Contract electronics manufacturing (EMS) finance risk

By Staff

Contract electronics manufacturing services (EMS) is capital intensive with most electronics contract manufacturers using revolving lines of credit to fund manufacturing operations. Many large and small contract electronics providers in industry are now facing challenges related to replacing maturing high coupon bond obligations with low coupon instruments – resulting in capital expenditure investment risk.

You can obtain our manufacturing supply chain readiness questionnaire and present it to your EMS manufacturer to fill in their capabilities to help you evaluate OpEx and CapEx risk, because they fund their EMS manufacturing operations with your money. View additional EMS industry documents, available here.

Find EMS manufacturing services

In your search results, you can further target additional ODM/EMS provider options such as more End Markets, additional Geographies, and other Services, then selecting Go.

So its more important than ever for electronics OEMs to perform adequate EMS financial due diligence before evaluating EMS manufacturing RFQs and quotes, or negotiating manufacturing contracts, when considering and selecting contract EMS manufacturing partners.

Trust but verify: Electronics OEM vendor selection and manufacturing supplier management team members are encouraged to ask prospective and existing EMS manufacturers: what is your debt:equity ratio.

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Then compare the answer the EMS manufacturer provides to you to the average debt:equity ratio in EMS manufacturing industry.

Its a 100-mile race

Depending on the P&L of your OEM company, your MCOGs are critical in making or breaking the quarter. Your ability to bring product to your customers in a timely manner with the right quality, at the right price… is a cornerstone to your survival. And choosing the right EMS manufacturing partner is a 100-mile race for many OEM companies.

It can take weeks even months talking with other OEM peers, followed by scheduling calls with EMS sales and marketers, then gathering other OEM company colleagues from various functional support groups internally and coordinating scheduling EMS vendor and supplier management team meetings with prospective EMS partners and their internal functional team members. All this, and more… eats up valuable time, just to create your EMS short list.

Afterward, there is more time and money spent on scheduling EMS factory site visits, whether in your country or abroad. The cost of flying, hotels, dinner meetings, trying to peek behind curtains inside EMS factories (remember to ask about bone piles), and more…

Just getting to the 90-mile mark in the race (your EMS short list) is an expensive investment of both time and hard costs.

Let Venture Outsource save you both time and money.

We provide you a free list of potentially suitable EMS manufacturers meeting your specific OEM program requirements.

We get you to the 90-mile mark in the race following a short phone call.

You save time, and money and, you get to EMS due diligence – fast. Want more info? Learn more.

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