Outsourcing electronics manufacturing can be a confusing prospect filled with new terms, hidden details, and plenty of dead ends. This is especially true for startups and small businesses in the thick of high growth. We’ve put together some basic information to help companies new to electronics outsourcing be more prepared for their journey.
Finding the right kind of manufacturer
Contract manufacturers (CMs) that work primarily with electronic assemblies (printed circuit board assemblies or PCBAs) are often referred to as Electronic Manufacturing Services (EMS) providers. These companies have equipment, capabilities, and experience required to manufacture PCBAs and often list their capabilities on their websites. Common equipment includes:
- SMT stencil printers
- Pick and place machines (a.k.a. Chip shooters), feeders, and racks
- Reflow ovens
- Selective solder and wave solder equipment
- Automated optical inspection (AOI)
- X-ray machines, including 3D x-ray for more sophisticated operations
EMS providers also tend to focus on making certain categories of electronics, like analog and power circuitry, through-hole or surface mount manufacturing, wireless transmission assemblies, etc. It’s important to make sure the vendors have the experience to understand the needs of the products you’re designing.
Buyers should research each provider to understand whether their strengths align with the requirements of the products that need to be built. Looking at the provider’s list of current customers as well as understanding where their production capabilities lie is key to finding a good fit.
Sourcing Options: Turnkey vs. Consignment
Electronic assemblies use a lot of off-the-shelf components. The PCBAs themselves often rely on very few or no custom components at all. Many EMS providers, therefore, have in-house procurement staff to help procure and manage inventory. This is known as a “turnkey” operation. Turnkey operations are considerably more expensive and require extensive communication to mitigate the effects of part lead time.
Most electronics contract manufacturers also operate under “consignment” which means the customer procures the components and provides them as a kit to the CM. These consignment-style EMS providers will also hold this inventory between batches so the customer doesn’t need to manage storage. Consignment builds tend to be cheaper for the buyer but require the buyer to source and deliver the parts necessary to the provider before production can start.
In either situation, the contracting company needs to provide highly detailed information on parts required for the build. In the case of turnkey manufacturing, this information is even more necessary. As the greater specificity provided to the contract manufacturer, the greater the chances that the correct parts will be used in the build.
Whether supplying their own parts or having the provider source themselves, customers tend to utilize purpose-built software to manage the details, like PLM or MRP systems. Both software systems are adept at managing and packaging the necessary information from internally-built bills of materials to the EMS provider. Better systems like Aligni PLM or Aligni MRP also have methods to convey that information directly to the provider, as well as help manage potential changes and revisions.
Matching your volume requirements to the EMS
EMS providers run the spectrum in size, from giants in the industry like Jabil and Foxconn to much smaller firms that can be found all over the world. It’s important to find a CM that is a good fit for your needs. Look for a partner that has the capabilities required to build your products and the capacity to produce the volumes you need in the batch sizes you expect to run. It is sometimes helpful to have multiple partners to meet the needs of different product lines.
US-based EMS providers generally have a lower-volume capacity than providers in Asia. US-based providers operate on the so-called “low-volume, high-mix” approach where companies tend to build a lot of different products for several customers at a lower per-batch volume (often less than 1,000 units). If the product volume is expected to increase, this may require the contracting company to maintain relationships with multiple CMs or migrate some production overseas. Production lead times may be affected if this isn’t done.
Buyers should make sure to find out early on what sorts of production volumes an EMS provider is comfortable with producing. Along the same lines, the buyer should also ask about what the Minimum Order Quantity (MOQ) the provider requires. Buyers should also inquire about how busy the CM is. This knowledge factors into what the EMS can provide in terms of delivery time.
Focus on Quality Culture for Success
In addition to the considerations of capability and capacity, the quality culture should be scrutinized as well. Attention to detail throughout the organization will help improve quality and efficiency with both short-term and long-term results. Strong EMS organizations embrace a strong quality culture throughout with pride and accountability of their workmanship. A good EMS provider will hold itself accountable for workmanship issues and take proper corrective actions to remedy them. An excellent provider will make timely suggestions to improve processes and the overall collaboration.
Finding the Right Fit: Hire Your EMS
Selecting the right electronic manufacturing service partner is an important decision that affects the operational efficiency of the company and the quality of the end product. Typically, engineering, production, and management teams are all involved in the selection process to ensure a great fit in multiple dimensions. We discussed capability, capacity, and quality culture in this article, but your organization may have others that are equally important. Finding the right partner requires diligence and attention to detail but will pay off with better efficiency, improved delivery times, and higher quality.
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