Electronics Manufacturing Services – Guide to Selecting an EMS
What Is Electronics Manufacturing Services?
Electronics Manufacturing Services is a term used by companies that do electronic assembly, design, test, manufacture, and (some of them) provide return/repair services for electronic components and assemblies for original equipment manufacturers (OEMs).
The more generic term contract manufacturing (CM) is sometimes used for EMS.
Commonly produced items in the EMS industry are mobile devices, circuit boards, and TVs.
If you are in the manufacturing industry, especially if you’re an OEM ( A company that has designed a product for sale), you have most likely come across the term electronics manufacturing services.
You should know that EMS companies are vital partners when you want to enter a market and might be the difference between launching your product on time and beat the competition or failure.
Choosing the correct EMS provider, the one that fits your conditions, will make your entire production process pleasurable, from the early faces of designing to the aftermarket services.
This guide covers all the essential information and the questions you might have regarding EMS, market trends, how to protect your intellectual property, the pros and cons of EMS, and what you should consider when choosing an electronics manufacturing services provider.
EMS Industry and Market Overview
The electronics manufacturing industry is considered to be leading in technology, both in innovation and implementation to the actual products.
Electronic manufacturing is stacked with opportunities and challenges.
Knowing how to compensate for the challenges can be essential for your company’s success.
The growing demand for electronics is an excellent opportunity for manufacturers in the industry.
The market is expected to be around USD 725$ billion by 2025 at a CAGR (Compound Annual Growth Rate of 7,5 %. According to market research.
Let’s have a look at some of the current trends.
Trends driving the market of electronic manufacturing services
- There is currently a rise in demand for automotive electronics such as automatic driving due to people wanting better safety systems.
- Demand for consumer electronics is expected to have a noticeable growth reaching USD 989.37 billion by 2027 due to user-friendly electronics being desired
- The proliferation of mobile devices. In 2024 the total number of phones is expected to be almost 18 billion, which is a rise of 4 billion compared to 2020. Our daily lives are very dependent on phones, creating a more significant demand for fast internet speed
- More focus on green manufacturing. Electronic devices are increasing rapidly, and the general population is becoming warier on how they as individuals can impact the world positively. Demands will be higher for companies to follow through with a green approach. Implementing green methods can be costly for companies, but it might be profitable in the long run due to customers acknowledging their efforts and boosting their reputation
- Manufacturers use Virtual Reality to improve efficiency. This is mostly known as digital design, simulation, and integration. VR technology makes it possible to examine the product at many different scales to avoid defects
- OEMs are moving product design and development to EMS companies
- Robotics and automation are increasing in popularity. Companies use sensors in machines to receive data which boosts efficiency and reduces production cost
What is the difference between an EMS and OEM?
The manufacturing industry consists of various terms being used to describe their services. EMS, OEM, CEM, ECM, and ODM are all acronyms for contract electronics solutions, but they provide various services.
You probably have or will come across these terms if you are in the industry of electronics manufacturing.
The differences might be obvious to people with inside knowledge about electronics manufacturing but confusing for new people. Knowing the differences ensures that your company gets the correct services.
Electronic Manufacturing Services (EMS) describes companies that offer services to design, test, build products for OEMs (Apple is an OEM) and offer them aftermarket service.
Occasionally the term electronic contract manufacturing (ECM) is also used.
An original equipment manufacturer or an OEM is the brand owner, and you will generally see their logo on the products. Examples would be LG, Huawei, Apple, Samsung, etc.
The mentioned companies all design their products independently and might be outsourcing their production elsewhere to EMS companies and ODM’s. OEM’s own the rights to the product, whereas EMS companies do not.
Taiwan is known for ODM companies like Pegatron and Wistron, which also provide electronics manufacturing services.
A typical ODM specializes in a category of products, such as tablets, for which it offers its own designs, any are ready to manufacture it for any brand interested to put its name on.
Many electronic products are produced in China and Taiwan due to the vast supply chain of electronic components and expertise.
What does an Electronic Manufacturing Services company do?
An electronic manufacturing service company is a company that provides different kinds of services for contractors.
First of all, they bring high expertise in your specific field, which adds significant value to the entire process of your production since you have a committed team of specialists in manufacturing.
They have the components or the molds to make your production and have large-scale necessities to create the product that your company wants.
The companies are often located in a different country than your company and are working with many other customers.
Electronic manufacturing services offered by companies, in general, are different from supplier to supplier but typically provide the following services.
- Printed Circuit Board Assembly – The assembly of a printed circuit board uses either through-hole-technology (THT) or surface-mount-technology (SMT) to solder different parts. THT puts the components into holes on a PCB, whereas SMT assures the parts by solder on the board’s top.
- Cable Assembly – Custom-created cables are valuable for OEMs in many different sectors, besides cable assembly services of products like harnesses and control panels/boxes are also connected to the service. To get the best out of this service, the EMS provider should take care of engineering, testing, and manufacturing the product.
