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NPI mistake EMS manufacturers make

By Mark Zetter

A Silicon Valley EMS CEO recently told me he has no interest talking with new customers about new product introduction (NPI) programs unless OEMs guarantee ongoing business with a minimum annual run rate.

This EMS provider is having difficulty growing their business and listening to him share other reasons for not leveraging NPI services to grow their business made reading between the lines of our conversation easier.

OEMs reading this can request a custom list of EMS providers offering NPI services, worldwide. You can learn more about new product introductions (NPI) and find NPI services here.

EMS providers without a designated NPI department or NPI-specific team members skilled in schematic design, PCB layout, DfM analysis, purchasing and planning, and so on, means employees already allocated in the organization are pulled away from work on existing customer programs, and saddled with more responsibility.

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This speaks to a larger, systemic issue for this EMS provider, and 99.9% of all EMS providers today: EMS providers do not manage their indirect labor workflow productivity effectively, and they do not have adequate processes and procedures in place to hold expensive EMS indirect labor accountable for costly errors and program iterations, workflow timeliness, and productivity execution.

So, yes, taking on NPI could be a real pain, and possibly place unnecessary strains on existing customer relationships.

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Non-strategic EMS providers with ineffective planning are always interesting because, as stalwarts, they provide insight into the deeper EMS psyche and systemic business challenges the EMS industry faces.

 

 

EMS providers mirror Detroit auto execs from the 70s. EMS providers are still largely unsophisticated and tend to stay in their comfort zones. Today in EMS, technologies like automation leveraging artificial intelligence and machine learning, despite what some EMS providers claim, are not yet things EMS executives really comprehend. I write and comment more on this in articles and posts on Linkedin.

This habitual thinking prevents EMS providers and individual EMS industry professionals from moving forward, experiencing both professional and company growth.

This lack of professional growth was apparent with this one particular EMS provider when I asked the CEO how his company differentiates, or is better, than the surrounding competitors serving similar markets.

Why NPI is good for every EMS provider

Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change, that lives within the means available and works co-operatively against common threats.”

A lot of interest exists from OEM decision makers seeking original design manufacturers (ODM) and EMS providers offering new product design, new product introduction, and new product launch solutions – across nearly every end market.

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Not unlike electronics NPI services, offering product design services can require EMS provider carry some additional business insurance. For example, whether customer programs bring built in risks like Class I v. Class II v. Class III medical devices solutions.

Responding to an OEM request-for-quote for NPI programs enables the EMS firm opportunities to look into quoting higher margin, DfX design services, plus alternative programs for this new customer the EMS provider may come to learn about through talking and working with this customer’s employees working on the NPI program.

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And if EMS providers execute well and offer good quality services they often get opportunity to quote these ‘additional’ programs even before the initial NPI program is underway.

This then gives EMS providers a doorway to their new customer’s AVL supplier list, enabling the EMS provider to quote production-level pricing for lower individual components costs. EMS providers can also quote board and systems testing with this info.

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