How to Align With<br />The Right EMS Provider<br />
10/18/2011<br />2<br />What Will Be Addressed Today<br /><ul><li>NOTE:Electronics Manufacturing Services (EMS) is the new ...
Current EMS market trends
Best practices on choosing an EMS partner
Key elements of success to achieve with an EMS supplier
Pro’s and Con’s of EMS outsourcing
Brief (your company)overview</li></li></ul><li>10/18/2011<br />3<br />Current EMS<br />Market Trends<br />
10/18/2011<br />4<br />Primary EMS Industry Solutions<br /><ul><li>Printed Circuit Board Assembly (PCBA)
PCB assembly refers to the attachment of various 		                 electronic components onto a bare printed circuit boar...
PCBA Value
The value (cost of goods sold, or COGS) of all material, labor, and overhead associated with an assembled printed circuit ...
Box (or System) Assembly
Box assembly refers to the assembly of one or more printed circuit boards, plus other items such as cable harnesses and en...
Box Assembly Value
The value (COGS) of all material, labor, and overhead of the box assembly, not including the value of the assembled PCBs w...
10/18/2011<br />5<br />EMS Market Growth Overview<br />Revenue ($M)<br />Source: The Worldwide Electronics Manufacturing S...
10/18/2011<br />6<br />EMS Worldwide Market by Region<br />Source: The Worldwide Electronics Manufacturing Services Market...
10/18/2011<br />7<br />EMS Worldwide Market Industry Segment<br />Source: The Worldwide Electronics Manufacturing Services...
10/18/2011<br />8<br />EMS Worldwide Market Industry Cont…<br />PCBA vs. Box/System Assembly Growth<br />CAGR = 6.5%<br />...
10/18/2011<br />9<br />EMS Worldwide Market Industry Cont…<br />Total Assembly Value ($) Growth Overview<br />Source: The ...
10/18/2011<br />10<br />EMS Industry Summary<br /><ul><li>All Industry Segments Are Profitable & Growing – Tier 1-3
EMS suppliers need to be profitable to avoid strategic financial risks
All Industry Segments Are Identifying Focus / Niche Strengths
(Your Company)focus is on products with a “man-to-machine” interface
Mergers & Acquisitions Remain a Primary Strategy for Growth / Market Penetration
(Your company)remains focused on growth opportunities in this area</li></li></ul><li>10/18/2011<br />11<br />Choosing An<b...
10/18/2011<br />12<br />Choosing an EMS Partner<br /><ul><li>OEMs spend billions of dollars annually outsourcing electroni...
Quotation accuracy from both the OEM and the EMS provider is essential to avoid unnecessary cost – short and long-term
Quality Problems
Regular process reviews – i.e. audits, quarterly business reviews, and establish consistent communication channels help pr...
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How to Align With The Right EMS Provider

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How to choose a Electronic Manufacturing Services supplier and the items to consider during your due diligence process.

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How to Align With The Right EMS Provider

  1. 1. How to Align With<br />The Right EMS Provider<br />
  2. 2. 10/18/2011<br />2<br />What Will Be Addressed Today<br /><ul><li>NOTE:Electronics Manufacturing Services (EMS) is the new name for the Contract Manufacturing (CM) Industry
  3. 3. Current EMS market trends
  4. 4. Best practices on choosing an EMS partner
  5. 5. Key elements of success to achieve with an EMS supplier
  6. 6. Pro’s and Con’s of EMS outsourcing
  7. 7. Brief (your company)overview</li></li></ul><li>10/18/2011<br />3<br />Current EMS<br />Market Trends<br />
  8. 8. 10/18/2011<br />4<br />Primary EMS Industry Solutions<br /><ul><li>Printed Circuit Board Assembly (PCBA)
  9. 9. PCB assembly refers to the attachment of various electronic components onto a bare printed circuit board, plus any test activities performed at this level of assembly
  10. 10. PCBA Value
  11. 11. The value (cost of goods sold, or COGS) of all material, labor, and overhead associated with an assembled printed circuit board
  12. 12. Box (or System) Assembly
  13. 13. Box assembly refers to the assembly of one or more printed circuit boards, plus other items such as cable harnesses and enclosures, into a final product (or a largely self-contained electronics assembly that will be embedded into a larger piece of equipment). This also includes any test activities performed at this level
  14. 14. Box Assembly Value
  15. 15. The value (COGS) of all material, labor, and overhead of the box assembly, not including the value of the assembled PCBs within the box assembly.</li></ul>Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition<br />© 2007 Electronic Trend Publications, Inc.<br />
