In this article Esprit Electronics helps OEMs understand the benefits of a CEM partnership and appreciate the differences between UK based CEMs
Whether an OEM is looking to out-source for the first time, change partners or dual-source, it is essential to get the decision right following careful consideration. Read on to discover the four key benefits of working with a CEM, followed by nine important considerations.
The first benefit is reducing capital expenditure. The equipment needed to manufacture at scale is a huge investment, not to mention servicing, maintenance and upgrades. To keep pace with the industry’s rapidly changing technology requires constant investment in new equipment. CEMs cover all this for the customer, who only pays for the service and products they receive.
Second comes reducing operational expenditure. Using a CEM, an OEM also saves on overheads including rent, heating, lighting, electricity, staff and training. This is significant in cost and effort. Consider the time and energy needed to find and manage the right people.
Third is reducing stock costs and risk. A rule of thumb is that 60 to 70 per cent of product cost is materials. Not having to hold stock is a huge cost saving. Working with a CEM, OEMs only buy what they need, when they need it. CEMs will have excellent relationships with their distribution network and may have greater buying power. So, the OEM should save on stock purchasing too. Using a CEM will free up cash that would otherwise be tied up in inventory.
The final key benefit is added value. CEMs often provide a design for manufacture service, where they advise on changes to an OEM’s product that will save time and money. The OEM gains the CEM’s experience, knowledge and relationships, on top of the manufacturing benefits.
Having identified the benefits of a CEM partnership, then comes the process of finding the right manufacturer. There are many UK-based CEMs, selecting the right one is vital. The following is a list of things to consider when shortlisting providers.
Technology: Many CEMs specialise in particular technologies, industry sectors and/or solutions. Select a CEM that is an expert, covering all the solutions required now and in the future. OEMs should choose a partner that will grow with them, not hold them back. For example, conformal coating isn’t provided by all CEMs. If this is critical, seek a manufacturer with this capability.
Certifications and accreditations: Do products need to meet industry standards and accreditations. Make a note of the accreditations required and consider providers who can meet these requirements.
Logistics and inventory: Many CEM providers can procure, stock and manage materials and deliver the end product in exact quantities. Others may require the OEM to manage the supply and provide materials on a free issue basis. Selecting a CEM with end-to-end logistics capabilities can streamline processes.
Size: It is vital to select the right size CEM. Most customers don’t want to be more than 20 per cent of their CEM’s turn-over. Less and they may feel that they don’t receive the best customer service, more than 20 per cent and there is a risk that they are too reliant on the business.
Investment: The electronics industry moves fast, so a CEM should commit to continually investing in their equipment, training and technology to ensure the best output.
Stability: This covers two aspects, is a CEM financially stable, profitable and can demonstrate growth, and is it well established.
Technical support. The best CEMs provide solutions to problems. Especially in the current market where there is huge pressure on the supply chain, look for a partner who can provide options and advice when needed most. Case studies, testimonials and recommendations are the perfect place to seek these out.
Partnership: The best relationships are established when the customer sees its CEM as an extension of its own business. A good CEM will be flexible, quick to respond and provide excellent customer service to ensure a high-quality output with on-time delivery.
Recommendations: Seeking recommendations is a good way to find the perfect partner.