Contracting electronics manufacturing: the basics

Even if you’re not new to contract manufacturing, the electronics outsourcing industry is a little different than others. It has a lot of its own vocabulary and unique ways of doing things. The first example is that, within the industry, electronics contract manufacturers are also referred to as Electronics Manufacturing Service (EMS) providers.

In this article, we briefly explore electronics contract manufacturing, outline what that EMS provides, and discuss the industry in broad strokes.

What does an EMS provider do?

An electronics manufacturing service provider is a company that offers a range of services related to the design, manufacturing, testing, and distribution of electronic assemblies and products. EMS providers play an important role in the electronics industry by helping Original Equipment Manufacturers (OEMs) bring their electronic devices to market efficiently and cost-effectively. Many electronics contract manufacturers provide value added services for OEMs beyond just product assembly. We’ve outlined nine common service areas that these companies provide. 

1. Product Design Support

Some EMS providers offer design and engineering services to help clients develop and optimize their electronic products. This may include Printed Circuit Board (PCB) design, prototyping, and product development. Even if they aren’t directly involved in the design process, many providers are happy to offer design feedback to improve production. Known as “Design for Manufacturing,” or “DFM”, this feedback helps improve quality and yield while sometimes reducing manufacturing costs.

2. Component Sourcing

EMS providers procure electronic components, raw materials, and other necessary parts from suppliers. They often have established relationships with component manufacturers and distributors, allowing them to secure competitive prices through reliable sources. Additionally, because they purchase for several clients, certain common commodity components such as resistors and capacitors might benefit from their higher-volume purchasing power.

3. Assembly and Manufacturing

The core function of an EMS provider is the assembly and manufacturing of electronic products. This involves the actual fabrication of PCBs, placement of components, soldering, and the integration of various sub-assemblies to create a finished product. As a derivative benefit, most EMS providers offer rework and repair services that are not economical to develop and maintain at smaller companies.

4. Testing and Quality Assurance

EMS providers conduct rigorous testing and quality assurance procedures to ensure that each product meets the specified standards and functions as intended. This may involve functional testing, environmental testing, and other relevant assessments.

5. Supply Chain Management

Effective supply chain management is critical in the electronics manufacturing process. EMS providers can coordinate the flow of materials, manage inventory, and ensure timely delivery of components to meet production schedules.

6. Box Build and System Integration

In addition to assembling PCBs, some EMS providers offer “box build” services, which involve the complete assembly of a product, including the integration of PCBs into the final enclosure and the installation of additional components like displays, connectors, and power supplies.

7. Logistics and Distribution

Many EMS providers handle the logistics and distribution of finished products. This includes packaging, labeling, and shipping products to their final destinations. Some providers may also offer after-sales services such as warranty support and repairs.

8. Customization and Configuration

EMS providers often have the capability to customize products according to the specific needs of their clients. This may involve software configuration, firmware updates, or other adjustments to meet unique requirements.

9. Regulatory Compliance

EMS providers are typically familiar with industry standards and regulations. They ensure that products comply with relevant certifications and standards, such as safety and environmental regulations.

Through these added services offered by EMS providers, companies can focus on their core competencies, reduce time-to-market, and benefit from the expertise and economies of scale offered by specialized manufacturing partners.

Flavors of electronics manufacturing service providers

Much like the variety of services offered, EMS providers come in various types, each catering to specific niches and requirements within the electronics manufacturing industry. Choosing the right type of EMS provider depends on the specific needs, scale, and requirements of the client’s project. Each type of provider brings its own set of strengths and expertise to the table. The main types of EMS providers include:

1. Original Design Manufacturer (ODM)

ODMs are EMS providers that not only manufacture electronic products but also contribute to the design and development of these products. They often have in-house engineering teams that work closely with clients to create custom solutions. ODMs may produce products under their own brand or white-label products for other companies.

2. Original Equipment Manufacturer (OEM)

While the term “OEM” is often used to refer to companies that design and manufacture their own products, it’s also used in the context of EMS. In the EMS industry, an OEM is a provider that handles the entire manufacturing process for another company’s products, often under the client’s brand. OEMs may or may not be involved in the design phase.

