What is Electronic Contract Manufacturing – Complete Guide
Electronic contract manufacturing
Electronic contract manufacturing (ECM) involves outsourcing electronic product assembly, testing, support services, and distribution to third-party electronic contract manufacturing companies. When a company hires a third-party manufacturer to produce electronic components or devices, it is known as ECM. The company that outsources its manufacturing needs is the original equipment manufacturer (OEM). An OEM focuses on designing and building the products while leaving the complex manufacturing mechanisms to contract manufacturers (CMs). Does this business model sound appealing? If yes, read ahead!
Electronic Contract Manufacturing – An Introduction
When your organization hires a third-party manufacturer to produce electronic components or devices for you, you are involved in a business model known as electronic contract manufacturing. Original equipment manufacturers (OEMs) often consult ECM companies to address hurdles, such as rising costs and rapid changes in the electronics sector, without consistently investing in the required personnel, facilities, and equipment. Thus, the hiring company or OEM can focus on its core competencies while outsourcing to another company specializing in electronics manufacturing.
Electronic contract manufacturing services entail several steps, some of which are mentioned below –
- ECM is an all-encompassing solution that includes electrical design, PCB layout, component supply, component manufacturing and assembly, end-product assembly, product maintenance, and after-sale services. Thus, the outsourcing company (OEM) only has to provide ideas and delivery schedules.
- The OEM or the outsourcing company can direct its R&D department to engage in the designing part and then delegate the duty of tangible hardware production to electronic contract manufacturers.
- The OEM can hire multiple EMS companies to engage in various facets of component manufacturing. For example, one contract manufacturer might be hired for PCB manufacturing and assembly, another for product after-sale services, and so forth.
- Usually, electronic contract manufacturing does not include complete dependence by the OEM on one specific electronic contract manufacturer, as components have different types of packaging sizes, some components need customization, etc.
Types of Electronic Contract Manufacturers
ECM includes a wide range of services, which includes –
One of the major tasks that ECM companies undertake is assembling printed circuit boards (PCBs). This includes manual or automated placement and soldering of electronic components on PCBs, which are then used in various electronic devices.
It includes assembling multiple components, such as power supplies, enclosures, and wiring harnesses. Boxbuild assemblies are usually leveraged in automotive electronics, medical devices, and telecommunications equipment.
Component Sourcing and Procurement
Electronic contract manufacturers also help OEMs procure electronic components, thereby saving the latter’s time and facilitating better price negotiations.
Cable and Wire Harness Assembly
The fourth common service offered by an ECM company is the manufacture of custom cables and wire harnesses used in electronic products. This process requires specialized skills and equipment and is usually performed by dedicated electronic contract manufacturers.
Design and Engineering Services
Last but not least, EMS companies also help clients develop and optimize their electronic equipment to enhance product designs and ensure cost efficiency.
Benefits of Electronic Contract Manufacturing
There are multiple benefits of electronic contract manufacturing. These include –
- Cost Efficiency
Quite understandably, cost mitigation is a pertinent part of every industrial operation. It is through cost efficiency that enterprises can accrue higher profits and ensure sustainable operations. Electronic contract manufacturers help lower operation costs in many ways. To begin with, outsourcing to an ECM company means not having to spend excessive capital investment to establish and maintain a manufacturing unit. Moreover, the additional cost of labor, purchasing high-tech equipment, and other overhead costs are eliminated from the picture.
- Better Scalability and Flexibility
The second benefit of electronic contract manufacturing is enhanced scalability and flexibility. Market demand fluctuates with time, and enterprises need a stable and flexible mechanism for scaling their production volumes without interrupting their operations during the readjustment process. ECM companies enable OEMs to accommodate the ever-changing market dynamics without incurring heavy expenses in labor, equipment, and facilities.
- Quality Control
Thirdly, outsourcing electronics manufacturing processes to third-party experts enables OEMs to maintain product quality standards. ECM companies are stalwarts manufacturing electronic components for their industry and have incredibly rigorous and stringent quality control measures. Electronic component manufacturers invest in the latest technology and manufacturing processes while employing skilled and experienced labor to ensure that the products they produce adhere to the highest standards needed by your company. Furthermore, the electronic components produced by ECMs also undergo thorough quality testing before they are released into the market.
- Improved Efficiency and Faster Time to Market
Last but not least, an ECM company vehemently bolsters efficiency and shortens the time spent marketing your products. EMS companies co-opt advanced manufacturing strategies, automation, and optimized workflows to expedite the production of electronic components. The culmination is super fast turnaround times and shorter lead times.
Reasons that Make Electronic Contract Manufacturing a Successful Business Model
Electronic contract manufacturing is an incredibly successful business model as it mitigates manufacturing costs for the hiring company while increasing efficiency. A few decades ago, electronic companies had the huge burden of manufacturing all their components themselves, which required a lot of time, effort, money, and resources. Thus, entry into the market was incredibly difficult, and many upcoming companies succumbed to the pressure. However, with the inception of EMS companies in the 1970s, OEMs can now focus on product research and development.
Top 10 EMS Companies of the World
After a comprehensive overview of electronic contract manufacturing, let’s wrap up the article by checking out the top 10 EMS services of the current times and their renowned clients.
- Flextronics Manufacturers – Microsoft, Dale, Siemens and more
- Foxconn Manufacturers – Apple, Nokia, Sony, Huawei, etc
- Jabil Manufacturers – Philips, Yahama, Cisco, etc
- Pegatron Manufacturers – Apple
- Wiston Manufacturers – Apple, Microsoft and more
- Celestica Manufacturers – IBM, HP, and more
- Sanmina Manufacturers – Ericsson, Hitachi, etc
- New Kinpo Manufacturers – Casio, Citizen, etc
- BYD Manufacturers – Apple, Huawei, etc
- USI Manufacturers – Apple, IBM, etc
Wrapping It Up
So, there is a detailed summary of electronic contract manufacturing.
