How product change notices impact profit margin in contract EMS manufacturing programs

By Staff

Electronics OEM manufacturers rely on timely and accurate info to target lower product costs and optimize supply chain cash conversion. Contract manufacturers are less likely to use manufacturing simulation ‘what if’ analysis during the product change notice (PCN) or, engineering change notice (ECN) response process than when evaluating a new business opportunity request-for-quote (RFQ).

One reason for this is OEM RFQs don’t often contain enough detailed information about design requirements. This is especially true for new programs and, its only later, after performance specs, dimensions and project scope are fully revealed that manufacturing cost models are more useful.

Internal EMS manufacturing cost vs OEM RFQ response pricing
Determining total landed cost
5 Steps to better product change notices

Manufacturers (both OEM and EMS) later come to realize the primary benefit of regular use of product manufacture cost modeling is its role surrounding every aspect of the RFQ creation, and response phases – enabling faster creation/response, timeliness, accuracy and thoroughness, and ultimately confidence in determining profit margin.

The above pertains to our experience with OEM-EMS supply chain relationships and, is also supported by a report by the Center for Automotive Research in which survey supplier respondents indicated they would make greater use of these applications of these tools could be used with limited information in the time available.

Making informed assumptions requires access to rich, market and industry segment information. Our manufacturing cost models are created from years of experience processing more than 3,000 OEM RFQs and EMS quotes for contract EMS manufacturing across a variety of industries.

Manufacturers can immediately determine impact to manufacturing profits based on product change notices plus, 1000s of other manufacturing supply chain coefficients and what if scenarios with our highly configurable manufacturing cost models.

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