Like any close relationship, the one you build up with your Contract Electronics Manufacturer (CEM) is going to take some time. Trust and communication are integral to any partnership; it’s essential therefore to develop an environment which allows both you and your CEM provider to work towards the goals you set out to achieve in your outsourcing strategy.
By providing practical guidance on how to conduct supplier performance reviews, this blog post will identify two key elements that can help strengthen the relationship you have with your CEM provider. By working together to continually improve the process, it’s possible to avoid confusion, miscommunication or ill feeling from entering your relationship.
Unfortunately we are all guilty of overusing email. With the sheer volume of mailbox traffic greeting us every day, we can get into bad habits. At times, the messages we send to our customers, suppliers, friends and colleagues are shorter and less personal than perhaps they should be; we don’t always have time to change subject headers, take off those that are copied in [with no action required], or else, to check that our message has been received in the way it was originally intended – which inevitably, in many cases, it isn’t.
Setting up regular, face-to-face meetings with your CEM provider, which have a clear agenda sent in advance, can clearly help overcome this issue. In the early stages of your outsourcing relationship a monthly meeting is a good starting point, due to the increased activity levels and actions associated with the initial transition phase. You may find that this can then be reduced to, say, a quarterly review once you are happy with the way things are working. These meetings will help you reinforce what you expect from the relationship and also allow your assembly partner to seek clarification on any messages that are unclear to them in any way.
Rotating where the meetings are held can also be beneficial. Being able to break out of the meeting and walk your CEMs factory floor can help you understand their processes and procedures in greater depth. This is particularly useful where there are immediate actions that need your input - for example, documentation or test queries - that could prevent them from building or shipping product to you. Being onsite also enables you to build up relationships with other key members of their team (outside of your immediate contact) such as engineering, test and production staff, who could be working on your products.
This obviously works the other way too. By inviting your Electronics Manufacturing Service (EMS) provider to your own facility they will gain exposure to your development, engineering and quality teams, and, at the same time, obtain a deeper appreciation of how the services they offer integrate with your business as a whole.
2 way reporting
In order to monitor the performance of your EMS provider it’s advisable that a supplier ‘scorecard’ of some form is created. Many standard templates already exist, the majority of which focus on areas such as delivery, Quality and Cost, as you would expect. A combination of ‘scores’ or points, along with traffic light colour-coded systems, are typically used to track performance and progress. When implementing a performance measurement system, it’s recommended that you explain to your partner which criteria you will be using and how any scoring or point system works. There may be elements of your report which are little more subjective in terms of scoring, for example, ‘responsiveness’ or ‘flexibility’; it should be defined early on how these can be influenced. ‘Comments’ or ‘notes’ sections work really well here, in helping explain to your partner how or why points have been awarded to them.
You may find that some more established CEM providers already produce regular Customer Service Reports of their own. If this is the case, then it probably makes sense to try and find a way of combining the two to avoid unnecessary duplication. It will also help remove any ambiguity on results when looking at certain criteria, for example, delivery performance, which can be measured in a variety of ways leading to differing results.
Finally, in order to gain an all-encompassing view of the relationship, why not ask your EMS provider to evaluate your performance, as a customer? On-time payment, forecast accuracy, Technical Support and the ability to place purchase orders to lead-time: these will all be important to them and could impact their ability to consistently deliver a quality service to you. Whilst this approach may seem a little unconventional, it’s an excellent way of encouraging continuous improvement across both sites and helps establish a structured forum to discuss, and address, what traditionally may have been thought of as contentious issues.
Always remain clear on your original outsourcing objectives, and use your meetings and performance reports to track how close you are to achieving these. Providing you can see that progress is being made, you can work with your EMS provider to define new ones to maximise the benefits outsourcing can bring to your business. Of course, if there are any causes for concern, address them face to face with your supplier, so that your expectations are clear and opportunity exists for your CEM provider to resolve any issues in a timely manner. If, for any reason, the relationship with your contract manufacturer starts to feel strained, or perhaps the quality of service has started to decline, maybe it’s time to start planning an amicable split. Transitioning your production from one EMS provider to another is certainly not something to be taken lightly, however, with the correct planning, support and guidance, this can be achieved sooner than you may first think.
Image by: Daniel Pietzsch