Manufacturing Outsourcing: Seven Common Pitfalls to Avoid Prepared by Symphony Consulting and Arena Solutions.

Since the late 1990s, outsourcing has become a way of life for electronics manufacturers. Most original equipment manufacturers (OEMs) no longer consider manufacturing to be a core competency. Even in cases where some of this capability is retained in-house, there is an ongoing eff ort to evaluate more activities that can be offl oaded to a contract manufacturer (CM).

09/13/2007


Since the late 1990s, outsourcing has become a way of life for electronics manufacturers. Most original equipment manufacturers (OEMs) no longer consider manufacturing to be a core competency. Even in cases where some of this capability is retained in-house, there is an ongoing eff ort to evaluate more activities that can be offl oaded to a contract manufacturer (CM). These CMs, whose role in the electronics industry was previously limited to assembling printed circuit boards, have transformed themselves into large-scale manufacturing powerhouses. Modern CMs provide their customers with a one-stop shop solution, providing excellence not only in manufacturing, but also in materials management, design and test services, order fulfi llment, and logistics.

Despite the signifi cant benefi ts that come with outsourcing, there are also risks and challenges for OEMs to consider. Outsourcing, by defi nition, leads to loss of control. Activities that would have traditionally been conducted within an OEM’s four walls by the OEM’s employees, and that would be visible on the OEM’s internal information systems, are now placed in the hands of a manufacturing partner and managed through documented business processes, contractual agreements, and software tools. This new supply chain approach requires new thinking; adapting previous approaches without building new processes and infrastructure will lead to loss of control, and the benefi ts of outsourcing will be off set by newly introduced costs and risks.

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