The global electronics manufacturing market is a hugely competitive one.
And how efficiently an Original Equipment Manufacturer (OEM) can scale up its operations can often be the difference between winning or losing an order.
Business growth is still one of the fastest ways to increase profitability. But it’s vital to ensure you’ve got the right tools to fuel that expansion and that you’re able to identify, and offset, any obstacles that could be standing in your way.
Deciding to outsource part or all of your electronics manufacturing operations could provide the means to increase production capacity and improve your sales lead times.
But before you choose to hand over responsibility to an Electronics Manufacturing Services (EMS) provider, it’s important to take stock not just of the tangible benefits but of the potential risks.
In this blog post we explore some of the reasons you might choose to outsource, and some of the key questions you’ll want to consider before you take the plunge.
Identifying your pain points
Any period of expansion requires having access to the right site, equipment and resources. If you’re at risk of outgrowing your existing site, for example, then you’ll need to decide whether investment in new premises or equipment is really going to be viable.
Perhaps ongoing supply chain disruption is having a detrimental effect on your company’s ability to meet its production targets? Or maybe you’re finding yourselves increasingly vulnerable to material price increases?
A lack of access to sufficiently skilled labour can make it harder to deliver your orders on time. Perhaps your engineering and production capabilities could do with a helping hand but having to draft in sub-contractors is going to cost you a fortune?
It could be that you’re finding it more difficult to react to increases in customer demand – or that you’re experiencing too many quiet periods which is leading to inefficient downtime.
Perhaps you’ve identified that your business’s primary skills lie in other areas?
Choosing to hand over certain elements such material procurement, assembly or test could free you up to focus on what you know you do well – whether that’s coming up with new product ideas, overseeing design or taking care of marketing and after-sales.
How much do you want to hand over?
A key question to consider is just how much of your operation you’re wanting to outsource?
Some OEMs are happy to hand over complete control to the right EMS partner. Others prefer to keep a firmer hold on the reins.
There may be some technical elements that you’d prefer to keep in-house, for example. Or you may have developed your own bespoke equipment which might be difficult for an outsourcing partner to replicate.
You might want the option to free-issue materials, or you may feel more comfortable having your EMS partner source all materials on your behalf. Either approach has its pros and cons.
Free issuing offers the advantage of giving you more control over the component procurement process. But it also relies on you having the infrastructure to handle the volatility of the supply chain and the capacity to hold the stock.
In choosing to retain too much control, you could well be adding an extra level of complexity to the very process you’re hoping to simplify.
Managing expectations
Whatever your reasons for considering outsourcing, it’s worth keeping in mind that any new solution is unlikely to be a quick fix.
It could be six months to a year before you start to see tangible results. And there may be some uncomfortable moments along the way.
It may feel overwhelming to put your trust into something that’s unfamiliar. And it can be hard to let go of old habits (even if they’ve not been giving you the results you want.)
Knowing what to expect (and what’s expected of you) in the early months of a new EMS partnership will be crucial in ensuring that you achieve your goals for business growth.
Is Outsourcing Your Electronics Manufacturing the Key to Scaling Up?
The electronics manufacturing industry is fiercely competitive, and for Original Equipment Manufacturers (OEMs), the ability to scale efficiently can make or break a deal.
Growth remains one of the most effective ways to boost profitability, but expanding successfully requires having the right strategies and infrastructure in place. It’s also essential to identify and mitigate potential challenges that could harm your progress.
Outsourcing some or all of your electronics manufacturing could be a game-changer—enhancing production capacity and optimising lead times. However, before taking the leap and partnering with an Electronics Manufacturing Services (EMS) provider, it’s crucial to weigh both the advantages and the risks.
In this blog, we’ll explore the factors that influence the decision to outsource and the key considerations to keep in mind before making your decision.
Pinpointing Your Challenges
Expanding operations isn’t just about increasing output—it demands access to the right facilities, equipment, and talent. If your current site is nearing capacity, the decision between investing in additional infrastructure or seeking external support becomes a pressing one.
Are supply chain disruptions impacting your ability to meet demand? Are rising material costs reducing your margins? If skilled labour shortages are causing production delays, bringing in subcontractors might seem like a solution—but it can also be costly.
Perhaps fluctuations in customer demand make it difficult to maintain efficiency, leading to periods of downtime. Or maybe your company’s core strengths lie elsewhere, such as product innovation, design, or marketing, and handling manufacturing in-house is proving to be a distraction.
Outsourcing elements like material procurement, assembly, or testing could allow you to focus on what your business does best, streamlining operations and driving growth.
Deciding How Much Control to Retain
One of the first questions to address is the level of outsourcing that aligns with your business strategy.
Some OEMs are comfortable entrusting an EMS partner with full control, while others prefer to retain oversight of specific aspects of production. For instance, if your manufacturing process involves proprietary equipment or highly specialised techniques, keeping certain operations in-house may be necessary.
Material sourcing is another key consideration. Do you want to provide materials yourself (free issuing), or would you rather have your EMS partner handle procurement? Free issuing can offer greater control over component selection, but it also requires robust supply chain management and sufficient storage capacity.
Retaining too much control can inadvertently add complexity to a process that outsourcing was meant to simplify. Striking the right balance is essential to ensuring efficiency and cost-effectiveness.
Setting Realistic Expectations
While outsourcing offers numerous benefits, it’s not an instant solution. Achieving meaningful results can take six months to a year, and the transition period may present challenges.
Entrusting manufacturing operations to a third party can feel daunting, especially if you’ve been accustomed to handling everything in-house. Breaking old habits and adjusting to new processes takes time—but understanding what to expect from your EMS partner, and what they expect from you, will be key to a successful partnership.
Outsourcing, when executed strategically, can be a powerful catalyst for growth. The key is careful planning, clear communication, and a willingness to adapt to change in pursuit of long-term success.
