Striking the right balance
I was talking to a major telecom equipment provider yesterday who, like many companies, outsources much of its manufacturing to leading EMS providers. We got on the topic of coordination between the OEM and EMS providers. They observed, correctly, that things have gone from one extreme to the other and the reality seems to be that striking the right balance is required.
The extremes are - originally everyone manufactured their own products and had full control over operations because they were both accountable and responsible. The other extreme was that companies started to outsource and some took the mentality that “its not my problem anymore” and relied on their EMS provider to produce and meet expectations.
The reality is somewhere in the middle. Yes, outsourcing places requirements on EMS providers and, rightfully, OEMs expect them to deliver and be accountable. But, the reality is that OEMs are now becoming “virtual companies” that have extended supply chains - much of which is outsourced. While this is true, the responsibility to the customer and their shareholders remains with the OEM.
In order to succeed in this environment, OEMs need control and visibility to respond to changes. Likewise, EMS providers need the same thing since their getting directly hit with their own set of unexpected changes and then getting them from their customers. To achieve this balance, each company needs to have the right information in the hands of the key decision makers throughout their organizations. Only by striking this balance can such an outsourced relationship thrive.
