SMTA International Conference Proceedings


Authors: Edwin B. Smith, III
Company: Hart InterCivic
Date Published: 9/21/2003   Conference: SMTA International

Abstract: There are many obvious sources of wasted money in OEM/EMS manufacturing relationships. This paper seeks to provide a deeper level of understanding of the less obvious sources of wasted money for both parties in an OEM/EMS relationship. These sources encompass every aspect of the relationship and arise from business processes, manufacturing, engineering, and quality. Since OEM/EMS relationships are a series of related projects many project management tools, as applied to the outsourced manufacturing business model, can be applied.

As an example, most EMS providers have robust quality systems, but many have not taken those systems one step further to immediately detect process shifts that lead to product returns. In addition, these systems often do not measure true project costs. Furthermore, most OEMs and EMS providers have budgeting systems. Written and unwritten goals for the OEM/EMS relationship are added to the budget, but are not communicated between the two parties. Communication is lacking regarding strategy.

These examples and others will be detailed to show how both the OEM and the EMS provider lose money covertly by not taking the next step to evolve many areas of their relationship, asking the tough questions, and moving their relationship to a deeper level of effectiveness.

Key words: outsourcing, project management, cost of quality.

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