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Speaking of Contract Manufacturing: Virtual Resources Play a Role in EMS
December 31, 1969 |Estimated reading time: 3 minutes
By Gary A. Tanel
Internal EMS resources have been stretched in the U.S. domestic market. Competitive pricing pressures and low profit margins in our industry have placed a strain on people by reducing the depth of in-house resources EMS companies can afford to retain on a permanent basis. We are finding ways to leverage the capabilities of related companies in this industry as we offer the customer a single point of contact in providing manufacturing services. It was a luxury to have all the internal resources available at any time to perform training, technical assessments, audits, benchmarking, design analysis and a host of other services that can not usually be assigned to customer invoices directly. It is, however, just the type of thing a customer expects of its preferred EMS provider. These could be called organizationally necessary, but non-value-added activities for the end product.
Production EMS capabilities that have moved to lower material- and labor-cost areas have been a reality for several years, and U.S. companies are finding niches where they can add value to the industry and make a profit. Specialization is a word that could be used for providing services to EMS suppliers or directly to OEMs. Support services companies are in areas such as test hardware and software development, allowing customers to focus on their core competencies. Consultants have been around for a while, but they are taking on new scope, as the depth of internal subject matter expertise is limited. Qualified consultants are working with companies for a few weeks at a time to help develop capabilities or correct problem areas, then moving on and getting off the cost load.
Using the InternetInternet services are leveling the playing field by allowing small, agile businesses the ability to provide customers with real-time data access inexpensively. A few years ago, a mid- or large-size company would have an in-house software development department to format Internet pages and post data for customers using passwords. Now there are less-expensive, standard software packages that can post real-time order-tracking information and test results. Take advantage of the tools available that can make you more valuable to your customers.
Internet training courses or external training experts are brought in as needed, and are taking the place of permanent training staff, affording small businesses with the same quality training that larger companies have enjoyed. Those who train others for a living can be more objective and are not affected by internal company politics. The added advantage of self-paced on-demand training with interactive testing can result in more flexible scheduling and a more meaningful personal training experience. Curriculum can be expanded automatically if the employee is having difficulty learning particular sections.
Building RelationshipsOutsourced expertise is not just in the technical areas of an EMS business. The small business owners need to have access to legal, financial, strategic planning, funding and human resources. Too often, a small business owner may be qualified in technology and sales, but can miss the mark on other areas of importance. Leveraging relationships and knowing when to ask for help is key to survival. Businesses would not consider having an unqualified accountant or CPA do their financials. However, small EMS businesses often run open loop when it comes to a marketing plan that is documented and controlled. This is because the financial world we live in has formal regulations and processes that are enforced by external agencies. Marketing and business planning are often left to fate and can change with the tides. When the time is right, have someone that is not part of your organization give a critical eye to how things are planned and controlledwithin your company.
To stay competitive in today's top organizations, EMS companies must use virtual resources and remain seamless in their customer relationships. OEM sourcingpersonnel have been reduced in staff and are not as capable in managing multiple contractors with interactive relationships. If schedules are dependent between suppliers, and communication is needed to determine the final completion date, it's better to have the timing monitored by a single qualified supplier that can oversee the progress of upstream partners. This person should have the responsibility and control to fulfill his part of the supply chain. Determine your core competencies and outsource the rest to proven suppliers, but monitor performance and hold suppliers accountable.
Gary A. Tanel is an SMT Editorial Advisory Board member, president of www.TechBizConsulting.com and co-founder of www.AcquisitionAllies.com. He may be contacted at (972) 672-2506; e-mail: Gtanel@techbizconsulting.com.