5 key things to know about electronic contract manufacturing: OptimaTech
One of the most critical, and least understood, elements of the modern electronics supply chain is electronic contract manufacturing (ECM). This knowledge can be invaluable, particularly when you're a startup working on your first hardware product or an established company trying to scale production.
In this post, we'll explore the 5 key points to consider before entering into a relationship with an electronic contract manufacturer, including how it works, and what set's a successful partnership from just a bad one to a bad one for the customer.
Electronic Contract Manufacturing: What is it?
Outsourcing of design, assembly, and manufacturing of electronic components or devices to a third-party manufacturer is known as electronic contract manufacturing. Instead of purchasing their own factories and manufacturing equipment, companies, called original equipment manufacturers (OEMs), contract out production with other companies (contract manufacturers, or CMs).
Typical services that the CM offers are over the entire production cycle, such as printed circuit board (PCB) assembly, component sourcing, testing, and sometimes product design. The OEM is responsible for the product design and IP, and the CM is responsible for the infrastructure and know-how to manufacture the product.
It is widely adopted in many fields, such as consumer electronics, Medical Industry, Aerospace, Telecommunications, and automotive manufacturing among others.
1.Electronic Contract Manufacturers provide a variety of services
Not all electronic contract manufacturers are the same. Some have a specific niche in the production process, others provide end-to-end production solutions from prototype to full-scale production and logistics services.
Typical services that may be provided by an ECM are:
The design and layout of the PCB
Purchase and supply of components and parts
Surface mount technology (SMT) assembly:
Through-hole assembly
Ensure the aircraft is functional and that quality is assured
Product packaging and fulfilment
It is essential to compare the services offered by a CM with your needs when examining a CM. The needs for a startup that makes a product for the consumer IoT market will be very different from those for a company working on a complicated medical device. A manufacturer that can perform all of the necessary steps for your product can save you from expensive rework in the future.
2. Sourcing of components is not as straightforward as it appears
Component sourcing is one of the underrated factors of electronics contract manufacturing. Getting the parts to assemble your product is not an easy task in a world where there are a lot of disruptions in the supply chain, and those are the duties of ECMs.
Volatile supply chain, shortages in components and counterfeit parts are constant problems for electronics. A good CM should have established trusting relationships with authorised distributors and have implemented stringent verification measures to verify the authenticity of the components.
If you're considering a potential partner, find out what their sourcing process is. Are they dependent on one source or do they have more than one source? What strategies do they employ to deal with component obsolescence? A CM that can show they are moving forward in their supply chain is far more secure than a CM that scrambles when there is a shortage.
3. Quality Standards and Certifications are of Great Significance
In electronics manufacturing, quality is a must and the certifications a CM has should be a good indicator of their dedication to quality. Some standards may be required for particular industries.
Some of the key certifications to consider are:
A popular standard for acceptance of electronic assemblies is IPC-A-610
The ISO 9001 standard is widely recognized as a general quality management system standard
This standard is required for the manufacturing companies operating in the medical device industry, such as ISO 13485
AS9100: The standard for aerospace & defense electronics
IATF 16949: applicable to automotive electronics suppliers
In addition to certifications, inquire about a CM's quality control system. How do they carry out their incoming inspection? What tests are they run prior to shipment? Can they provide good traceability from production through? These are the types of questions that can give you a lot of insight into the manufacturer's interest in quality.
4. Communication and Transparency is the foundation of a successful Partnership
While the technical skills are important, the communication of a CM is also important. Many original equipment manufacturers (OEMs) who have had bad experiences with contract manufacturers cite the same problem – lack of communication. Even well-funded projects can go awry as a result of late updates, ambiguous timelines, and unclear cost breakdowns.
A good CM partner will provide:
Production updates that are regular and particularly important in the early production runs.
Clear and itemised pricing – no nasty surprises at invoice time!
Engineering support available to respond to design problems when they arise
Optimistic lead time estimates, which slip
When considering signing a contract, review the CM's communication system. How fast does it take them to answer questions? Do they have a specific point of contact that you are assigned to? Others use a lot of money to build tools around the customer that enable OEMs to view the production status in real time, which is a major benefit for businesses with fast deadlines.
6. Dealing With Scaling with Contract Manufacturing: Forward Planning is Key
The most significant benefit of incorporating a CM is that you can increase production without having to establish your own manufacturing capability. Which is not a given but needs to be carefully planned on both sides.
Production quantity has a significant impact on the unit manufacturing cost, lead time and component prices. If you are ready for 50,000 units, but your CM can only produce 500, it may not be the best choice for you. Speak the truth about your future growth plans before entering into a long-term relationship and inquire how the CM will meet your growing demands.
It's also important to be familiar with the CM's process for design changes in production. Products change and a good manufacturing partner should be able to handle engineering change orders (ECOs) without causing significant production changes. Flexibility in the manufacturing process and clarity and documentation of the process are key to a manufacturer's ability to deal with change.
Conclusion
The electronic contract manufacturing industry is big and diverse. While obtaining a price quote is a start, it is important to consider a CM's technical capabilities, quality systems, supply chain, communication culture, and capability to scale. A fine option to pick is Optima Technology.
If you can, visit facilities, but ask for references from current clients and look at sample production reports prior to selecting a particular facility. All of the work it takes to do thorough vetting has a reward throughout the life of the product. Building products is not the only aspect of a strong CM partnership. When done well, it is a competitive edge and provides you access to manufacturing knowledge, existing sourcing networks and production flexibility that may only be years and many millions of dollars in investment in your own company.
