A smooth transition to outsourcing

Director global transition management at Plexus, David Strachan, explains a structured outsourcing process, led by an experienced team, always yields the best results.

The way products are manufactured has undeniably changed, particularly recently. Original equipment manufacturers (OEMs) are moving from an in-house manufacturing model to entrusting electronic manufacturing services companies (EMS) with their products.

For OEMs, the creation and marketing of products is often their sole focus, with product manufacturing or design a non-core activity. However, an EMS provider will generally have proven capability in the OEM company’s specialist field. By transferring the responsibility of these tasks, OEMs can free up time to concentrate on core competencies and allow the EMS to focus on theirs.

In the past, an OEM would use a contract manufacturer to build circuit boards which would then be shipped back for final configuration, higher-level assembly and integration. Today, EMS providers work closely with OEMs and have consequently been rewarded with broader responsibilities. EMS providers will now design, build, repair and refurbish entire systems on the OEM’s behalf as fully integrated partners.

Within the defence and security sector, companies have recognised the benefits of outsourcing to reduce costs and stay competitive. Such companies have seen increased pressure to improve efficiency and create a differentiated product whilst maintaining the high product quality this sector demands. Subsequently, OEM and EMS companies are collaborating more closely and more frequently, especially in high-complexity product areas.

So how do companies ensure successful processes, what qualities should be sought in a new partnership and how do partners manage the move?

The key to this process is a smooth transition, whether from design to manufacturing or manufacturing between two companies. In this sense, a structured process led by an experienced team will always yield the best results.

Companies should put a repeatable, global and standardised model in place to ensure the high standards of the OEM and their customers are maintained, regardless of geographical location.

Preferably, there should be a dedicated project team engaging with customers and stakeholders. By implementing their prior experience, the team can guarantee the project requirements are met.

Many companies will wait for a project to come in before assigning staff, which can mean those with capacity are prioritised over those with the right skillset. However, best practice means a dedicated team is implemented early in the transfer process, allowing teams from both sides to work closely and achieve the best result.

This team will work with an OEM to remove pain points and ensure the shift is smooth and simple. Partnering with an EMS company which has the same model will allow a seamless introduction of the product into its organisation and the marketplace. It will also reduce the impact on the business during the transition.

To best facilitate the change from an in-house to outsourced model, an OEM should partner with an EMS that meets its product needs, has relevant industry experience and cultural similarities. Instating the right team, processes and tools will result in a long-term, mutually beneficial partnership where both sides can focus on their own individual strengths and ensure their products are of the highest possible standards.