December 22, 2006
Outsourcing & OEM Direct Costs
At the TFI's Quarterly Forum recently there was one point that seemed to come up pretty often. That of the knee-jerk reactions of OEMs and their manufacturing partners to the challenges of global electronics manufacturing. The fact that this mode of functioning doesn’t work is pretty obvious. Most of these people seem frustrated with the tactical measures required to meet environmental regulations such as China RoHS.
They are also finding it increasingly difficult to find profitable and socially responsible ways to manufacture the low-volume, high-mix products that represent the next wave of electronics outsourcing for the global arena. One attendee from an OEM member company succinctly expressed this frustration: "I am so tired of the fire drills for WEEE, RoHS, and now China RoHS."
What they don’t realize is that there IS a better way. It’s actually now a time to reconsider their management strategies. In the first wave of outsourcing, OEMs' transferred their manufacturing costs from their bottom line to that of the EMS. Now, they must focus on their internal management costs. They must find ways to increase the efficiencies on the supplier interface and the first step toward this is knowledge.
The best way to gather knowledge is to check out TFI's 8th study on environmental requirements, which focused on OEMs' performance and paths to profitable compliance. The research on electronics manufacturing in India uncovered several trends: Based on a Web survey of over 400 electronics industry managers, TFI projects that the number of electronics companies selling product in India will rise by 24% in the next two years.
Moreover, the number of companies manufacturing in India is expected to rise by 63% during the same period. India’s major attraction to most OEMs and EMS providers is the huge local market, which they can serve. This differs from the typical manufacturing strategy in China. The question for OEMs and EMS providers is the size of India's consumer electronics market.
--
Did you enjoy this post?
Comments
The comments to this entry are closed.
« Is Your Doctor Googling Your Symptoms? | Main | Change Is The Name of the Game »
Recent Comments