas of your business.
Even if you plan on handling procurement yourself and free-issuing all the parts, it is still beneficial to ask for a quote to be drawn up. In many instances, CEMs have long-term relationships with crucial suppliers and manufacturers and may be able to deliver additional cost-savings.
Does the service provider audit its suppliers?
Counterfeiting is, rightly, one of the biggest topics in the electronics industry. Given than a simple suspect part can cause production delays, cost a substantial amount of money to rectify and erode trust, it is imperative to find out the service provider’s auditing process.
Enquire about their commitment to anti-counterfeiting, ask about their main suppliers, lay out initial ground rules about where (and especially where not) parts can be sourced from and determine if Certificates of Conformance (C of Cs) are required.
Everything, from bare PCBs to the components used to populate the boards should be discussed.
If a CEM is unable – or unwilling – to share this information with you, then it’s probably best to give them a wide berth.
"If a CEM is unable – or unwilling – to share this information with you, then it’s probably best to give them a wide berth."
What is the company’s standing?
The financial crisis caused many problems for the UK’s manufacturing sector. During this period, many OEMs opted to move abroad to take advantage of ultra-competitive pricing from the Far East and mainland Europe, sending shockwaves through the industry.
The economic positions of CEMs in the Union varied: Some were secure and in a position to easily accommodate a period of downturn; others were operating on a financial knife edge.
Things are by no means as bleak today as they were a couple of years ago. However, for all the positivity in the sector due, it is worth asking your potential CEM partner the tough financial questions. Are they capable of withstanding another downturn? If not, then how will it impact your plans and business strategy?
Also, what is the company’s standing within the United Kingdom? You should already have a decent idea due to the background research and vetting you have already carried out, but any extra information that you can gather is always valuable.
And if they are a brand-new company, do they have an experienced project manager and equally capable production staff? By this stage, you should feel comfortable and confident that the people you have been talking to can easily handle your requests.
How flexible is the CEM? And will they continue to work with clients in the long-term?
It is all well and good for a service provider being able to meet initial demands and complete pre-determined PCB, box build and cable assemblies, but how do they react to problems and are they able to provide ongoing support and development?
As we’ve touched on previously it is important for a CEM to be as adaptable and as flexible as possible. Whether the situation is proactive (accommodate your unique situation and assembly) or reactive (finding a workaround to a problem), you need to have faith in their ability to ensuring the production process is as seamless as it can be.
Looking further down the line, what other services does the CEM offer that could be advantageous to you and your business? For example, do they have the personnel to offer ongoing development support in conjunction with your own internal team? Also, look for additional value-added services that they offer. You might not need to make use of them immediately, but once initial production runs have been completed, it might be beneficial for all parties to change delivery time and dates, or operate a call-off system.
You shouldn’t be static when it comes to production and neither should they.