XDF provide electronic manufacturing services for 15years, As a global leader in high-mix low-volume manufacturing, we see first-hand the evolution the EMS industry is experiencing and the critical role we play in the electronics value chain. In this new guide, you’ll learn about the driving factors of EMS, applications, challenges, and what to consider when outsourcing the manufacturing of your product, We serve industrial, Robotic, AI automotive Medical military electronic control area.
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Electronic manufacturing services and other electronic trade and service providers are very important for having the electronics we all use in our everyday lives. The ever-increasing reliance on electronics by diverse global sectors has enhanced the demand for electronic manufacturing services. It is a situation that gets more exacerbated with the evolution of the complexity of electronic devices. As a domestic or industrial electronics player, you have no option but to learn everything you can in electronic manufacturing.
Most companies nowadays have some form of an electronic component in their products. The technology is important to know and understand, but it doesn’t always come cheaply. Luckily, it’s possible to outsource the manufacturing process to a company specializing in electronic manufacturing services (EMS). But what are these services? Why would you want them? And how can they benefit your company? Read on for information about this niche market and some potential benefits. The article will detail all these necessary details about electronics manufacturing.
Electronic Manufacturing Services refers to a range of electronic product design, development, and manufacturing services offered by EMS companies. Depending on the type of EMS company, they either offer only product development and design services, or they offer both product design and manufacturing services.
As technology continues to evolve, so does the world of electronics, and with that in mind, EMS are experiencing rapid growth within the industry. An EMS company offers more than just a contract manufacturing service. They offer total solutions, including development, engineering, industrial design, and production management.
Various factors are attributed to the growth of the EMS industry. Some of these factors are:
The advent of electronic manufacturing can get attributed to the introduction of the digital computer, its integration, and its evolution into mainstream electronics from the ’90s. However, it has increased operational capacity, availability, economy, and diversity in recent years. What’s more? The complexity involving electronic assembly and miniaturization has brought the significance of EMS to the fore.
Therefore, the prerogative regarding the provision of electronic manufacturing services lies primarily on an electronic manufacturing company. Such services often encompass a range that spans electronic components’ design, manufacturing, assembly, and testing. However, it becomes electronic contract manufacturing if it involves manufacturing the original electronic manufacturers (OEM).
Currently, the EMS industry proves dynamic, with forecasts placing its growth at 7.5% annually from 2018 to 2024. Such growth implies increased opportunities for electronic manufacturers to capitalize on. Consequently, an array of electronic manufacturing service providers exist, which can represent a challenge when you want to pick one for your electronic manufacturing needs.
All notwithstanding, however, if you need electronic contract manufacturing services, then engaging a suitable contract manufacturer becomes crucial. However, EMS providers such as XDF PCB and Assembly can offer companies simple documents like customer design files based on their requirements. It comes before the electronic development, assembly, component assembly, and product testing. Alternatively, an ECM will provide complex solutions encompassing aspects like manufacturing components, design services, and the provision of assembled prototypes.
Since the global situation features a high demand for cutting-edge electronic equipment and devices across diverse industrial niches, authorities have had to reign in and spur the sector’s development through favorable EMS policies and regulations. For instance, India has developed and adopted schemes like PIL and SPECs to enhance electronics and component manufacturing in the country.
As already stipulated, diverse EMS companies exist across the world. Each electronic manufacturing service company offers services that may vary from competitors. However, every EMS Company should offer the following electronic manufacturing services.
The assembling of PCBs is one key electronic service that almost every EMS Company offers. It can entail surface mount or through-hole tech methods of soldering the PCB components on the circuit board. Additionally, the components range from integrated circuits, transistors to resistors. But since most of these components are tiny, having a machine to pick and place besides aligning them becomes key, something you realize with EMS companies.
Any top EMS provider will have cable assembly as one of their electronic service areas. It entails the production, engineering, and testing of cable assemblies, mechanical subassemblies, and harnesses. It can also encompass panel assembly and wiring.
An EMS provider should offer electromechanical assembly services, mostly plastic, steel, or aluminum box builds. Additional services related to electromechanical assembly can encompass encapsulation, functional testing, and 3-D modeling. Others include configuration management, heat shrink deployment, and custom packaging for shipping.
An EMS company often proves happy to outsource expert electronic manufacturing services like designing. Such professional design services feature DFX analysis, validation, environmental tests, design, documentation, etc. In most instances, such services involve collaboration between material managers, engineers, etc. The team design by carrying out the following.
It is a significant aspect of the electronic manufacturing process that most top EMS providers offer. Services can include visual modeling, PoC (proof of concept), functional prototypes, or working prototypes. It becomes vital in electronics manufacturing as it prevents embarrassment when the electronic product heads for launch. Some of the vital things prototyping ensures to include the following.
