Modernizing Supply Management by Improving Collaboration Between EMS/OEMs

For years, there has been a significant communication gap between electronics manufacturers and their suppliers. This issue is often to blame for many industry woes, from cost increases to needless production delays.

It is not a secret: much of the electronic manufacturing industry acknowledges a need for streamlining and expediating. Yet, there is still lingering reluctance to share information, and that remains the most noticeable hindrance to improvement. This hesitance can be from companies distrusting one another, outdated tools or systems that deter collaboration, or just feeling like the issues are too large to change.

There are certainly some valid reasons for hesitation. Whether it’s an overprotectiveness towards what is perceived to be intellectual property or even something that might give a competitor the advantage, it’s understandable that some in the industry may not trust another organization to take appropriate care to protect shared information, especially when it’s a new relationship between manufacturer and supplier. Beyond which, there’s a general lack of standardization in terms of data structure between organizations that creates further cloudiness in the supply chain. With these challenging issues, it may seem like the problem is too large to fix.  

Of course, the one most obvious answer might just be the most effective. Rather than divulging too much information, companies could instead take a “baby steps” approach to collaboration and trust. Start by offering one another small amounts of relevant information. This would greatly help the electronics manufacturing supply chain to become as efficient and functional as any cutting-edge product.

Building Better Manufacturing Partnerships

One of the biggest detriments to a supply chain is that participating companies don’t see one another as partners. A partnership is an integral component of a successful outsourcing relationship. Trust is imperative for any relationship and that includes business relationships. Working together is the key to building better products and better company futures. 

High-level business trust can only be found when an OEM truly recognizes and appreciates the value of the EMS and their contributions to success. Any lack of appreciation is a detriment to any working relationship that becomes even more complicated and problematic when you depend on the EMS’s position to produce your product.  Ultimately, the OEM should perceive the EMS as a trustworthy and necessary component of their success.

A Little Background on Lack of Trust Between OEM/EMS Organizations

There was a time when many OEMs viewed their EMS providers as little more than temporary suppliers. They turned to the EMS companies to manage unforeseen demand increases. Time has proven the necessity for trusted relationships between EMS companies and OEMs. The supply chain evolution brought about a different approach.

The manufacturing process becomes most successful when there is synergy between companies. Instead of a temporary solution, the EMS becomes the preferred manufacturer. This designation allows the OEM to focus on other important endeavors, such as research, marketing, and sales.  

Creating Manufacturing Industry Standards for Data Sharing

There’s no shortage of competition in the OEM industry. This means that any opportunity or advantage will be equally slight. There’s a narrow window of opportunity to take advantage of the market’s profitability. There is a considerable profit loss when an OEM arrives late to the market. This is the point where an EMS can make the difference between profit and loss.  

Many OEMs find that their EMS provider can participate in many phases of production. Their skill and knowledge can help improve design, quality, and production time. EMS providers can design components that will improve functionality. The streamlining of the process typically produces lower rates of defects and creates more durable products. This will ultimately increase consumer satisfaction and product loyalty. This reduces waste and cost for all members of the supply chain.

Creating the Collaborative Manufacturing Industry of Tomorrow

The rapid and intricate choreography of the entire manufacturing process is a boon to the product’s life cycle. The industry needs to see more agile supply management. This alone will overshadow the unforeseen future shocks to the industry, such as with the issues created by COVID. Production times, as well as costs, naturally decrease as the cycle becomes more expedient and more efficient. When high-quality goods are distributed to global markets with speed and volume, OEMs have greater control to exceed time-to-market and time-to-volume obligations. OEMS, EMS providers, distributors, and the manufacturers of necessary components, must collaborate efficiently, and fully, to withstand future uncertainty.

EMS providers routinely manage complex processes. They already understand how to leverage their experience and knowledge to ensure all systems operate without problems, even if the system reaches capacity. When allowed the freedom to do so, EMSs can correct issues when the product is being designed, long before they become a problem of production.

Success is an excellent force to turn a business arrangement into a strategic relationship. It can also demand that a technology company place even more trust in its EMS provider. Many EMS providers today manage entire life cycles for product lines.

Partnerships are beneficial to EMS growth, as well. Their success allows them to integrate and expand to offer OEMs even more amenities. The resulting predictability and flexibility help OEMs face any issues with demand uncertainty.

Building a Relationship of Trust Between OEM/EMS

There’s the concern that the transmission of data will result in more questions, which can lead to even further miscommunication or the divulgence of important company secrets. It should be demonstrated that openness and transparency may seem like a greater workload, but the trust and reputation that result from such honesty can greatly improve professional relationships. It can encourage more companies to work together and that will ultimately improve the supply chain. Honesty is a great way to avoid any issues with doubt, that the other company may have ulterior motives, or that they may mistrust you. It affirms a positive relationship from the onset.

Some companies may also feel like they will be the only ones sharing information, or that their OEM may see their openness in a negative light, or otherwise take issue that too much sensitive information may be shared.

OEMs should also consider how they interact with the ESM providers. Integrated EMS providers today take on greater duties. They have become the point of management for the entire supply chain. Their reach isn’t just manufacturing and delivery, but also inventory management to further reduce time and cost. Many OEMs continue to ask more of their EMS providers, which is not a always a bad thing. Problems again arise when a professional relationship deteriorates due to expectations.

When competencies are well-defined, necessary manufacturing information is shared, by default. The business relationship becomes more trust focused. Nurturing this relationship of partnering businesses demands that OEMs have transparency. They must access real-time data, such as design, shipping, or manufacturing information, from their EMS provider. Time-to-market is of the essence, but so too is the growth of business relationships. Most OEMs regard successful partnerships as the product of collaboration, cooperation, and the additional value of EMS services.

OEMs gain a distinct advantage when outsourcing. EMS partners should be chosen by their management skills within the production cycle. Building good relationships with your EMS provider, based on trust, has a proven bottom line.

Start the Journey to Trust With a “Baby Steps” Approach to Sharing Information

Small steps will carry the industry in the correct direction to proper transparency. Many OEMs can undergo a pilot test case for their transparency, usually with a trusted EMS provider. It should be a small engagement, in the beginning. OEMs should realize they have the power to control what data is or isn’t shared. This softens the fears associated with transparency and its aftermath. As time passes, and further trust is developed, more information can be shared between companies.

Eventually, full transparency will be attained, without sacrifice. If successful, a greater and far-reaching pilot can be designed to occur within a specific time frame. The correct small steps ultimately pave the foundation for greater relationships, and greater efficiency, in the long run.