The Evolution of EMS or Electronics Manufacturing Service

The electronic world is evolving at all times. Your phone in your pocket, your computer on your desk, your smart TV in your living room, all are the results of one of the most complicated and global manufacturing systems. The central part of this system is the electronics manufacturing service (EMS) industry, which has radically changed in the course of the recent several decades.

Knowledge about this development is important to Original Equipment Manufacturers (OEMs) that wish to launch new products into the market in an efficient and cost effective manner. EMS providers have grown to a greater extent in terms of role since they can merely assemble simple circuit boards up to offering end-to-end solutions.

Contract to Collaboration: The EMS Journey

Electronics manufacturing history is a legend of strategic alteration & technology. What started as a low cost strategy among the OEMs has evolved into a complex relationship model propelling innovation throughout the product lifecycle.

The Early Days: Birth of Electronic Manufacturing Service or EMS

The history of the EMS industry dates back to 1970s and 1980s. It is at this time that big OEMs such as IBM started moving some of their printed circuit board (PCB) assembly to small and specialized firms. These pioneer players were called contract electronics manufacturers (CEMs).

Their business concept was simple to offer manufacturing capacity to OEMs by a contractual basis. The major motivation of this outsourcing was price. To OEMs, it was more cost effective to outsource the capital intensive process of PCB assembly instead of keeping it internally. This enabled them to cut on overhead, cope with the changing production needs, and concentrate on their core competencies that were mainly research, development and marketing.

During these initial phases, OEMs and CEMs worked in a purely transactional manner. OEMs would include detailed designs and bill of materials (BOM), and the CEM would only perform the assembly. In design, engineering and supply chain management processes, there was minimal to no participation.

The 1990s: The Emergence of the EMS Provider

The 1990s represented a great change. The boom in the personal computer and the sudden growth in the consumer electronics market had unprecedented demand. OEMs required more than assembly services to keep abreast with them; they required partners capable of handling bigger sections of the manufacturing process.

Major CEMs started to increase their capacities in turn. They began to provide services other than PCB assembly which included:

• Design for Manufacturability (DFM): This entails feedback to OEMs to streamline designs to make them more efficient and cost-effective to manufacture.
• Prototyping and Testing: This is a process of constructing and testing rough prototypes of products in order to find and rectify a problem before it becomes mass-produced.
• Supply Chain Management: Acquiring the components and maintaining relations with suppliers.

This change of an exposure based relationship into an integration based partnership resulted in renaming the industry as CEM to Electronics Manufacturing Services (EMS). Flextronics, Solectron and Sanmina-SCI among other companies emerged as global giants acquiring other smaller companies and constructing huge manufacturing plants, frequently in low-cost locations such as Mexico and Southeast Asia. It was aimed at making a one-stop shop to OEMs, where they would receive a full package of services, which would address a large chunk of the product lifecycle.

The 2000s: The Diversification and Globalization

The EMS industry was a force globally by the early 2000s. China and in particular became the manufacturing center of the world as it presented an unstoppable number of low labor costs, a large pool of skilled workers and a huge influence of the government. Large EMS vendors made an immense impact in the country and this allowed the OEMs to manufacture consumer electronics in large volumes like never before.

It is also during this period that the EMS providers extended their services even more. They entered into new markets outside the consumer electronics that included:

• Medical Devices: Production of regulated and complicated medical devices.
• Aerospace & Defense: manufacturing of aircraft & military products with great quality and trustworthiness requirements.
• Industrial and Automotive: Electronics used in control of buildings, sensors and other industrial and automotive machinery.

In order to facilitate this diversification, EMS providers were able to build a better level of understanding in areas of engineering, quality control and regulatory compliance. They started to provide end-to-end solutions starting with the design and development of their product to the after-sales services and repair.

Today: The Age of Intelligent production and Strategic alliances

The modern EMS environment is characterized by technology and strategy. The emergence of Industry 4.0 the combination of automation, data transfer, and artificial intelligence in the factories is transforming the factory floor. The contemporary EMS buildings are smart factories, robotics, IoT sensors, and sophisticated analytics combine to optimize production, enhance quality, and become more flexible.

Nowadays, EMS providers are no longer mere vendors, they are strategic partners. They collaborate with OEMs at the very beginning of product creation and offer insights that are vital and affect product creation in terms of material choices and final assembly.

The current industry dynamics that are defining the industry are:

• Regionalization: Due to the fierce geopolitical tensions and the supply chain disruption, most OEMs are re-evaluating their reliance on a single location of production. The shift of a trend more towards a China +1 approach, whereby firms still have a presence in China, but also invest in other manufacturing capacities elsewhere such as Vietnam, India, and Mexico, is on the rise.
• Sustainability: Customers and regulators are putting more pressure on greener production. EMS providers are placing bets in green processes, minimizing waste, and making sure that the materials that they source are ethically found.
• High-Mix, Low-Volume Production: There is an increasing demand of customized products and niche products. EMS providers are changing, and their response is to create more flexible manufacturing lines that can easily cope with smaller production runs and even more product variation.

Conclusion

The electronic manufacturing service or EMS industry development is not an end in itself. With the current technological development, the role of manufacturing partners will be more critical. In the future, it will be regarding the value addition outside the factory floor in the context of EMS. It will entail an in-depth incorporation of digital technologies, a war on sustainable and resilient operations, and a model of partnership that is based on trust and mutual innovation. To OEMs, selecting the appropriate partner in the EMS market is no longer a procurement choice, but a strategic decision that could make or break a product in a competitive world market.

Simon Fox is a tech lover and writer who creates innovative Flipbook Software solutions for interactive digital publishing. With expertise in SaaS product.