Pros and Cons of Outsourcing an EMS Provider
Outsourcing is a business practice in which a company hires another company as a third-party provider of one or multiple services. However, outsourcing global manufacturing services only started after Solectron, now called Flex, was established as the first outsource EMS provider in the world in the late 1970s. Before its existence, manufacturing was mostly done by companies in-house.
Like in any kind of business investment, there are always advantages and disadvantages, and outsourcing an EMS provider is no different. Contemplating on whether you want to outsource manufacturing or do it in-house? Weight your decisions by reading the advantages and disadvantages of outsourcing an EMS provider.
Pros
Manufacturing in-house is very much possible but it can be limiting, not only on the number of employees and quality of equipment but also in terms of skill. By hiring a third-party manufacturer, not only will you have experts do the job for you, but you may also have wider access to more capabilities even for other markets like automotive and aerospace.
Hiring a third-party company that specializes in the process or service you need for your project can give you the benefit of increased work efficiency, faster completion of production, and better product quality.
Lower costs. By entrusting the project to an already established manufacturing company, it removes you the need to establish your own facility from scratch, along with the costs of labor, equipment, maintenance, and many more.
Having a greater competitive advantage against your competitors. Services like product and laboratory tests as well as new product introduction can ensure that your products are made of quality and can meet commercial success, which can then help your company be ahead of the competition.
Cons
You would lose most of the control over your project once you leave it onto the hands of a third-party service provider. Although that is not necessarily a big disadvantage, some companies may be unable to trust outsource manufacturing partners.
The fact that you will be working with an entity not related to your company already raises the concerns and risks for information leak and intellectual property theft.
It is very unlikely that you experience communication issues with your outsource manufacturing partner unless your project manager is highly unresponsive or difficult to talk to. In such cases, it might be better to meet and talk to them in person, but doing it frequently could be very inconvenient as well.
One of the biggest fears any company may have is their third-party EMS provider going out of business without any prior notice. This could lead to unfinished projects which just essentially wastes plenty of time, money, and effort.
Those are some of the fears companies have when hiring outsource manufacturing partners. However, it is easy to see that all of them can be avoided given that you make a thorough selection and choose a great manufacturing partner.
Whether you outsource an EMS provider or not is entirely up to you. Just remember that in a time of rapid technological advancements and fast-growing global manufacturing industry, having a third-party EMS partner is already an advantage by itself.