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80 Metrics to focus EMS provider materials management and increase EMS profits

By Mark Zetter

Electronics components on reelsThe electronics manufacturing services (EMS) business can be a zero-sum game for many EMS providers given many EMS providers often take on new OEM programs at a loss or, in some best case scenarios, with hopes to just break-even until cost-savings with EMS vendors and suppliers can be designed into products and manufacturing volume efficiencies start taking hold.

While the majority of EMS providers are sloppy detail managers when it comes to holding costly indirect labor accountable, for related, detailed ideas on strategy when setting up early relations with EMS manufacturing partners, click here, or click the image below. For additional EMS industry documents [$] click here.)

With the above points in mind on the importance of choosing tightly-managed EMS executive teams, and effective materials management, one can see how any EMS provider wanting to be profitable must focus management efforts on managing materials and the materials controls aspect of their business (purchasing, planning, scheduling, inventory control…) for happy OEM customers long term.

This can be a daunting challenge considering EMS providers are typically only driven to grow in terms of technology and management capability at the urging of OEM customers (or prospects) and, the EMS industry norm for ‘scrap’ for an EMS model is only loosely managed, but should be kept below 1%.

The following are 80 key metrics EMS provider materials managers should focus on when responsible for what many consider to be the lion’s share of an EMS model’s opportunities for profit. We share these so that OEM customers can hold their EMS partners to task.

SEE ALSO
How to drive cost out of your manufacturing product portfolio
Best practices for EMS manufacturing RFQ quotes
EMS Manufacturer internal cost vs OEM quoted fees vs OEM target price

Metrics managed internal the EMS provider can be done so and presented / updated daily; weekly, monthly, quarterly… or to whatever frequency helps EMS providers maintain focus to meet their EMS (and let’s not forget OEM customer) business objectives. (Metrics listed are not presented in order of importance)

80 Key metrics EMS providers must focus on to improve OEM customer materials management (and EMS profits)

    1. Master production scheduling: Number (#) of master production scheduler (MPS) changes within next 4 weeks
    2. # of MPS changes within 5-8 weeks out
    3. # of MPS changes within 9-13 weeks out
    4. % performance to [insert your company name here] commit
    5. Units forecast / requested
    6. % performance to [insert your company name here] loading / OEM customer request
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