  16. 16. 10/18/2011<br />5<br />EMS Market Growth Overview<br />Revenue ($M)<br />Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition © 2007 Electronic Trend Publications, Inc.<br />
  17. 17. 10/18/2011<br />6<br />EMS Worldwide Market by Region<br />Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition © 2007 Electronic Trend Publications, Inc.<br />
  18. 18. 10/18/2011<br />7<br />EMS Worldwide Market Industry Segment<br />Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition © 2007 Electronic Trend Publications, Inc.<br />
  19. 19. 10/18/2011<br />8<br />EMS Worldwide Market Industry Cont…<br />PCBA vs. Box/System Assembly Growth<br />CAGR = 6.5%<br />CAGR = 7.2%<br />Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition © 2007 Electronic Trend Publications, Inc.<br />
  20. 20. 10/18/2011<br />9<br />EMS Worldwide Market Industry Cont…<br />Total Assembly Value ($) Growth Overview<br />Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition © 2007 Electronic Trend Publications, Inc.<br />
  21. 21. 10/18/2011<br />10<br />EMS Industry Summary<br /><ul><li>All Industry Segments Are Profitable & Growing – Tier 1-3
  22. 22. EMS suppliers need to be profitable to avoid strategic financial risks
  23. 23. All Industry Segments Are Identifying Focus / Niche Strengths
  24. 24. (Your Company)focus is on products with a “man-to-machine” interface
  25. 25. Mergers & Acquisitions Remain a Primary Strategy for Growth / Market Penetration
  26. 26. (Your company)remains focused on growth opportunities in this area</li></li></ul><li>10/18/2011<br />11<br />Choosing An<br />EMS Partner<br />
  27. 27. 10/18/2011<br />12<br />Choosing an EMS Partner<br /><ul><li>OEMs spend billions of dollars annually outsourcing electronics production. Choosing the wrong supplier can result in significant cost increases, poor product quality, and insufficient customer relationship issues.</li></li></ul><li>10/18/2011<br />13<br />Choosing the Wrong Supplier<br /><ul><li>Cost Overruns
  28. 28. Quotation accuracy from both the OEM and the EMS provider is essential to avoid unnecessary cost – short and long-term
  29. 29. Quality Problems
  30. 30. Regular process reviews – i.e. audits, quarterly business reviews, and establish consistent communication channels help prevent quality problems
  31. 31. Missing Production & Time-to-Market Requirements
  32. 32. Ineffective material management and capacity planning, poor quality yields, insufficient administrative or engineering bandwidth, or simply a misalignment between your business model and your EMS partner can dismantle your production pipeline</li></li></ul><li>10/18/2011<br />14<br />Choosing the Right Supplier<br /><ul><li>Cost Goals Achieved
  33. 33. Quotation accuracy from both the OEM and the EMS provider is essential to avoid unnecessary cost – short and long-term
  34. 34. Quality Success
  35. 35. Regular process reviews – i.e. audits, quarterly business reviews, and establish consistent communication channels help maintain solid quality results
  36. 36. Meeting Production & Time-to-Market Requirements
  37. 37. Effective material management and capacity planning, strong quality yields, sufficient administrative or engineering bandwidth, and a good alignment between your business model and your EMS partner can enhance your production pipeline</li></li></ul><li>10/18/2011<br />15<br />Where Do I Start?<br /><ul><li>Develop an outsourcing strategy then select an EMS partner that can scale with your capabilities and capacity growth
  38. 38. Identify your outsourcing requirements
  39. 39. Determine your cost reduction goals
  40. 40. Define your time-to-market plan
  41. 41. Establish your after sales support needs
  42. 42. Find suppliers that match your business model – i.e. product mix</li></li></ul><li>10/18/2011<br />16<br />Product Mix Overview<br />EMS Approach to Product Mix<br />
  43. 43. 10/18/2011<br />17<br />What Makes a Good EMS Partner?<br /><ul><li>Evaluate Suppliers on Three Key Process Capabilities
  44. 44. Administrative Processes – what is the suppliers order processing, purchasing practices, production planning, communication process?
  45. 45. Capabilities and Capacity – does the supplier meet your current and growth, quality, and technological requirements?
  46. 46. Engineering Change Order (ECO) Management – can the supplier adequately accommodate your design changes and improvements and balance all the manufacturing processes to meet those needs?
