Shifting Tide

While the results of the latest Riverwood OEM survey are eye-opening, I want to focus on one data point in particular: the percentage of OEMs that are hiring staff near their EMS providers.

Per the study, the results of which were released today, 63.6% of survey respondents say that they are likely to hire remote operations staff near their EMS provider. That’s up 34.2 points (not percent) from a year ago.

Riverwood did not indicate reasons for the switch, but some can be inferred, including OEMs are demanding more control and insight over EMS operations, and OEMs are staffing up after severe cuts in 2009.

But the bottom line, as always, is the bottom line. Outsourcing assembly was supposed to reap substantial tangible benefits, not the least of which was lower fixed costs (i.e., head count). As we’ve noted before, in many cases employees formerly known as process engineers have now become supplier engineers — but they are still at the OEM. That development (or lack thereof) does not suggest a high degree of confidence in a lights-out supply chain.

Which once again begs the question, has outsourcing been worth it?

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About Mike

Mike Buetow is editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He is also vice president and editorial director of UP Media Group, for which he oversees all editorial and production aspects. He has more than 20 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

1 thought on “Shifting Tide

  1. It’s a case of buyer beware. OEM’S employing people to locally work with their Ems Provider is a sign of unresolved root cause.

    If I had to find one word to describe contract manufacturing it would be CHURN. Constant pull ins, ECN’s and schedule changes from many different customer sources.

    Find an EMS provider that sucessfully applies 6 sigma methodology to ALL of it’s business processes if you want a hands off approach, QUALITY ON TIME DELIVERY with a Cp of 2.0 and a Cpk of 1.5 would be a good starting point.

    John

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