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How to OEM RFQs to manage EMS providers and material costs

By Steve Linahan

Effective request-for-quotes (RFQ) share a common theme as an RFQ package that bridges the search for an EMS provider with establishing the principle tenants of the manufacturing supply agreement.

At provider selection, which is the exit point of a typical RFQ process, some of the better RFQ packages also emerge with most of the business terms of a supply agreement already in place.

Addressing both in the RFQ clarifies that the pricing you establish is what you wanted, is clearly understood and contains the math to how it was calculated visible as well as removing the emotion of unresolved terms out of the ensuing negotiation of the contract supply agreement. (See, also: Outsourcing Calculator for OEMs)

Standard quote package
In a standard EMS quote package, the following items are desired assuming this is not a stealth or confidential OEM program transitional search:

  • Mutual NDA agreement
  • Introduction letter that introduces you, your product or product line and a brief company bio
  • Product sample
  • Drawings of final unit and printed circuit board assembly (PCBA)
  • Drawing of silkscreen layers with part placement reference designators
  • Pictures of product and sub assemblies
  • Bill of materials (BOM)
  • Approved vendor list (AVL) / approved supplier list (ASL)
  • Engineering change notice (ECN) and deviation package if different than BOM and drawings
  • Annotate program parts and base raw parts and if purchased, or programmed at ICT not the actual JEDEC files
  • Custom part and controlled part authorizations to quote, or at least budgetary prices
  • Test process with test times and yield rates (actual, or assumptions)
  • Tooling that is to be transferred or, you are requesting to be made
  • Special considerations or requirements
  • Forecast by product going out 12 months with estimate for a total of three years
  • Supply agreement terms and conditions sheet (See my article: ‘9 key points help OEMs negotiate better contract service agreements with EMS providers’)
  • Time line and standardized response template that details exactly how you want the quotes formatted
  • Electronic copies with CAD files
  • Professionally packaged not a bunch of emails or separate files
Find electronic design services
Go

In your search results, you will be able to further target provider options by choosing End Market, then selecting Go.

Most of the above are self explanatory except maybe the response format as pricing varies and is not uniform unless you force the formats.

SEE ALSO
How to drive cost out of your manufacturing product portfolio
Best practices for EMS manufacturing RFQ quotes
EMS Manufacturer internal cost vs OEM quoted fees vs OEM target price

Your goal is to get a uniform apples-to-apples comparison of pricing for all services you are requesting and to be able to establish a forward looking template for all of your business. Meanwhile, the EMS provider is attempting to create flexibility and to win your business; more detail for them isn’t the goal.

Examples of these formats follow below.

Typical material and labor

Typical Electronics Material and Labor

Bill of materials (BOM) plus

Bill of Materials (BOM) Plus

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How to Cut Costs 5% to 15% for EMS Manufacturing Services

https://www.ventureoutsource.com/contract-manufacturing/oem-rfq-manage-ems-providers-material-costs

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