3. Electronic Manufacturing Service (EMS)

This is a broad category that encompasses companies specializing in the manufacturing of electronic components and products. EMS providers may offer a range of services, including PCB assembly, testing, supply chain management, and more. They can serve clients in various industries, from consumer electronics to industrial applications.

4. Printed Circuit Board Assembly (PCBA) Providers

Some EMS providers focus specifically on PCB assembly. They excel in the fabrication and assembly of printed circuit boards, including the placement of electronic components. These providers may offer services ranging from Surface Mount Technology (SMT) to through-hole assembly.

Some EMS providers focus specifically on PCB assembly. PCBA companies can handle the placement and securing (i.e. soldering) of components to PCBs provided by PCB fabricators. These providers may offer services ranging from Surface Mount Technology (SMT) to through-hole component assembly operations in either prototype or production volumes, although it’s important to verify their capabilities before moving forward with a vendor.

5. Turnkey Providers

Turnkey EMS providers offer comprehensive services that cover the entire manufacturing process. Clients can essentially “turn the key” and receive a fully finished product. Turnkey providers are suitable for clients who want a one-stop solution and are in a position to pay more to get it.

6. Consignment Providers

In a consignment model, the client retains ownership of the components and materials, and the EMS provider is responsible for the assembly and manufacturing process. This model is suitable for clients who want more control over the supply chain and component sourcing. Hybrid (turnkey / consignment) operation is also common. In a typical hybrid relationship, the customer might purchase critical, specialized, or high-cost components and rely on the EMS’s procurement for more commodity components.

7. Specialized Providers

Some EMS providers specialize in specific industries or types of products. For example, there are EMS companies that focus exclusively on medical devices, automotive electronics, aerospace components, or telecommunications equipment. These specialized providers often have expertise in the unique requirements and regulations of their target industries.

8. Regional or Global Providers

EMS providers may operate on a regional or global scale. Regional providers often serve local or specific market segments, while global providers have facilities and capabilities across multiple countries. Global providers can offer advantages such as cost efficiency, diverse talent pools, and access to different markets.

A great EMS relationship starts with great data management and communications

With all information needed to build the product compounded by managing the services available to OEMs through EMS providers, having the right data management processes in place becomes a requirement. So is using a well-managed communication system. Spreadsheets and email just can’t cut it. Companies need a system that can store all the information needed and make it easy to share and manage. For small and medium sized companies, that software is typically a Material Requirements Planning (MRP) system.

Implementing an MRP is pivotal for fostering effective collaboration between OEMs and EMS providers. The MRP system seamlessly integrates various aspects of the manufacturing process, enhancing communication and coordination between the two entities. They also provide other benefits to help with the contract manufacturing process.

MRP systems excel in demand forecasting and planning. It enables OEMs to share accurate production forecasts with EMS providers. This fosters a shared understanding of expected demand and facilitates collaborative planning for manufacturing activities and ensures alignment with delivery deadlines while optimizing resource utilization.

Providing real-time visibility into raw materials and component levels (if OEMs decide to take on providing materials) to the EMS provider is another way MRP systems contribute significantly to inventory management. This transparency is invaluable for both OEMs and electronics contract manufacturers as they can work together to optimize inventory levels and prevent disruptions due to shortages or costs from excess stock. Should the OEM move to have the EMS source materials, MRP systems also support effective Bill of Materials (BOM) management. This helps ensure both parties have access to accurate and up-to-date information about product structures, components, and specifications.

Overall, systems like Aligni MRP serve as a collaborative platform that enables real-time data sharing between OEMs and EMS providers. This includes communicating updates on changes in demand, production schedules, BOM modifications, and product designs. MRP systems provide an integrated approach that ensures a streamlined production process for electronic products and strengthens the partnership between OEMs and EMS providers.

Bringing it all together

If you’re looking to start outsourcing your electronics production, it’s important to understand what the organization would like to achieve and how much to outsource. This knowledge will be a guide to selecting which providers to contact. 

Make sure all the relevant product information and requirements are collected and accessible to outside vendors. Ideally, this should be done before contacting EMS providers. The best way to do that is to have a materials requirements planning system in place to properly provide that collection and accessibility, like Aligni MRP. Sign up today!