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

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

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EMS provider OnCore CEO interview

VentureOutsource.com: What makes OnCore different from many other EMS providers like API, WORLD, Suntron, or International Control Services… also serving some of the same, non-traditional EMS markets? (Read: ‘So you think you know defense EMS?‘)

Perez: Well, I think there are a lot of good EMS providers out there, and I simply don’t know enough about each of them to really comment, other than to say we’ve developed a whole set of systematic processes, services, and people that are engaged in one pursuit and one pursuit only, and that is satisfying our customers’ needs and be very, very flexible which is characteristic of this industry.

You have to be flexible, and in order to be flexible, you have to know where you are all of the time in order to make good commitments you can act on and actually deliver on.

We’ve built all of our processes around that aspect of the business.

So, it’s flexibility. It’s managing change. And, all of the tools we’ve built. All of the training we’ve put our people through…

We’ve been very good at that and I think we’ve been rewarded by the fact we’re continuing to see growth and we’re continuing to get very good comments from our customers about how much they appreciate what we’ve been able to deliver to them.

VentureOutsource.com: I’ve said before that over the next couple of years we will see smaller EMS players serving lucrative non-traditional EMS markets begin to face more competition from larger, better-funded EMS competitors.

This heightened competition in the non-traditional sectors will result in smaller EMS players exhibiting more flexibility with their customers as they try and hold on to healthy margins and find themselves working even harder to retain OEM programs…possibly straining just to maintain market share.

Expand your options seeking medical, defense, industrial and other electronics market services

This shift will be driven partly by many tier-1 EMS providers becoming less capable of effectively squeezing more margin from highly commoditized programs like handsets and PC’s. Essentially, these larger EMS providers are becoming forced to obtain more adequate skill sets and proper certifications and move even more aggressively into non-traditional EMS markets.

As this happens, overall margins across non-traditional EMS sectors will surely take a hit. What are your thoughts on this? How will things change regarding the way OnCore competes?

Perez: Well, that’s a fact of life in this business. It’s a very competitive environment. I think everything you stated in this question is very, very true.

Our challenge is to continually serve the customer. We anticipate that as we grow with our customers…forget the fact there is tier-1 competition or tier-2 competition…our customers expect more value for the increased level of business they give us.

What we’ve become more efficient in everything we do. So, we’re always looking for opportunities to take cost out of our own operations.

 

OnCore EMS factory San Jose, CA

 

 

We also feel there is plenty of room to become more efficient over time, and I think as we continue to scale, we will see benefit in that additional leverage internally.

We’re also developing a quite capable supply chain management organization that will continue to provide our customers with additional leverage by developing our own supply chain partners that will, in turn, benefit from our growth.

We will make sure that these supply chain partners grow with us, and we will be rewarding these [supply chain] partners by providing them with additional business.

In return, we expect to see lower prices from these partners.

So in many ways we’re symmetrically running this business, but anticipating that there will definitely be marginalization as we grow with each of our customers.

We’re prepared to handle this.

 

VentureOutsource.com: What are some of OnCore’s plans for growth?

Perez: Our plans for growth revolve around what our customers have told us they need from us. So, we’re not building capabilities that have no market need that might be nice to have but aren’t really important to customers.

We’re looking at geographic expansion.

Many of our industrial and medical customers have told us they would like us to be in Asia. So, this is in our geographic roadmap. We will also be in lower cost regions of Europe later on

Beyond geographic expansion, another thing we’re considering is making additional investments or acquisitions around design — especially at the system level. Customers are telling us they want additional technology capabilities related specifically to the defense industry as well as the medical industry.

 

VentureOutsource.com: Are there any other comments you’d like to share with our readers?

Perez: This is a great industry. I know it’s very challenging but, for the right EMS companies working on projects for the defense sector, the medical electronics industry, and industrial infrastructure, we’re doing important work for the country and the world.

We can’t lose sight of that.

We play an important part in the development of new products that keep people more secure. We work on products that keep people more healthy and also make their lives easier.

I’m very proud to be in this industry and I hope everyone else serving OEM customers feels the same way.

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