Capabilities, Skills, and Understanding:
Criteria for Selecting an EMS Provider

You’re with a young and/or small Original Equipment Manufacturer (OEM). You’ve been working on a new product for six months. The product’s conceptual design is almost complete and it’s time to get into the practical details of manufacturing it. Printed Circuit Board Assemblies (PCBAs) are the heart of this new product.

The problem you face now is that your company doesn’t have the capability to assemble and test the PCBAs. Another prerequisite for in-house assembly is an established supply chain—and you also lack this. Clearly, you need to find a contract manufacturer, specifically an Electronics Manufacturing Services (EMS) provider, who is already set up to buy the components, assemble, and test your boards.

No Shortage of EMS Providers

As a young OEM, you can’t bring a lot of business to the table yet. Or maybe you’re an established but small OEM with low volume production (25 - 200 PCBAs/month), so you’d like to work with an EMS provider who’s set up to handle a Low Volume/High Mix (LVHM) production profile.

Despite your modest production volume, there remain dozens of seemingly viable providers. Selecting the wrong one could jeopardize the reputation—and even survival—of your company. Those thousands of hours spent on your product’s form, function, and features will have been for nothing. You are acutely aware that customers don't care how hard you worked to bring the product to market. All they care about is that it does what you promise, and that it keeps doing it. You can’t risk any accusations of reliability and quality problems spreading across various media channels.

Filtering Through the EMS Field

So how do you begin the selection process? From preliminary research, you know there are hundreds that can manufacture PCBAs. But how many are willing to manufacture your PCBAs? First, consider the production and revenue scale of prospective EMS providers.

You can clearly rule out the high-volume providers. Your business will simply be unfeasible for Tier 1 EMS providers, who have revenue in the billions and offshore manufacturing sites. Even Tier 2 and Tier 3 providers are unlikely to economically justify starting and stopping the assembly lines to accommodate smaller production runs and prototypes. And frankly you may never become large enough to fit into the business models of the majority of these upper-tier EMS providers.

Level    Annual Revenue
Tier 1    >$3 billion
Tier 2    $300 million - $3 billion
Tier 3    $150 million - $300 million
Tier 4    <$150 million

Source: www.ventureoutsource.com

You’ll find the best candidates are smaller, Tier 4 EMS providers. These providers tend to be the most flexible and capable of supporting a LVHM production profile like yours. They may be smaller in production volume, but they are still big players in the EMS market.

Location, Location, Location

Geography plays an important role: why make the supply chain longer than necessary? Shipping costs are proportionate to the distance between you and your provider, so generally the closer you are to your EMS, the more affordable your shipping charges. And if the assembly is done off-shore, then there are the additional complications of import duties and export controls.

Don’t forget to factor in travel costs during the selection period too. There is no substitute for observing the order, cleanliness, and process capabilities of a prospective EMS provider’s facilities and operation, so you will want to visit the EMS providers on your short list before placing your business.

It is also important to understand how your business will be managed inside the ERP system used by the EMS provider. Your intuition and level of confidence in the provider’s internal processes can sway your favor towards or, more importantly, away from an EMS provider.

Oh No, an ECO

Based on past experience, you know that the EMS provider must be able to remain flexible and adapt to Engineering Change Orders (ECOs) quickly, accurately, and cost-effectively. ECOs arrive for many reasons, such as component obsolescence and unforeseen reliability issues. As a small OEM, you understand the value of being flexible while keeping costs low, and you want to ensure that your EMS provider reflects your values.

Which EMS providers have Enterprise Resource Planning (ERP) and shop floor control processes in place to ensure your PCBAs won’t get lost in the shuffle with their other clients’ production?

How can you be assured that your PCBAs won’t be set aside to run a job for that bigger client who represents more income for the EMS provider?

But Does It Work?

As much as you have tried to be conservative in component tolerances and have built-in redundancies in key circuits, there is no way for you to test every physical and functional aspect of the design. This means you need an EMS provider adept at quick-turnaround builds of 2-5 units of your PCBAs for design verification.

And it would be really good if your provider could put them in your card enclosure, hook them up to the backplane and the wiring harness, and test key input-output points. In fact, you are not confident that everything will fit within the card cage, so if the provider could do predictive modeling/stacking tolerance analysis using your CAD files before the design is finalized, that would be extremely valuable in shortening time-to-market.

Refining the Filter

So far you have determined that you need an EMS provider who:

• is responsive, flexible, and capable of supporting an LVHM production profile.
• adds value to your business both before and after the PCBA operation.

For example, an EMS provider who conducts Bill of Material analysis for cost reduction before the PCBA is manufactured as well as performs functional testing of the finished system is likely to be on your list of contenders.

Depending on how far you’d like to be from your selected EMS provider, you are probably still left with a half-dozen candidates. Ask yourself:

• Have they done work similar to what you need: PCBAs that are fairly component-dense and complicated by the need to use two assembly technologies (Surface Mount Technology and Plated-Through-Hole) on the same board?
• Do they have experience assembling components that do not lend themselves to automated assembly, and as such require skilled hand-soldering and mechanical fastening? As much as you’d like to have a more automation-friendly component Bill of Materials, you may have a few “oddballs” on the PCBAs.

Final Candidates

By now, you may have just three viable EMS provider candidates. And you have rightly determined that the nature of the relationship with the provider you select will be more strategic than tactical. After all, you want (and need) more than “order processing" and "board stuffing" — you want the involvement and engagement of your provider so that manufacturing can be a competitive advantage for your company, not merely a task.

This isn’t a hobby, it’s a business. You are risking your company’s reputation based on this decision. You need to be able to trust your EMS provider with your designs, your investment, your future.

You’ve had some conference calls with the final candidates. One candidate virtually knocked your socks off with their appreciation for your business and interest in your product.

This EMS provider spoke about things no other candidate did: the importance of your cash (not tying it up in inventory) and your cash flow (and how dock-to-stock product shipping could accelerate it). They anticipated your remarks about the importance of quality to your reputation in the marketplace, and described some of the techniques they use (such as thermal cycling) for keeping quality high. They didn’t always talk about “boards”; they talked about your product, your system.

This EMS provider seemed to “get it.” You felt that they already knew what was on your mind—and that as your manufacturing provider they would do their part to make manufacturing the least of your worries. It was as though they’d been through the same challenges you’re facing, and they succeeded. Not only do they have the resources to be your EMS provider, you feel like they relate to your struggles and obstacles.

Tipping Point: OEM-Pathy

After filtering through the capabilities, geography, complexion of the customer mix, and the many other ways that EMS providers differ, uncertainty can still remain. Which provider should you select to manufacture your product? Your first product? Your most important product? Your newest, most technically-advanced product?

You realize that the decision goes beyond capabilities and skills.

Which EMS provider answered your questions in a way that made sense from your OEM business perspective? Which provider tested assumptions about what your business objectives are by insisting on a “big-picture” discussion with key managers in your company? Which one really wanted to know what keeps you—an OEM in a hypercompetitive market—up at night?

Which one understood?

The EMS provider who stood out from the rest has the ability to communicate beyond the verbal; they empathize with you, the OEM. Selecting the EMS provider with OEM-pathy will make all the difference to your company.

Every EMS provider makes many decisions that you will never know about. The provider with OEM-pathy will make the right decisions for your business.