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Electronics Production | May 06, 2008

Part Two: New trends in EMS & OEM

TFI is examining recent developments in the outsourcing strategies of large OEM companies. Many companies are rethinking which parts of the production to outsource and which to keep in-house.
For the past several years, the OEM mantra seems to have been, “No one ever got fired for outsourcing.” While they were outsourcing anything and everything to EMS partners, some companies ended up with no business strategy at all, reports the mbtmag. Many find their approach now unmanageable and most have lost control of their own supply chains.

TFI however states that no OEM company wants to totally reverse their outsourcing strategy. But many consider the reorganisation to regain control over some aspects of the supply chain. The question is where is outsourcing an appropriate step and which segments constitute core-competencies. And how can we acquire and develop such competencies in-house, rather than outsourcing them to other companies.

Outsourcing seemed an easy option; rather than asking if the competency was something they should be good at and how to acquire the skills in a cost-efficient way. Some OEM companies develop sourcing formulas or models to rethink what is core to their business. TFI anticipates this rethinking will continue, and in five years, many OEMs will have retrenched somewhat on the outsourcing model to a more balanced approach of in-house and outsourced capabilities.

The next five years in electronics manufacturing will see such changes and uncertainties. History may not repeat itself, but OEMs, ODMs and EMS providers that stay constantly in sync will be the most likely to succeed, reports the mbtmag.

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