The process of testing your circuit boards often proves necessary before assembly, something that most electronic manufacturing service providers offer. It guarantees a fully assembled and functional board, which then limits any supply chain challenges. Some of the electronic PCB testings encompass the following.
A top EMS provider will always offer services post the production and assembly stages. It can include repairing and upgrading, calibration, and refurbishing electronics. Additionally, after-market services can also encompass troubleshooting, inspection, painting, and cleaning.
Electronic Manufacturing Board
Alternatively inferred as make-to-order manufacturing, HMLV implies the production of small quantities of various electronic products. As part of the electronic manufacturing services, it represents a method that manufactures highly complex and unique products. Such electronic products often require specific quality specs.
High-mix low-volume (HMVL) is a modern manufacturing practice that has increasingly replaced the once-popular low-mix high-volume electronic manufacturing. While the LMHV focused on producing high volumes of similar electronic products, the current market emphasizes a need for customized electronics, which becomes a reality with HMVL.
For instance, products like electronic appliances or vehicles underwent the LMHV manufacturing process before as the demand solely focused on quantities. However, under current circumstances, consumers want tailor-made or customized products that suit their individual preferences. It, therefore, becomes necessary to have the high-mix, low-volume electronic manufacturing process to cater to such market demands.
One significant feature of high-mix, low-volume manufacturing entails a constant demand for changes to the job, machines, and materials. It results from the highly customized nature of electronic product manufacturing. However, the limited nature of the production line and the enormous product variety involved ensures the frequent change in the scheduling of materials and jobs, which can cause inconsistency and errors in products.
To alleviate this, it helps to consider the below ways of enhancing the HMLV manufacturing processes.
It becomes prudent to optimize low-volume manufacturing operations by smoothening the product flow. Remember, it becomes a possibility regardless of the numerous product variations.
It relies heavily on the optimization of the product flow. Here, the plan has to align on the flow to better predict outcomes besides eliminating failures during production.
It becomes necessary to create an open working environment for employees. Such an environment ensures that each employee, regardless of the department, can check on the production status besides alerting the operators accordingly.
It becomes crucial to ensure the company’s operational flexibility from machine inventory to staff scheduling to handle the frequent changes that HMLV features.
At times, the distinction between original equipment manufacturing (OEM) and electronic manufacturing service is blurry. However, to get to grips with the differences, consider the aspects detailed below.
OEM implies manufacturing electronic products or components that get used in other companies’ assembly and manufacturing processes. In other words, an original equipment manufacturer possesses the market products or components. On the other hand, EMS infers to the designing, manufacturing, testing, and distributing electronic assemblies or products for OEMs. Here, the products are for OEMs. It is also vital to note that EMS provides value-added services.
Most electronic equipment manufacturers sell high-volume electronic products. However, a few engage in the sale of low-medium electronic volumes. Conversely, electronic manufacturing service providers specialize in either high-mix, low-volume (HMLV) or low-mix, high-volume (LMHV) production environments. The technological density also varies in line with the production environment.
Original equipment manufacturers have rights over their electronic products while the situation proves different with the electronic manufacturing service providers. EMS providers have no rights.
OEMs tend to concentrate on design innovation and product development, while the electronic manufacturing services (EMS) focus on supply chain management, repair, and design for support. EMS providers manufacture top and world-class quality electronic products.
The process of picking an ideal and top-quality electronic manufacturing services provider can prove arduous. It primarily arises from a vast number of EMS providers available and the similarities such companies have regarding important attributes of electronic manufacturing. So it becomes helpful to ask some fundamental questions before picking an ideal world-class EMS provider. Some of these questions should entail the following.
The relationship between you and the EMS provider proves key in ensuring a successful electronics manufacturing process. Therefore, it becomes prudent to consider the potential EMS provider’s customer care practices and policy before deciding on who to pick. Crucial considerations should revolve around the working relationship you want. For instance, would you prefer communicating with a team or a single contact point? Additionally, it becomes vital to establish your communication expectations by asking questions regarding their customer care services.
It becomes crucial to get an EMS provider with the potential for a lasting working relationship. Therefore, looking at the financial strength of the prospective EMS Company proves vital before making your decision.
The targeted market and the product requirements often influence the type of EMS partner to settle for. Because of this, it becomes prudent to identify the types of certifications an EMS provider has to ensure that they meet the industry regulations.
