Top 3 Trends in the Electronics Manufacturing Services (EMS) Industry


While the inherent economic benefits of outsourcing or offshore sourcing (in the case the manufacturing partner is located overseas, off-shore sourcing) may differ from company to company, it is no denying that manufacturing outsourcing has seen a steady uptrend over the past couple of decades. With clear benefits in terms of production efficiency, reduced overhead, labor costs, and faster new product introductions, to list a few, today OEMs continue to collaborate with EMS’s to develop their products.

Electronic Manufacturing Services facility

Rising demand for electronic devices and components has created a dynamic business environment for most Original Equipment Manufacturers (OEMs) to work with overseas component manufacturers and electronic manufacturing service (EMS) providers.

We take a look at 3 trends in the OEM-EMS relations-building:

1. Product Design Outsourcing

Market competition and product complexities require OEMs to advance their in-house development and design competencies further or, alternatively, collaborate with EMS partners to fill their needs. To reduce overall costs and shift from fixed costs to variable costs, OEMs are increasingly moving product design and development processes to EMS partners.

At the same time, EMS companies are offering more design services for sub-assemblies and finished products. In fact; EMS’s are advocating product design & “End-to-end” manufacturing solutions to the OEMs. From concept generation, to product planning and engineering, to industrial design, to mass production, EMS plays an integral part in the introduction of new ‎electronic products.

2. Manufacturing Integration

OEMs are looking increasingly for cross-industry horizontally integrated service providers. This trend is most noticeable across the electronics, plastics and metal industries. Driven mainly by the end application market and engineering synergies, this business model will become a major strategic goal between leading component manufacturers, EMS service providers and OEMs. Small-to-medium sized OEMs are especially appreciative of the benefits manufacturing integration services offer.

In some instances, OEMs may completely outsource their entire product designs to one strategic manufacturing partner, as opposed to working with multiple component manufacturers. By working directly with each and every approved component manufacturer of the OEM’s to manufacture and deliver the final products, EMS providers are better able to streamline technical and logistics communications amongst all manufacturing parties, thus streamlining the entire manufacturing processes. Strong strategic partnership puts an even higher consolidation pressure on small and mid-size OEMs to work its manufacturing partners, most notably its EMS partners, to create a “one-stop shop” offering design, engineering and manufacturing competencies to OEMs.

3. Develop Strategic Partnerships in Cloud-Based Platform

Advances in digital technology enable various manufacturing partners to become more active players in the technology ecosystem, seeking expertise outside the industry in order to develop equipment connectivity, data analysis, and software that are beyond their current abilities.

OEM’s want connectivity tools that provide insight into production levels, inventory situation, and order status from all their component contract manufacturers and EMS providers. In order to do this, electronic manufacturers and EMS’s must become more aggressive and deliberate in their investments. They should focus on developing technology platforms, even cloud-based, and new operating models that enable connected products and services to integrate into theirs or even their customers’ operations.

EMS Contract Manufacturing equipment

To summarize, companies undertake outsourcing and offshoring for a variety of reasons depending upon their vision and business objectives. Over the past couple of decades, an environment has been created that demands more responsive and innovative services in the electronics manufacturing space.

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