MINIMIZING TOTAL COST IN THE CONTRACT MANUFACTURING PROCESS
Author: Ralph H. Kenton Company: Ralph Kenton and Associates Date Published: 4/28/1997
Surface Mount International
Abstract: One of the major factors which drives OEMS (original equipment manufacturers)to outsource is the need to reduce manufacturing costs and improve return on assets. To optimize these benefits, the OEM must understand potential and hidden costs which can arise in dealing with CMS (contract manufacturers, more recently called Electronics Manufacturing Services Industry Suppliers). Ironically, many outsourcing costs are well within the control of the OEM. This paper examines both the obvious and more subtle elements which contribute to the total cost of outsourcing, including those factors which the OEM itself can influence positively. Such examples will include reliable forecasting, robust product designs, high quality manufacturing deliverables, good communications and supplier management techniques. Proven processes and tools will be discussed which can minimize outsourcing total costs, thus optimizing the overall contract manufacturing process.