For instance, it can involve compliance with REACH or RoHS regulations or standards. While it is true that industry regulations at times complicate issues, finding an ideal EMS partner will ensure your electronic product meets the relevant quality standards. A case in point is the ISO 9001 certification for all IPC class two and three electronics. Further, a 13485 or AS9100D certification suffices for highly reliable electronic products.
Tech in general advances quickly, and it becomes crucial to get an EMS partner who remains relevant to such advances like IoT and AI. No one desires their electronic products getting manufactured by outdated technology and machines. It, therefore, becomes crucial to enquire and ascertain that the prospective EMS partner has all the relevant and up-to-date equipment and technologies. Additionally, checking whether the company proves adaptable to changing industry trends also becomes crucial for any long-term working relationship. Industry 4.0 resourcefulness is transforming aspects of electronics manufacturing with data reporting and connected machines featuring prominently.
Contracting an electronic manufacturing services partner never implies that anything cannot go wrong. Sometimes it can, and it becomes crucial for the EMS partner to have processes, plans, and policies to remedy the situation. It can include policy aspects like return material authorization. Additionally, such policies need to meet the expectations of your company.
Safety of sensitive business information, including product designs, becomes crucial when engaging a prospective EMS provider. How the EMS Company protects this information becomes vital in considering them long-term for your electronic manufacturing. An EMS provider that will go to all lengths in safeguarding your IP or intellectual property proves ideal for lasting EMS provision. You can always determine this through policy arrangements like signing NDAs (non-disclosure agreements) besides demonstrating capacity when it comes to cybersecurity safeguards to prevent your information and concepts from falling into the hands of unintended and wrong people.
All top electronic manufacturing services providers need to offer you references to enable you to explore their capacity. It happens through checking their prior work and customer relationships. For instance, does the company’s past work align with your company’s expectations (present and future)?
One key aspect you should consider when approaching a potential EMS company features its capacity and receptivity to changes in the electronic project. Therefore, it is vital to ask their approach to handle changes and how flexible they prove. Besides all these, it is also prudent to determine how such changes and adjustments can influence their production timelines, especially when material lead times get factored in. Can such changes impact their pricing significantly as well?
The experience of developing a similar electronic product to the one you want to be manufactured can prove useful, as much as it is not necessary for your potential EMS provider. Such experience builds trust in their capacity to manufacture your specific product designs. It becomes crucial to get an EMS partner with broad capabilities that may prove beneficial to your project. For example, consider whether the company possesses an in-house printed circuit board design team, which can answer any arising questions from the fabrication house. Another vital consideration is whether the company has the technical know-how of building cables or box builds. Such expertise comes in handy in troubleshooting issues besides suggesting product improvements.
It is important to inquire from your EMS provider about their testing capabilities, especially those that prove in-house besides what is required to go to the factory. Further, a top EMS provider has to provide in-circuit testing. It should have the capacity to do functional tests on your electronic product besides helping you create a test for the same whenever necessary.
Electronic manufacturing services have become pivotal for diverse sectors. However, to dispel any uncertainties, consider the following EMS application areas.
The electronic manufacturing industry, like many other sectors, faces a myriad of challenges. Because of this, EMS companies need to identify and address these challenges to ensure they remain in business. Challenges faced include the following.
The electronic manufacturing scene will keep evolving as it has from the past years. Some of the vital trends that will shape electronic manufacturing include the following.
Electronic manufacturing services are important in the development and advancement of electronics. Additionally, the importance of electronics makes it necessary to understand every vital aspect of EMS, something that hopefully this article covers.
Electronic Manufacturing Services (EMS) refers to various services that may include engineering design, PCB fabrication, subassembly manufacturing, turnkey or box building, functional testing, distribution, and order fulfillment on behalf of OEM (Original Electronic Manufacturers). Electronics manufacturing companies may be utilized as either a supplement or as a replacement of company-owned manufacturing operations.
With XDF as your electronics assembly partner, you will benefit from our experience as an electronics manufacturing company for over ten years. We are proud to attest that our policy as an electronic contract manufacturing company is to provide the finest instrument solutions and related services that will meet or exceed your expectations of quality and workmanship – on time and within budget.
EMS
Electronic manufacturing services (EMS) refer to manufacturers that provide a series of services such as manufacturing, procurement, partial design, and logistics for electronic product brand owners.
In other words, ODM has more new elements than OEM. In addition to doing the things that ODM and OEM can do, the current EMS is more logistical and even assists in customer sales. This is the general EMS.
ODM
OEM means “original design manufacturer,” which refers to a company designing and manufacturing a product according to another company’s specifications. After a manufacturer designs a product, another manufacturer might use it or slightly modified some designs (such as button positions) to manufacture. The biggest advantage of this is that the other manufacturers reduce their own development time.
