Electronics hardware decision makers cannot afford to disregard product costs. Your product needs to be built at the right quality, at the right time and, so on, but OEM product cost remains important.
You have a cost objective and after your new product introduction (NPI) to the market that objective becomes your focus.
But the expectation some OEMs retain is that somehow your product’s costs get managed. But how?
OEM products have continuous pricing pressure from your end markets. Continuous price reductions are being implemented and you try to counter these with new products and features/functions.
But the reality is you have on-going price erosion. To stay profitable as a company you are constantly challenged to counter this.
On the one-hand you counter by introducing new products and on the other and, you need to ensure you have cost reduction programs in place with your EMS providers.
When you talk about cost reductions, there is often the misperception the EMS partner is 100% accountable for all the costs included in the cost of your product.
The reality is that’s not always the case and small components/changes get designed into the product by the OEM from time to time.
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Then, there are also OEM price controls. Its important OEMs isolate and can highlight outsourcing program segments where you can keep your EMS partners accountable.
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