Tools for EMS manufacturing quote pricing analysis - Optimize total landed cost savings for your contract electronics outsourcing programs

Details here

Tools for EMS manufacturing quote pricing analysis - Optimize total landed cost savings for your contract electronics outsourcing programs

Details here
 
25 Years solving global, regional and local priorities.

Menu


EMS activity-based quote model for electronic systems integration manufacturing

By Mark Zetter

Your contract electronics solutions partner needs to be able to make a profit to survive. Otherwise, they can’t continue to serve you. Meanwhile, EMS providers are responding to OEM RFQs with activity-based quotations (activity-based costing; ABC) as more OEMs seek open-book EMS costing for program quote pricing from their electronics outsourcing partner.

Ideally, below are RFQ inputs your EMS provider might reveal:

  • Material Cost
  • Material Inventory Reserve / Adjustments / Scrap
  • Material Freight-in Costs
  • Material Duty Costs
  • Product Warranty Reserve
  • Capital / Finance Charges
  • Material Overhead
  • Direct Labor Overhead
  • Direct Labor

Your EMS provider then determines the following: Total cost of goods (COGS) plus, SG&A and, their total operating costs so your EMS provider can then determine the amount of profit they will make from your OEM customer program. (Related: Top 10 impacts to EMS/ODM quote pricing OEM programs)

SEE ALSO
How to build costing modelers for contract electronic programs

But nothing happen unless people get involved so we then look at direct and indirect labor, knowing number of people and hour required will vary based on customer program volumes.

Direct labor

Direct labor is sometimes broken down into standard hours required for a given period and volume of production, overtime hours anticipated (and actual) for same period and efficiency (utilization hours loss of actual v ideal throughputs).

From here your EMS provider then determines their total direct labor costs, which includes direct labor benefits. This allows your EMS provider to determine total direct labor headcount and the amount of cost for direct labor that goes into each unit (of your product) produced.

Indirect labor

Managing people is an art form and managing EMS indirect labor is filled with uncertainty.

ACCESS ARTICLE: Full content is available to logged in electronics OEM site users only. Registration is free. If you are an electronics OEM professional working in an electronics OEM company please Register or Log In.


Custom list of providers

Electronic OEM professionals reading this and wanting help locating contract electronic service providers matching your program and end market, Venture Outsource offers a free service. Speak with a Provider Advisor. Advisors have access to detailed information on listings in our global database and can help you compare provider service capabilities to better match your program needs. You can also click the button below.

Talk to an Advisor

Get a list of EMS manufacturers matching your program needs (Its free)

Venture Outsource has the largest, global database of contract electronics capabilities. Get a free list of contract EMS manufacturing companies matching your program needs.

“Was able to very quickly find details on the important elements of setting up EMS and ODM partnerships, talked with an advisor for personalized info on quality providers matching our requirements while getting up to speed quickly about the industry and connect with key staff from like-minded companies and potential partners. Great resource.”

— Jeff Treuhaft, Sr. Vice President, Fusion-IO

Advisors have access to detailed information on listings in our global database and can help you compare provider service capabilities to better match your program needs. Speak with a Provider Advisor. This free service is for electronic professionals working in OEM brand companies.

Talk to an Advisor




Private message OEM peers. Access all content.

For electronic OEM professionals working in OEM companies. Connect with OEM peers and access exclusive content.

https://ventureoutsource.com/contract-manufacturing/ems-activity-based-quote-model-for-electronics-systems-integration-manufacturing/

Provider spotlight

About Venture Outsource, LLC

Venture Outsource, LLC site content and our consulting services help electronic manufacturers plan and execute global, regional and local priorities. Our chief assets are knowledge and interactions. The business is divided into two divisions: an operating division which includes education and training, and consulting and research.



Copyright Venture Outsource, LLC. All Rights Reserved
The material on this site is for informational purposes only and is not a substitute for legal, financial or professional advice. Distribution and use of this material are governed by our User Terms Agreement and by copyright law. By using our Website you agree to site Terms and Privacy policies. For questions email insight@ventureoutsource.com or visit www.ventureoutsource.com