A computer company, such as HP, wants to make specific specifications for a notebook computer to market. They will specify the appearance requirements, like the size, screen specification, input/output ports, the front tilt of the keyboard, the shape and color of the computer bag, and the speakers’ location. They also usually specify the main internal details of the product, such as the technical specifications of the CPU or video controller. However, they do not design drawings, specify the type of switching transistor used in the power supply, or select the frequency of the backlight converter. These are the jobs of ODM.
ODM designs and produces notebook computers according to the specifications proposed by computer companies. Sometimes, ODM can also work with existing samples. ODM tends to pay more attention to cooperation. In the case of OEM, the buyer does not participate in the specific specifications of the product.
The main difference between OEM and ODM is that OEM is the product design plan proposed by the client. No matter who completes the overall design, the entrusted party shall not provide a third party with a product that adopts the design. The ODM is completed by the manufacturer from design to production, and the OEM will buy it after the product is complete. Whether the manufacturer can produce the same product for a third party depends if the OEM buys out the design layout. OEM products are tailor-made for a specific brand. After production, only the brand name can be used, and the manufacturer’s name must not be used for production. In the case of ODM, it depends on whether the brand company has bought out the product’s copyright. If not, the manufacturer has the right to organize production independently, as long as there is no corporate design identification.
In brief, the difference between OEM and ODM lies in who owns the product’s intellectual property rights. If the client has the product’s intellectual property rights, then it is OEM, which is commonly known as “foundry.” If it is the manufacturer’s overall design, it is ODM, commonly known as “OEM.”
In industrial society, OEM and ODM are common. Because of manufacturing cost, transportation convenience, and saving development time, well-known brand companies are generally willing to find other OEM or ODM manufacturers. When looking for OEM or ODM, well-known brand companies have to bear a lot of responsibilities. After all, the product is labeled by its brand. If the product’s quality is not acceptable, some customers will complain or even take legal actions. Therefore, brand companies will carry out strict quality control during the commissioning process. But after the OEM, the quality cannot be guaranteed.
When merchants state that the manufacturer of a certain product is an OEM or ODM, do not expect a similar quality as the original brand. The only thing you can compare is that the manufacturer has a certain production capacity.
OEM -ORIGIN EQUIPMENT MANUFACTURING
ODM -ORIGIN DESIGN MANUFACTURING
OBM -ORIGIN BRAND MANUFACTURING
The basic meaning of OEM (Original Equipment Manufacturer) is product development and manufacturing according to the original company (brand company) entrusted contract, using the original company’s trademark, cooperative operation, and production method. Some well-known brand-name commodity manufacturers often turn to other manufacturers for help because their factories cannot meet mass production requirements or need specific parts. These vendors who offer this support are called OEMs (Original Equipment Manufacturers). For example, CPU fans are not produced by Intel or AMD. They usually find professional motor manufacturers like Sanyo Corporation for fan OEM production.
ODM (Original Design Manufacturer) is the original developer making major improvements and modifications to the customer’s products at their request. It involves major changes in the mechanical structure, circuit structure, and software function. It could even be redesign according to customer needs. This process of manufacturing products belongs to the category of ODM. But like OEM, the products are labeled with the customer’s company’s trademark and sold by the customer company. After a particular manufacturer (ODM) designs a product, it may be favored by manufacturers of other brands, requiring the latter’s brand name for production, or slightly modifying some designs (such as Key position) to manufacture.
The biggest advantage of this is that other manufacturers reduce their own development time. Some people also habitually call these products OEM, but in fact they should be called ODM (Original Design Manufacturer). For example, some Japanese brand notebook computers are actually manufactured by Taiwanese manufacturers. Afterwards, Taiwanese notebook computer manufacturers only need to modify certain design details or accessories to mass-produce under their own brand names. The reason is that they do ODM rather than OEM for these Japanese brands. Of course, we can say that they are all produced from the same production line.
OBM (Original Brand Manufacturer)
Party A is interested in Party B’s products and lets Party B produce them with Party A’s trademark. For Party A, this is called OEM. Party A brings its own technology and design and allows Party B to process it, called ODM. For Party B, it is only responsible for producing and processing another company’s products and then affixing other people’s trademarks. This is called OBM. The products produced by Party B do not have their own brand, and they specifically accept other companies’ OEM or ODM requirements for the production.
OEM, ODM, OBM, different profit models
Viewpoints:
1. Enterprises have different operating methods and profit models at different stages. One operating method cannot run through all stages of enterprise development. From OEM (Original Equipment Manufacturer) to ODM (Original Design Manufacturer) to OBM (Original Brand Manufacturer), theyare needed in enterprise development.From a development point of view, when the company’s OEM business method and low-cost strategy can not be carried out, then you think of ODM, and your strategy will become more sound.
