In this article Peter Shawyer guides OEMS through the process of matching their organisations to their ideal CEM partner
Over two hundred CEMs operate in the UK, delivering more than £2.3 billion of electronic products. The terms CEM (contract electronics manufacturer) and EMS (electronic manufacturing services) are interchangeable and used to describe organisations that provide outsourced manufacturing services to OEMs (original equipment manufacturers).
The CEM sector is pyramid shaped, with a few large organisations, a greater number of medium sized companies and a large band of small businesses. So, faced with this choice, how do organisations looking to outsource manufacturing select the right partner?
The relationship between OEM and CEM is a partnership. To be successful, both parties must work closely to understand each other’s strengths and foster a good fit. The OEM should scorecard the attributes they require with weighting specific to the OEM and influenced by its organisational structure and markets served.
An OEM should ask itself the following six questions:
Firstly, does the organisation have sufficient internal engineering resource or should the CEM provide expertise in design, production engineering and alternative component selection?
Are the products mature, requiring few amends/up-issues or are they new and requiring changes and enhancements over time?
Is product demand easily forecast and planned for or will the CEM need to assist with short term dynamic scheduling and buffer stocks to help smooth supply requirements?
Is the CEM a good fit size-wise. Will the OEM be a small fish in a big pond or vice versa?
How agile is the CEM, how quickly can it respond to changing requirements?
Finally, does the CEM have knowledge and experience in the vertical markets the OEM operates in?
In addition to these specific questions, there are standard factors to consider such as financial stability, industry approvals, quality standards and price competitiveness. These days, location is less of an issue as technology and logistical advances have reduced the need for a CEM and OEM to be geographically close.
Other important but intangible qualities include problem-solving skills. An example would be a CEM taking the initiative to modify a product or process to avoid product failures and scrapped components.
The last two years have seen a seismic shift in the business environment which has impacted UK manufacturing. This will have resulted in a review, and possibly a reshuffle, of these-priorities. For example, financial stability, agility and procurement/logistics expertise have become even more important.
The process of selecting the right CEM shouldn’t be underestimated. A mismatch will be painful for both parties. As a CEM with over 40-years’ experience, Texcel can identify the right fit and makes a large upfront investment onboarding new OEMs and integrating their people, processes and products into the organisation.
So, if you are an OEM looking to outsource your manufacturing, make sure you invest time up front to think about what you need from the OEM/CEM partnership. It will pay dividends in the long term.