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OEM selection of EMS proposal and awarding EMS your OEM program

By VentureOutsource.com Staff

EMS_OEM_Business_WinYou began with your request for quote (RFQ) process. Now it’s time for analysis with weighted factor scores for the EMS capabilities requiring your highest priority while you include feedback from your RFQ teams and discussion with all the internal stakeholders.

Its important to take into consideration the degree EMS providers you’re considering covering weaknesses in your organization. And, to what extent would any EMS partner be willing to work with you enhancing internal functional insufficiencies where you’re not quite ready for effectively managing outsourcing programs.

For instance you might need test equipment that’s not been set up or still needs software written, repair and fulfillment services might be needed or, trade compliance administration activities, to name just a few areas. Wherever you can peer into your roadmap future to see other, important activities you will eventually begin to outsource. Assess these forthcoming capabilities and requirements into your future as best as you can.

As you are reducing your longer list of possible EMS provider partners to one or two, one of your other selection criteria needs to be about the specific factory that’s going to get your program: the EMS team in that specific factory, on a day-by-day basis that’s going to execute and manager your business.

Every manager and executive reading this has heard about the A, B, and C teams. You’ve all heard stories where an EMS provider puts on his dog and pony show for you when you first visit by only exposing you to their best people…

But once the agreement is signed and you go into business with them you now have a new, different set of people – the EMS provider’s B or even C team.

Don’t let this happen to you. Have these discussions before you make your decision. Sure, your EMS provider will change people eventually. All organization experience attrition but you don’t your EMS partner to be constrained trying to service your program properly because he’s moving people around.

Incentivize your EMS provider to assign good people to your account. Get names and titles and job functions from key EMS departments in writing because you want your provider’s A team for your program.

Whether you are with an incumbent EMS provider and transitioning your OEM program to another EMS provider or, you are transitioning your program from in-house capabilities to outsourcing with an EMS provider, ensure your transition team is clearly defined in advance. Selecting the right OEM transition team is important.

Depending on which EMS provider(s) make it to your short list and, especially when you are deciding on EMS manufacturers you have no previous experience with, always speak with references either provided by the EMS provider or people you know.

Its helpful to get information about any EMS provider’s company culture and how they’ve dealt with OEM businesses previously because you want your EMS partner to manage your business as if it were his own.

Today, we’re all well connected and there’s no EMS provider in industry that can afford to do bad business.

If EMS sales and marketing says one thing and there are other OEMs that are experiencing first-hand difference between what the EMS provider tells you he can do vs. actual EMS capabilities its important you know about these beforehand for better decision-making.

VentureOutsource helps OEMs by giving you information (its free) on valuable feedback from other electronics OEMs about EMS providers you may already be working with, or EMS providers you are considering, including non-public information in the business dialogue. Questions many OEMs want answers to might include: Is a particular EMS provider known for being flexible when negotiating contractual terms? Does an EMS provider meet more shipping commitments than he misses? Are other OEMs leaving a particular provider? If so, do you know why?

Consider what’s acceptable and what’s not. Get a feel for an EMS provider’s soft skills and EMS provider timeliness such as: Do key EMS provider contacts respond to emails and telephone calls in a timely manner? Are EMS provider executives and management responsive to OEM requests once the deal is signed? How would you rate EMS provider program support post-sale? The list goes on. (Learn more)

The truth is most EMS providers will act in your best interest but just know we hear of instances, and experienced first-hand talking with other OEMs, some EMS providers have done some pretty poor things.

So, do check your references and if other OEM colleagues are willing to share, listen to their stories. You can also check OEM reviews of EMS provider services in our Directory of Electronics Services.

Once you’ve agreed internally with your stakeholders on your implementation project plan timeline and you have resource commitments, you can do your award announcement. (This order is important)

The reason you want your implementation timeline and resource commitments lined up before you announce your award is to prevent notifying the EMS provider or publishing a press release and then all of sudden you realize your implementation timeline cannot be met because resources you planned on being available are not.

Your stakeholders and awarding the business

Keeping your stakeholders informed cannot be overrated. Using your checklist of who each of your internal stakeholders are, be sure to communicate which EMS provider(s) will be awarded your business before you award the program to the EMS provider(s).

You want to avoid one of your stakeholders hearing this from somebody else. Doing things in this order also helps you create an internal team mindset and then everybody will be cheering for you to be successful.

For publicly-traded OEMs keep in mind, your award decision could have a material impact so check with your legal department and then clearly communicate your award announcement and coordinate it with your EMS provider(s). (Although it might not be a material impact to you it might be to them).

Finally, before you award the business be certain your due diligence is completed, all stakeholders are enrolled, and the contract is signed.

Now, you can notify your EMS provider(s) and award the business!

Takeaways:

  • Know your company’s strengths and weaknesses
  • Understand why you are going down the outsourcing path
  • Solicit key objectives from each internal stakeholder (they’re different for everyone)
  • Create a list of your stakeholders
  • Look at your processes and your decisions from all angles
  • Look into your program roadmap’s future to anticipate your EMS provider needs going forward
  • Hold discussions internally and encourage your functional teams to speak with, and obtain knowledge from EMS providers you’re considering
  • Get references and obtain information from others
  • Inform your stakeholders of your decision before they hear from someone else
  • Check for internal material impact of a public notification and whether doing so will materially impact your EMS partner(s)
  • Complete all of your due diligence before you award the business

Do your homework because your cost to change EMS providers later is high. This is not a simple decision and it’s a long-term relationship that you’re endeavoring on and it’s very critical for your success as well because if you select the right partner they’re making you successful but they can also be your downfall.




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