Electronic contract manufacturing (ECM) refers to the outsourcing of electronic product assembly, testing, support services, and distribution to third-party electronic contract manufacturing companies. Companies that outsource their manufacturing needs are called original equipment manufacturers (OEMs). OEMs focus on designing and branding the products while leaving the complex manufacturing process to contract electronic manufacturers (CMs).
ECM allows OEMs to leverage specialized electronics contract manufacturers’ expertise, scale, and infrastructure. This helps OEMs reduce costs, focus on their core competencies, access new technologies, and gain the flexibility to scale up or down quickly based on market demand.
Why do companies use electronic contract manufacturing?
There are several compelling reasons for electronics OEMs to utilize ECM:
1. Reduce manufacturing costs – CMs have lower per-unit costs due to economies of scale, optimized supply chains, and specialized expertise in high-volume production. They can produce electronics at lower costs than the OEM’s in-house manufacturing.
2. Focus on core competencies – ECM enables OEMs to concentrate their resources on R&D, design, marketing, and sales – activities central to their core competencies and competitive differentiation. The electronics contract manufacturing handle all manufacturing processes.
3. Access new technologies and expertise – CMs often develop expertise in niche technologies and specialized processes that the OEM may lack. This provides access to capabilities that help the OEM innovate and stay at the cutting edge.
4. Flexibility and agility – ECM provides the flexibility for OEMs to quickly scale up or down production based on market demand without large capital investments in manufacturing capabilities. CMs can adapt to the OEM’s changing needs.
5. Risk reduction – Using a CM reduces the OEM’s financial risks associated with owning a complex manufacturing operation as well as operational risks due to volatile component costs, workforce issues, production bottlenecks, etc. CMs bear these risks.
6. Improve time to market – Leveraging ECM allows OEMs to bring their products to market faster by shortening product development cycles and accelerating the prototyping process with the CM’s assembly expertise.
What services do electronic contract manufacturers provide?
Full-service electronic CMs offer a comprehensive set of capabilities to meet the OEM’s requirements across various stages of the product lifecycle. Common ECM services include:
•PCBA assembly – Assembling printed circuit boards with electronic components and interconnecting them. This encompasses SMT and through-hole assembly, fine pitch capabilities, box build, etc.
•Final product assembly – Integrating PCBA, mechanical parts, cables, etc., to assemble the finished product as per the OEM’s specifications. This includes box build, system-level, and final product testing.
•Prototyping – Rapid prototyping services to produce working proofs-of-concept which help validate product designs early in the development cycle.
•Material management – Managing the sourcing, procurement, storage, and distribution of components needed for manufacturing. This includes providing inventory buffers for OEMs.
•Test and inspection services – Verifying product functions and reliability through electrical, mechanical, environmental, and safety testing as required by the OEM.
•Lifecycle management – Full lifecycle support from product development to EOL/obsolescence management, software, and firmware services.
•Certifications – OEMs need assistance with industry certifications like UL, CE, FCC, RoHS, ISO 9000, ISO 14000, etc., to sell their products.
•Distribution and aftermarket services – Fulfillment, repairs, spares, and warranty management to support OEMs in delivering products to end customers.