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Electronics Production | January 16, 2006

The EMS industry's evolution

The contract manufacturing has during the last 30 years developed towards complete solutions for the product owners.
In the 70's the companies only outsourced when they hadn't enough manufacturing capacity. At that time no one ever thought about outsourcing any strategic operations.

"IBM and other large companies had metal shops and painting. Those companies decided there probably wasn't an advantage in spray painting their own metal so they would send that to the outside," Solectron's Procurement Officer Perry Mulligan told Purchasing.com.

In the 80's the companies started to outsource some of their board production rather than investing in surface mount equipment.

In the 90's it was more and more about supply chain execution. "OEMs would ask EMS providers, 'can you order the parts and manage that inflow of materials, manage supplier quality and on-time delivery and can you aggregate all of the widgets in an orderly fashion?'", Mulligan said.

Today the EMS companies have become partners that are taking care of more and more of the the work from the product owners. The EMS industry has elongated the supply chain by taking many customers offshore to offer cost reductions," says Mulligan. "Now a new element comes into the equation: localization of the supply base", Mulligan told Purchasing.com.

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