How Much of My Electronics Manufacturing Should I Outsource?

Logistics, particularly outbound, is often an area that is overlooked during an outsourcing strategy but it can make a huge difference to success or failure. For example, unless you outsource all of the assembly and test, the EMS provider will have to package the PCBA or sub-assembly and ship it to you, only for you to re-open this packaging, dispose of it and then package the product back up again when you're ready to ship to the end user. Not only does this add extra layers of waste, it also creates an opportunity for double handling and the potential to introduce damage.

If, however, you outsource all of the assembly and test of your product to the EMS provider, they can package the completed unit in your own branded packaging. They can then deliver this product back to you, for you to sell on when you have demand, or they can ship it straight to your end user anywhere in the world. This is the ultimate outsourcing agreement and allows you to focus purely on product design, sales, and marketing activities.

When considering your shipping requirements, here are some questions to think about:

• Where is my market and how quickly do I need to be able to respond to demand?
• How much of my current organization is involved in picking, packing and shipping products? Is this a core activity for us, do our customers value this?
• How much space is taken up with goods coming in and going out of the business? What could this additional space be used for if we didn’t have to hold stock on the shelves?
• What specialist lifting or handling equipment would an EMS provider need to have if I wanted to outsource all of our shipping to them?

How Far Will You Go?

As we said at the beginning of this post, the more of your procurement, assembly, test, and logistics operation you outsource, the more benefits you can expect to see. But that's not to say you won’t see benefits from outsourcing if you don’t hand over everything to your EMS provider on day one. In fact, our advice would be to hand over the elements of your operation that are causing you the most pain and then plan on moving other functions or tasks over once you are in a position to do so. The first six months of any outsourcing relationship is critical and it's advisable not to introduce too many variables early on. That said, there should be an 'end goal', something to work towards with your EMS partner. A fully outsourced solution may not be feasible for several months or even years, but providing you both understand what the long-term plan looks like, a suitable project plan can be put in place.

Hopefully, this article has helped and highlighted some questions to think about before you make a final decision on your outsourcing strategy and the most suitable supplier.

This article originally appeared on the JJS Manufacturing blog, which can be found here.

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