- Electromechanical Assembly – The process of combining electrical and mechanical procedures needed to make mechanical equipment such as pacemakers, cell phones, and thermostats work. The assemblers follow blueprints to build the part of a product that controls the electrical current flow. These services are commonly associated with box-builds, but a company may offer more services.
- Testing – You definitely don’t want a circuit board that isn’t fully working because of a lack of testing. It will cost you money to sort out the problems, and your reputation will be at stake. There are different ways to test your PCBs depending on the provider. Some of the methods are
- In-circuit testing (ICT)
- Automated optical inspection (AOT)
- Prototyping – You don’t want to lose money when you are about to launch, and this is where prototyping is essential. Numerous prototyping solutions are depending on the company. Some of the services are,
- Prototyping (PCBA)
- Design for Procurement (cost)
- 3D Printing
- Soft tooling
- After-Sales services – Typically in repair, upgrades, and refurbishing. Some companies will even help you sort out recurring problems in products by redesigning them to avoid the same repair over and over, which will save you money in the long run.
Why should you Outsource your manufacturing?
It is widespread to outsource some or the entire manufacturing process in these times. If you are an OEM, you can save a lot of time and money by outsourcing instead of doing everything independently. To succeed, you should look for the best companies possible for outsourcing.
- The apparent reason and perhaps the most important is for economic reasons. Using an EMS company will lower your cost and save you capital investments and focus your resources solely on core competencies.
- Improving quality. EMS companies have loads of manufacturing experience and pride in upholding high product quality standards which means
- A delay in your delivery will not be suitable for your business’s reputation. With an EMS provider, you can expect to deliver on time to keep your customers happy.
- Your products will be on the market faster, giving you a competitive edge.
- EMS providers are more agile
- Access to a much greater supply chain.
What are the top challenges faced by EMS?
While there are many ups with electronic manufacturing services, it doesn’t come without a downside. The world is in constant evolution, and the electronics industry might experience the most changes. Companies have to stay competitive and are commonly faced with these challenges.
- Global competition
It is forcing the profit down for companies who are forced to be more cost-efficient to be able to compete in an internationally competitive market.
- Managing Service And Warranty
Good quality control measures ensure that the products you produce are of high quality. If something goes wrong, offering a service under warranty instead of merely replacing products will save both parts time and money.
Changes in the environment mean that businesses have to look for a more eco-friendly approach in their solutions. Laws and regulations also force companies to adjust to CSR policies and a greener approach to their product lifecycle to prevent electronic waste. Companies’ must consider Manufacturing processes, chemicals used, consumer energy, and their disposal of products.
- Short Product Life Cycles
Due to consumer preferences always changing. Manufacturers must communicate well between the different departments (sales, marketing, manufacturing, and engineering) to ensure the product is launched on time and in the right volume. In addition, the change in consumer preference can also create uncertainty in demand.
This one is hopefully only a temporary issue, but necessary to mention. The global pandemic has affected everything globally, including EMS. The trade war between the USA and China resulted in electronic components becoming more expensive and harder to find. If there is a delay in the Chinese production, it delays the rest of the downstream process. With the vaccines slowly being rolled out, this issue should be temporary, and it has encouraged companies to adapt to future pandemics, which could be a positive sign.
What should you look for in an Electronic Manufacturing Service company?
Finding the right company for you can be a tedious process. To make the process easier, we have listed various considerations you need to have when selecting your company.
It may seem obvious, but sometimes it can slip under the radar. You might find a service with excellent reviews but only has been around for a year. It is easy to assume they are capable companies based solely upon that.
There could be no harm, or you could be the first company to experience the adverse effects of their lack of experience. A simple mistake on their side could mean bad news for your company, which could be due to their lack of knowledge.
Make sure to set up meetings with candidates and measure them by their electronics manufacturing experience and how well their former projects align with what you want. Don’t be afraid to ask critical questions, and do your research about the company to determine its capabilities.
Some EMS companies are very design-proficient, and others may not be, or they could be highly design-proficient in certain areas, but those areas may not be what you need for your product.
Do your research because you may need help making outlines or fixing your most recent prototype, as it is not always straightforward and easy.
Knowing that they can help you means that you have less to worry about going wrong.
Having an electronics manufacturing service company with worldwide experience is vital since they understand a market’s possibilities outside of local markets which means access to more customers resulting in higher revenue and profit.
Having a physical presence at a local market also makes it easier to communicate with customers because of fewer language and cultural barriers. Additionally, the companies will be more agile, and it will be easier to find solutions that suit your needs.
How Technologically Advanced They Are
Technology is developing rapidly.
This can be seen in all kinds of technology. Say you buy a phone or perhaps a console, within a short period there will be a new product that will leave the former outdated.
For some products, this might be acceptable, as it might still be able to do the job needed. However, with electronics manufacturing services, they must be up to date with mechanics and updating the quality of what they are producing to be in line with everything else.
Suppose you are trying to sell something and your electronics manufacturing services use older technology than your competitors. In that case, your electronics won’t be a match, which will result in your competitors having the edge over you.
