When sourcing electronics services design or manufacture for your OEM product program (electrical, PCB design / layout, SMT and PCBA, electro-mechanical assembly, final systems test…) there are a few tips OEMs can keep in mind for a win-win.
Managing ambiguity early on will help both the OEM and the provider of electronics services minimize risk and uncertainty in the quote process.
The provider risks quoting too high and possibly losing the opportunity. And if he quotes too low to win the OEM program he ends up taking the program in at a loss.
The OEM risks production and shipping delays because the electronics product doesn’t meet spec or, overly paying for provider prices with excessive PPV and inflated pricing because the provider felt a need to protect himself from the ambiguity.
Both sides want to act-in-good faith but as most OEM buyers of electronics services know there is no standard pricing when sourcing relative electronics services.
In your search results, you can further target End Market options.
So, savvy OEM buyers of complex, product-specific electronic services remove this risk by communicating their program technical requirements and anticipate manufacturing and marketplace challenges as clearly as possible and are usually rewarded with more reasonable pricing when comparing provider quotes plus, fewer quality issues in manufacturing.
SEE ALSO
Tips for better RFQs
Errors in EMS manufacturer OEM quote package pricing and sourcing costs
Understanding EMS quotes for electro-mechanical assembly services
Using RFQs to manage providers and materials costs
Ways EMS quotes influence should cost analysis
In a standard electronics services business model, a general cost bucket distribution for doing business can be viewed as:
- 75% Materials
- 12% Overhead
- 6% Direct Labor
- 4% S,G & A
- Other (expedite shipping and forwarding costs)
A good way to help make sure providers understand your program requirements is to provide accurate Gerber 2D bi-level vector image files (3D prototype models where applicable), assembly drawings, BOM files with detailed line item quantities and complete part numbers plus, as much NRE as you can think of. Doing this will also help when it comes to comparing quotes from competing providers.
And while many OEMs reading this might feel price is paramount to selecting their electronics outsourcing partner, other criteria such as location, quality, provider responsiveness, supply chain and technical capabilities cannot be overlooked.
In most instances, OEMs will do best in their selection process by disregarding ‘total unit cost’ (price) as the main criteria for choosing a provider.
The ability for your chosen provider(s) to seamlessly ramp-to-volume your product in manufacturing and manage your outsourced business model within the provider’s factory must be paramount to your decision process.
OEMs can click here for more detailed RFQ process info when asking providers for electronics services quotes.
