Contract manufacturing has emerged as a choice for several electronics original equipment manufacturers (OEMs) in recent years. Today, these OEMs understand the importance of remaining competitive in the market while keeping operating costs low and without compromising on the quality of products. Electronics manufacturing is a challenging industry and driven by several technological evolutions demanding huge investments. Many OEMs cannot afford to make huge investments if they wish to keep their operating costs low. Thus, they rely on trusted contract manufacturers (CMs) more than ever before. Owing to their increasing popularity, today, it is easy to find contract manufacturers who assure better quality and pricing to OEMs. However, OEMs don’t understand that not all contract manufacturers may be right for their business. It is seen that their selection is often influenced by several myths. What are these myths surrounding the selection of electronics contract manufacturers (ECMs)? Although there are several, the post aims to educate on seven myths that generally influence the selection.
Top 7 Myths of Working with an Electronics Contract Manufacturer
The following myth busters will help you make the right selection of an ECM.
- The Lowest Quote is the Best Price: The lowest quote may help you reduce your overhead costs, still it may not be the best choice. It is important to ensure that the contract manufacturer also ensures quality along with reduced prices. Also, remember that the price per unit only accounts for 80% of the production costs, whereas several contract manufacturers include additional charges and fees during the final bill. So, be careful to discuss the total production costs with the manufacturer before making a final decision. This will help you gain clear visibility on quality and manufacturing costs.
- A Larger Company will Provide Me Better Advantages: Many OEMs believe that by teaming with a larger contract manufacturer they will gain better price advantage and quality. This is not true, because contract manufacturers often charge on the basis of the product to be manufactured and its complexity. You will have a better advantage choosing a contract manufacturer who is capable of meeting your diverse manufacturing requirements while focusing on your business goals.
- Working with CM who Works with Your Competitor is not a Good Idea: This myth becomes a reality only if you follow a proprietary process or unique designs. There is a wide range of processes employed for creating a product. It is not always necessary that your competitor is also following the same processes, designs, or materials as yours. Thus, there are several opportunities to create a value differentiation, even if you choose to work with a contract manufacturer who is building products for your competitor.
- The CM Offering the Lowest Time to Market is the Best: In recent years, improved time-to-market capabilities have emerged as one of the key success factors across various industries. However, they don’t always assure you success. Remember, having the best time to market doesn’t mean quality or better profits. Hence, ensure that you are following a balanced approach when working with an electronics contract manufacturing company.
- A Company with a Global Footprint is a Better Choice: This is another common misconception among OEMs. Although a company with global footprint may have a lot to offer, it may not offer you access to different technologies that may improve your product quality. In most cases, the CMs who advertise worldwide outreach usually possess manufacturing facilities with individual capacities. These facilities may be more accessible, if you also have a presence in the countries where they operate. Instead of focusing on the lure of a global footprint, it is important to check that the contract manufacturer whom you plan to work with has all requisite capabilities to perform your task.
- A Technically Competent CM will Solve My Problems: Although technical competency is one of the important requirements for the selection, it is not everything. Many times, OEMs rely on CMs for the entire product development, which may be helpful several times, but not always. It is important that OEMs align their production strategy in a manner that creates productive, commercial relationship with CMs.
- A Large Contractor Can Offer Various Volume Mixes: This is true up to a certain extent, because large contractors have capabilities to fulfill different volume mixes. Sometimes, however, the reality is that their definition of high-volume and high-mix or low-volume production may not fit your requirements. It is important to understand if the chosen contract manufacturer is capable of providing the volume mixes you require.
Whenever selecting an electronics contract manufacturer, it is important that you check their credentials, experience, capabilities, and other value offerings, rather than being influenced by these myths. Janssen Engineering is one of the leading electronics contract manufacturers in the US, with a vast manufacturing experience to its credit.