Don’t be afraid to ask the company enacting your service how technologically advanced they are to avoid any problems. Furthermore, check out their facilities if still in doubt.
The industry naturally has laws and regulations that are important to adhere to; at least, it puts your entire business under question.
There are a few industries in the mix of many good ones that don’t do this.
Making sure the electronics manufacturing services industry you will engage with does all of this means that you are one step closer to not worrying about any serious problems that could occur for you and your business.
Say, for example, if you’re working with a service and maybe a few months into manufacturing, they come under scrutiny for violating workers’ rights.
You may have a difficult time as they would have your products and your company’s name aligned with theirs even if your company is morally correct and treats your workers according to the protocol.
Focused on Quality Assurance and Quality Control
Having both top quality assurance and quality control means that the two balance each other out, giving you a good turnover as well as a durable product procedure.
Quality assurance helps to counter defects and problems in the product as it continues to be made and manufactured.
Quality control is testing the products and ensuring that the quality has maintained its standard or improved before manufacturing on a large scale.
Having good quality assurance but not reasonable quality control can mean that your product is assured but not tested.
If your product has reasonable quality control but no assurance, it is tested, but the quality is not maintained over manufacturing and selling.
A Supply Chain Management System
A good supply chain ensures that your electronic manufacturing service company knows precisely how and where to find your products’ components.
If you don’t have a well-researched supply chain management system in place, an abundance of time can be spent having the electronics manufacturing services company tracking your components down.
It would be like baking a cake without checking if you have the necessary ingredients. It would take you a long time if you continually had to go to the supermarket whenever a step included a new component or anger your neighbors if you decided to use theirs instead of the supermarket.
Naturally, having everything from the get down on your bench ready to be added, or having a partner or friend shortly dropping by with the ingredients, would make your baking quicker.
Incorporates Product Testing
Product testing makes the experiences a lot easier for you since being responsible for your testing would mean many more steps would be involved.
Having them responsible for testing makes the whole experience much more streamlined.
If you come upon a company that doesn’t, there will be many that do.
A guide to selecting the right Electronic Manufacturing Service
Now that you know what to look for in an electronic manufacturing service, it is vital to remember that your company is unique.
Every company has unique demands from their electronics manufacturing services provider, based on your context. Every EMS firm is different, which means it is detrimental to go through thought processes and do a lot of research to find your best fit.
Here are some examples of what you should look for
Is the company a good match for you?
When looking for a potential company to cooperate with, an easy way to eliminate possible candidates is by comparing your company’s sizes.
A small company compared to yours is most likely unable to meet your desired volume. Looking at how intricate their products are will also give you indications of whether they have the capabilities to become your partner.
Communication is essential for knowing the What’s Who’s and How. You should not be afraid to ask critical questions regarding their production, engineering, supply chain, etc. talking to people in their organization will indicate what to expect and how they perceive customers.
To what extent do you want knowledge of your product’s every step?
Some services like to reach an agreement and then let you know when they’ve completed their side of things.
Other services like to have more of a relationship with their clients and let you have a more significant say in areas that the services are responsible for.
If you’re the kind of person that wants to be there every step of the way, make sure the service is the type that allows that.
What finances can you commit to the procedure?
Various services have different costs. If your company is a startup and wants to keep a backup of income, it might be an idea to choose a cheaper service compared to an expensive one if any unforeseen expenses come up.
However, if you can’t compromise with quality, choosing the budget option might not be in your best interests.
The services’ actual cost is not something that will be clarified at the first meeting due to many details that must be investigated.
However, cooperating with a capable EMS company will mean you can save money from your supply chain since you have to spend less of your resource managing them.
Do You Need To Implement CSR Guidelines?
Corporate Social Responsibility
Does your company have moral lines that you need your electronic manufacturing service to adhere to?
Is your company’s marketing focused on biodegradable products or environmental awareness?
Choosing a service that does its best not to commit to pollution or uses biodegradable packaging will help you stay strong in the future because people will be able to believe that your product stands in line with what you say it does.
Protecting your Intellectual Property
So you have decided to partner with an EMS company and are now ready to get your products on the market, but you don’t want to share your concept.
Knowing your rights is very important since you might be working with third-party providers who wish you to share your information with them, and you should protect yourself against theft.
When looking for a company that offers EMS, make sure to find out how they will protect your property.
The company is an integral part of your products, and it is in your interest to make sure that they dedicate themselves to protecting your valuable data.
At Titoma, we go to great lengths to protect our clients’ IP confidentiality, which is one of the primary reasons companies come to us for their development and manufacturing needs.
Electronics Manufacturing Services Conclusion
Electronics manufacturing is a lively industry that is in constant development. The market is in growth, and there are valuable opportunities for companies looking to partner up with an EMS, to focus on core competencies and bring production costs down. Finding a company that matches your unique demands and is up to date with technology is vital for your success.
Titoma also offers Electronics Manufacturing Services. We design in Taiwan and Colombia, and most production occurs in China. Check out our website and apply your own rules of standards to see if we are the right company for you or book a consultation.