all components of an electronic product were manufactured by the same company that produced the final product. This meant that the manufacturer had to purchase the raw materials, employ experts, carry inventory for nearly every each individual component that goes into the product.
In addition, this made it extremely difficult for small companies with small runs to enter the market and compete.
The market was ready for 'electronic contract manufacturers' that specialized in the design and manufacture of specific components that would then be sold to the OEM to be placed in the final product. Narrowing the focusing of a company to just one product or component, allowed them to offer economies of scale in the acquisition of raw materials, knowledge and natural talent in the design process, and equipment for production. This cuts costs for the original manufacturer and frees up their capital.
With this new structure, manufacturing companies were able to produce a better product, more efficiently, and easily scale up or down to customer demand. In the design development process, usually the most complex and difficult part of the process, a contract manufacturer is more likely to accumulate a team of experienced engineers that will focus their expertise on the specific component. In the production process, they are more likely to keep up with the latest, high tech level and apparatus-of-the-art technology.
Suppose there is a problem with one of the components. It may take a little while prior to now it is usually seen - and maybe even with it offers long gone toward the user in case the vendor is generating all factors in-property. In addition, the problem has to be solved using in-house resources and capital.
When working with a binding agreement producer, oftentimes part flaws are actually snagged prior to they reach the OEM - very often resulting from feelings with other designers. Often a third-party view of the problem is what's needed, and the resolution is solely on the shoulders of that third-party.
Since an ECM only purchases materials for the components they produce, they are able to purchase in bulk offering the OEM substantial cost savings. And since they are purchasing from their individual supplier in greater frequency, the manufacturer takes advantage of the strong relationships developed.
Finally, the contract company will thoroughly test the components they provide for quality. They will stay at the forefront of technology proposing improvements and upgrading their product so that it works better, lasts longer, and is more efficiently. This is a daunting task for the original manufacturer that has hundreds of components to keep up with.
An electronic contract manufacturer is an expert in the components they build and gives. This expertise offers extreme value.
Considerations when choosing an Electronic Contract Manufacturing partner
For many companies, especially small to mid-sized companies, having a contract manufacturing partner is not only a good idea, it's critical to the success of the business. Along with, costing arrangement and excellent quality conditions, there are several other items that need to be regarded as in assessing opportunities associates:
How much and why do they want your business - Choose a partner with compatible objectives.
Some companies may only be interested in the amount of money at stake. While it is important that the numbers match up for the benefit of both parties, find out what their main driving force is. Bigger commitment suppliers can be curious about scaled-down producing enterprises once they present the capability to develop knowledge of a market that could be a new comer to them. Or a product that has big growth forecasts.