Today’s EMS CEOs mirror Detroit auto execs of the 70s

By Mark Zetter

I’m a long-time fan of Seth Godin’s. He offers views and perspectives that are often refreshing and sometimes challenging. He writes in a recent post:

“Detroit car executives in the 1970s and 1980s consistently failed to respond to the threat from Japanese imports. They weren’t merely arrogant—they were blinded by proximity. Everyone in their neighborhood, everyone on their commute, everyone in their parking lot was driving an American car. How could there be a problem?”[read full post on Seth’s blog]

EMS providers are no different when it comes to strategy and how they manage their business. The same EMS people use the same tools, manage EMS operations the same way and move from EMS provider to provider – taking with them the same toolbox of skills, with the same outlook and getting the same results. This has not changed much since Excel has became the defacto tool of choice among EMS CEOs and program managers.

EMS providers talk about innovation yet by nature they are risk intolerant. They claim this is because of thin EMS margins. I believe this is more about remaining in their comfort zone because change is difficult and brings a degree of uncertainty.

But change is coming to the EMS industry. Real change in the form of artificial intelligence that will position smaller, more nimble and better managed EMS manufacturing providers against industry- and sector-leading incumbents that are bigger, have more money and by current standards are preceived as scale- and cost-driven solutions providers.

Early on, execution and efficiency will beat out lower cost as the main EMS selling point in this transition on the RFQ horizon followed by sustainably lower costs for EMS providers willing to learn this new technloogy and better EMS quote pricing for OEMs partnering with these EMS providers dedicating their companies to a better way.

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