  47. 47. Communication, Customer Service, & On-Time Delivery– Is the supplier responsive to your everyday needs and what is their system / processes that accommodate this requirement?</li></li></ul><li>10/18/2011<br />18<br />Good EMS Partner Cont…<br />Product<br />Process<br />Product Manufacturing<br />Delivery<br /><ul><li>New Product Introduction (NPI) Capabilities
  48. 48. Domestic and offshore capabilities
  49. 49. Design, prototype, documentation, process development, ECO flexibility, and transition plan to production support</li></ul>Product<br />Analysis<br />Process<br />Analysis<br />Product<br />Design<br />Process<br />Design<br />Engineering<br />Change<br />Orders<br />Prototype<br />Build<br />Prod. Line<br />Build<br />Production<br />China<br />China<br />Transition<br />Plan<br />Prototype<br />Test<br />Prod. Eng.<br />Test<br />Production<br />Capacity Test<br />Delivery<br />Logistics<br />Investment Period<br />Revenue Period<br />
  50. 50. 10/18/2011<br />19<br />Good EMS Partner Cont…<br /><ul><li>Resource Planning System
  51. 51. Inventory management production scheduling functionality
  52. 52. A closed-loop system that quickly identifies misalignment and initiates action to correct material and production bottlenecks upon discovery plus incorporates a communications system that notifies the OEM
  53. 53. A robust process (software/people/procedures) that generates timely information for immediate action by front-line people
  54. 54. A system that identifies production gaps and balances supply with demand</li></li></ul><li>10/18/2011<br />20<br />Good EMS Partner Cont…<br /><ul><li>Excess & Obsolete – End-of-Life Materials Process
  55. 55. Inventory management that accurately tracks and maintains proper communication regarding E&O issues – this prevents substantial materials liability issues when established up front
  56. 56. End-of-life / life cycle planning is critical to supporting existing production revisions while the new versions are being implemented to ensure production flow remains steady for both
  57. 57. Inventory turns are the primary result of either strong or weak E&O or EOL processes for the both the EMS supplier and the OEM</li></li></ul><li>10/18/2011<br />21<br />Good EMS Partner Cont…<br /><ul><li>Make Your Decision on Total Cost vs. Price
  58. 58. Look at total acquisition cost and not the price alone – BOM, labor, test, after sales service, etc…
  59. 59. Leverage materials relationships with together with the EMS supplier to achieve the best price, however, working together to achieve this requires trust and openness – i.e. providing costed BOM’s
  60. 60. End-of-life / life cycle planning for the whole product line should be considered when making this decision of who to choose as a “partner” to manage the whole supply chain, manufacturing, and logistics requirements together
  61. 61. Look for a long-term partnership rather than a short-term price
  62. 62. Establish a formal cost reduction program with your suppliers</li></li></ul><li>10/18/2011<br />22<br />Pro’s & Con’s For Outsourcing EMS<br />
  63. 63. 10/18/2011<br />23<br />Keys to Success<br />With Your EMS Supplier<br /><ul><li>Mutually complementary cultures / personalities
  64. 64. Processes in place to provide solutions
  65. 65. NPI capabilities
  66. 66. Domestic vs. offshore solutions
  67. 67. Resource planning system / process
  68. 68. Cost reduction plan
  69. 69. Inventory management processes established
  70. 70. Life cycle management plan
  71. 71. Quarterly business review process</li></li></ul><li>10/18/2011<br />24<br />EMS<br />Industry<br />Background<br />
  72. 72. What is the EMS Industry?<br />EMS or Electronic Manufacturing Services Today<br /><ul><li>Design
  73. 73. Printed circuit board assembly (PCBA)
  74. 74. System build / final assembly
  75. 75. Fulfillment / distribution services
  76. 76. After Sales Support</li></ul>Industry History / Background<br /><ul><li> 1950's the printed wiring board and integrated circuit were invented by Texas Instruments and refined by others
  77. 77. 1961 SCI of Alabama was a "contracted manufacturer" for the NASA lunar space program to meet cost reduction initiatives and lead-times to land on the moon</li></ul>10/18/2011<br />25<br />
  78. 78. 10/18/2011<br />26<br />EMS Industry History<br />1960’s – 1980’s<br /><ul><li>Industry referred to as "contract manufacturing" or "CM" industry
  79. 79. Primary focus on PCBA for commercial and defense OEM's
  80. 80. The vast majority of OEM's did their own PCBA in-house
  81. 81. Most OEM's consigned 100% of materials to CM's</li></ul>Traditional Supplier Relationships<br />1990’s<br /><ul><li> Silicon Valley – OEM's began to focus on the core competence of R&D, sales / marketing, and service and outsourced manufacturing as a cost effective measure to ensure time to market goals
  82. 82. Turnkey solutions begin – labor, materials, and test
  83. 83. Outsourcing migration – OEM’s sold off PCBA, PCB fab and other non-core capabilities to CM's
  84. 84. Wall Street – CM’s proved to be viable business model
  85. 85. Services outsourced – Design, NPI, PCBA, test, materials, system build, end-of-life functions began to be outsourced to CM's
  86. 86. End-to-End – CM's begin to provide "end-to-end" global supply chain solutions</li></ul>Strategic Relationships Emerge<br />
  87. 87. 10/18/2011<br />27<br />EMS Industry Background cont…<br />2000 Through Today<br /><ul><li> Industry changed name to EMS (Electronic Manufacturing Services)
  88. 88. 100% turnkey of end-to-end solutions is standard from tier-1 through tier-3
  89. 89. All-in-one model is established in tier-1 through tier-3 Suppliers
  90. 90. Facilities and equipment are not the main differentiator anymore
  91. 91. Cost effective strong relationships are still king!</li></ul>(Your Company) Has Positioned Itself to Support<br />Our Customer’s Future Strategic Needs<br />
  92. 92. 10/18/2011<br />28<br />Customer<br />Support<br />Structure<br />
  93. 93. Customer Focus Team<br />10/18/2011<br />29<br />
  94. 94. 10/18/2011<br />30<br />
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