The role of electronics manufacturing services in supporting OEMs

These companies provide a variety of services, including design, manufacturing, testing, and distribution, as well as after-market services such as returns and repairs. EMS providers work closely with original equipment manufacturers (OEMs), helping them scale production, reduce costs, and focus on their core competencies – whether in product development, innovation, or marketing.

EMS explained

EMS companies are often described as electronics contract manufacturers (ECMs), but their role goes beyond simple manufacturing. They offer a full suite of services that encompass nearly every stage of the product lifecycle.

A typical EMS company will:

• Design: offer design services, often assisting in the transition from product concept to a manufacturable design. This can involve optimising for cost, manufacturability, and performance.
• Manufacture: use advanced manufacturing technologies, including surface-mount technology (SMT) and through-hole assembly, to produce high-quality electronic assemblies.
• Test: conduct rigorous testing procedures to ensure that products meet the necessary performance and safety standards.
• Distribute: provide logistics services to ensure that finished products reach the market efficiently, often through global distribution networks.
• Repair/return: manage after-sales services, including returns and repairs, ensuring the product remains functional throughout its intended lifespan.

EMS companies are capable of producing anything from printed circuit boards (PCBs) to complex electronic assemblies for various industries, including automotive, consumer electronics, industrial equipment, and medical devices.

The OEM-EMS relationship

Original equipment manufacturers (OEMs) are companies that design and market a product under their brand name but may not manufacture it themselves. Instead, OEMs often outsource some or all aspects of the manufacturing process to EMS companies. The EMS model allows OEMs to leverage the expertise and manufacturing capabilities of third-party specialists, enabling them to scale production without making significant capital investments in manufacturing facilities or equipment.

This relationship is symbiotic: OEMs benefit from the flexibility and cost-efficiency offered by EMS providers, while EMS companies gain by securing long-term contracts and repeat business. Additionally, EMS providers help OEMs navigate the complexities of global supply chains and component sourcing, which has become particularly important given recent disruptions in global markets.

Key advantages for OEMs

One of the primary advantages for OEMs in partnering with EMS companies is the flexibility it provides. By outsourcing manufacturing, OEMs can adjust production volumes quickly in response to changing market demands without being limited by their in-house capabilities. This flexibility is especially valuable in industries where product lifecycles are short, and demand can be volatile, such as consumer electronics.

So, it’s a bit like thinking of this relationship like a restaurant hiring a catering company for large events. The restaurant focuses on creating the menu and branding, while the catering company handles the cooking, preparation, and serving, scaling up or down depending on the size of the event. This allows the restaurant to focus on what it does best, while the catering company ensures everything runs smoothly and efficiently.

EMS companies can also help OEMs achieve:

Cost reductions: EMS providers, with their large-scale operations and established supplier networks, often have better purchasing power than smaller OEMs. This results in lower costs for components and materials. Additionally, EMS companies can help OEMs avoid costly mistakes by optimising designs for manufacturability and ensuring high-quality production processes.

Faster time-to-market: EMS providers have the experience and infrastructure to ramp up production quickly. They typically have the resources to conduct rigorous testing, ensure regulatory compliance, and manage logistics efficiently, all of which helps OEMs bring products to market faster.

Technological expertise: many EMS providers invest in cutting-edge technologies, such as automation and artificial intelligence, to enhance manufacturing processes. This allows OEMs to benefit from advanced production techniques without making significant investments in new technologies themselves.

Emerging trends in EMS

The electronics manufacturing sector is driven by technological advancements and changing market dynamics, and there are several key trends that are shaping the future of EMS, including:

• Industry 4.0: automation, smart factories, and the use of artificial intelligence in production lines are transforming EMS companies’ capabilities. These technologies are enabling higher efficiency, better product quality, and reduced lead times.
• Sustainability: as environmental concerns grow, EMS companies are increasingly focused on sustainable manufacturing practices. This includes reducing electronic waste, using energy-efficient production techniques, and integrating recycled materials into the supply chain.
• Regionalisation of production: the COVID-19 pandemic exposed vulnerabilities in global supply chains, leading some OEMs to rethink their reliance on geographically distant EMS providers. This is driving a shift toward more regionalised manufacturing, where production is moved closer to the end market to improve supply chain resilience.

EMS companies play an essential role in the electronics industry by offering a broad range of services that support OEMs in bringing products to market. From design to distribution, EMS providers allow OEMs to focus on innovation and market differentiation, while benefiting from flexible, cost-effective manufacturing solutions. As new technologies and challenges emerge, the collaboration between EMS companies and OEMs will continue to evolve, driving the future of electronics manufacturing.