2. There are different stages of enterprise development, including entrepreneurship, development, maturity, decline, etc. Enterprisespartnerwith large companies to create OEM production, making the market relatively stable and obtaining excellent exercise and development opportunities. But OEM has its limits. When OEM reaches a certain size, its manufacturing level is relatively mature, and the technical level has reached a certain extent. As a result, the entrepreneurial enterprise has entered a relatively stable stage. If the business method is not reviewed or modified, it is difficult for companies to achieve explosive growth and be innovative. Mature companies must actively implement the strategy of technological innovation and brand success. Therefore, going from OEM to ODM is necessary and a positive choice to meet challenges and hold on to the competitive edge.
3. OEM is not going anywhere. It is still an excellentsurvival and development model for some small enterprises. OEM is only not suitable for more mature companies, determined by the company’s development stage.Many OEM companies in developing countries have to gradually change this business model at a particular stage, including Taiwan. When OEMs mature, they must actively transition to ODM and OBM. It is the inevitable division of labor in the world economy.
4. The links with large profit margins in the value chain are mainly concentrated in the technology market. Therefore, ODM and OBM are the strategies and business methods that every company hopesfor. However, the implementation of ODM and OBM requires a lot of investment, and the risk is high. Generally, small enterprises do not have the qualifications and conditions to implement ODM and OBM. OEM is a better way to start a startup. Due to their lack of funds and weak anti-risk capabilities, those small businessescannot withstand market shocks. Actively looking for OEM markets to allow the companies to survive and develop has become the right choice in their entrepreneurial stage.
5.In essence, OEM, ODM, and OBM are different business methods and profit models. From OEM to ODM to OBM, it is an inevitable division of labor between large and small companies, companies at different stages of development, andrisk appetiteafter weighing profit and risk. Mature enterprises have robust technology and market, and some or all manufacturing is outsourced. This is not only the result of maximizing profit but also the division of labor.
6. From OEM to ODM to OBM, it is a development model of an enterprise. It is a company with different operating methods and profit models at different stages of development. It is also an inevitable choice for companies to pursue sustainable development. This is to meet the challenge, create value and obtain profit actively.
7. In the process of OEM to ODM to OBM, enterprises must gradually transition, create conditions, and cross-over develop, backed by mature business, step by step, positive and stable, be innovative,develop higher-level business methods and profit models.
8. It is necessary to realize that the operation mode and profit model of ODM and OBM have very high requirements for human resource management, which posea challenge to human resource development and management in the economic society. There must be a qualitative leap in the enterprise’s talent managementoperation, knowledge management mechanism, and corporate culture construction. Without the talent management system’s support, ODM and OBM cannot operate to their full potential even if they are financially equipped.
9. Through the transition and transformation from OEM to ODM to OBM, at the maturity stage of ODM and OBM, you will find that your competitive territory and profit model have been re-divided and restructured. This is a spectacular sight for successful companies.https://www.pcba360.com/contact/
The cost accounting process of the electronics industry is complicated. The reason as following:
First is the materials used are complicated. There are many types of materials used in electronic products, ranging from 10 to 20 types, and potentially be as many as thousands or more.
The second is that electronic products are a typical multi-step production and processing flow. A product often has to go through multiple processes, and there are many semi-finished products, which means that the cost accounting of semi-finished products is relatively high.
Third, electronic product manufacturers often involve entrusting outsourcing companies to process parts and components. Some companies have almost all parts processed by outsourcing companies, and their own companies only carry out the main assemblies.
Fourth, there are many types of PCBA products and complex process flow. When the management level of the enterprise cannot keep up, it will make the electronic manufacturing cost calculation inaccurate. For example, the material logistics are not well organized. The components’ costs are not well defined, and it will likely exceed the cost estimate and even deviate from the actual solution!
To accurately calculate the electronic manufacturing cost of a company’s products, it is necessary to have a clear understanding of the company’s material flow. This is the basis for cost accounting, especially for products that require multi-step production and multi-process flow. If you don’t understand the flow of materials, you don’t know the order of cost carry-forward, you cannot perform the correct cost accounting and carry-forward.
In my opinion, to prepare correctly and efficiently complete the cost accounting work, we must first have a clear idea of the entire material flow, what products each material can produce and what materials are used in the product. Then it is necessary to understand some details. If an enterprise has higher management needs, this kind of detail is even more difficult. Every small thing is the cornerstone of the cost, and you don’t pay attention to them, the overall cost will encounter trouble in the calculation, such as stagnating work!
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