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How engineering changes impact OEM customer costs in EMS manufacturing factories

By VentureOutsource.com Staff

OEM equipment manufacturers already pay excessive customer fees to their EMS and ODM suppliers. With every engineering change order (ECO) or engineering change notice (ECN) any manufacturer wants to be able to analyze impact to time, cost, quality at time of ECO conception. Prioritizing ECO/ECNs can also impact material availability and other aspects impacting production and production schedules.

Being able to manage and approve recurring ECO/ECNs in a rapid way, using the proper EMS industry KPI metrics with your contract manufacturing partner saves OEM companies time, and money. Comprehensive EMS industry cost models can help OEM decision makers leverage supply chain delays as contract negotiating values.

Faster product innovation with greater control of spend (costs) and contract manufacture pricing (fees) are some of the benefits of better ECO/ECN management. Manufacturing cost models let you change product components, and many other aspects like factory location and currency, volumes and lot sizes, warehouse storage and shipping costs, and more and immediately see how changes impact BOMs, inventory, quarterly spend, cost reduction strategy, and more.

Managing engineering changes in EMS: CFT, DFT meetings

Meanwhile, OEMs can expect ongoing meetings and reports and a constant flow of information exchanged between you and your EMS manufacturer to discuss and track your outsourcing program engineering changes. Two meetings you want to make sure take place regularly are the customer focus team (CFT) meeting and, defect reduction team (DRT) meeting.

Examples of these two types of meetings follow. OEM site users can request examples of actual CFT and DRT meeting minutes in our white papers section.

1. CFT meetings are hosted by your EMS or ODM partner and OEM participants attend as guests.

2. DRT meetings are typically closed, in-house EMS meetings (EMS personnel, only)

SEE ALSO
How to determine EMS manufacturing factory costs
EMS internal costs vs EMS profit vs OEM quote price
Top 10 impacts to EMS/ODM quote pricing OEM programs

1.) CFT meetings occur 1x per week, more frequently if issues are urgent. EMS program management or EMS key stake holder, like operations manager titles, typically drive these meetings, while the OEM customer’s project or program manager will participate and drive concerns on your end. During CFT meetings, together, teams identify/share program concerns, discuss lead times, product forecast, production, shipping schedules, and more.

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2.) DFT meetings occur 1x per week. EMS internal. This meeting can pit functional groups against each other/finger-pointing, hold groups supporting production accountable, with internal EMS escalation, so they focus on your success. Its not common but it is possible, your EMS partner program manager (PM) may give you a summary each week, if you ask. EMS DRT meetings review and follow up on action items assigned to EMS functional groups/individuals from the previous week and must be tightly tracked. Program issues and root cause analysis is discussed, corrective actions are determined and issues related to your program are resolved and crossed off their lists of ‘things to do’.

Manufacturing alerts

Whenever issues occur internal your EMS manufacturer that will impact your production and/or impact your shipping schedule, its a good idea your EMS program manager (or other key EMS contact) sends out a manufacturing alert.

Manufacturing alerts are used to keep all team members (OEM and EMS) updated on manufacturing and related issues.

Manufacturing alerts spell out what is wrong, areas impacted, who is responsible for ‘next steps’, and more. These can be email-typed format, which is common, so you have a email thread/history sent to all relevant team members tied to the program.

Manufacturing alerts can also be automated in some manufacturing environments. Regardless, the purpose is to keep urgent issues top of mind for fast resolution. More about manufacturing alerts can be found here.




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