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24 Mar, 2021 / BY Neil Sharp

Getting a quote from an EMS provider. What could go wrong?

quote-from-ems-provider-what-could-go-wrongIf you’ve made the decision to outsource your manufacturing, you’ll probably be looking to get quotes from a number of different EMS providers. 

But you may be surprised to find that the process of getting a quote is a little more complex than you expect. This is because the EMS provider will need lots of information from you so that they can put together an accurate quote. Getting this right is important as it will help to avoid any bumps in the road when you start working with your chosen provider.

What does an EMS provider need to create an initial quote?

When you reach out for a quote, there are some key things the EMS provider will need to know. These include:

  1. How much of your assembly, test and logistics you are looking to outsource
  2. The materials required for the build
  3. How long it takes to assemble, test and pack your products
  4. The number of products you anticipate needing over the next 12 months
  5. Where your products need shipping to
  6. How quickly your products need to be available
  7. How much firm order commitment you can realistically sign up to

This might feel like a lot of information. But having all this ready before you reach out to the EMS provider will save you – and them – a lot of time. And the more accurate the information you provide, the more accurate your quote will be.

It may be that at this stage, you’re just looking for a broad idea of what to expect. At the very minimum, the EMS provider will need to know what products you want to build, the materials required to build them, and how long it takes to assemble, test and pack them. This will allow them to work out the material handling costs, labour charges and profit margins to calculate a rough price per unit. But they’ll still need the rest of the information, so it pays to have this all ready before you contact the EMS provider.

Getting it wrong

It’s vital that you have carefully thought through all of these things before you reach out - and that you’re open and honest with the EMS provider. 

Providing inaccurate information will only lead to complications, delays and frustrations for both you and the EMS provider once you start working with them. 

These are just a few of the things that could go wrong:

  • Missing materials or inaccuracies in the build process could result in faulty or poorer quality products
  • There may be delays in getting products to customers 
  • You may face additional costs you hadn't anticipated

Some of the things the EMS provider will need to know will be easy to answer, like where your products will need to be shipped to. But others may take a little more digging to get accurate, up to date information.

For example, when it comes to the type of materials required for the build, you should have a Bill of Materials (BoM) that you can refer to. This should reference all the materials required, a description of the parts and a definition of how many are required to produce a single product.  

However, avoid just handing this over to your EMS provider without checking it over first. How long ago was it updated? Does the documentation match up to the reality of what actually happens on the ground?

Don’t underestimate how much ‘local’ knowledge will have built up over time in the heads of your production and test operatives. It’s worth taking the time to tap into this vault of knowledge from your most experienced employees before you reach out for a quote.

Ultimately, if the EMS provider doesn’t have accurate information about the build, test and assembly process, problems may arise when they come to build the first batch of products. It may lead to delays that could extend the lead time for your customers.

You may also end up incurring additional costs you hadn’t accounted for. The EMS provider will have provided a quote based on how long they expected it to take to assemble, build and pack your products. If you told them it would take one day, and it ends up taking two, the EMS provider will be forced to charge you for the extra time. And that’s the best-case scenario. They may not have the resource to complete the orders, resulting in a delay to shipping and a swarm of unhappy customers.

It’s also important to be honest with the EMS provider about how many orders you expect to fulfil in the next 12 months and how quickly customers will need them. Over-inflate the demand and the EMS provider may end up with an overstock on supplies, which they may need to sell back to you. Underestimate it and they may not be able to meet the demand.

The EMS provider won’t expect your forecast to be 100% accurate, especially not in the current climate. But you need to be as honest about what things are looking like. The same goes for the expected lead times for customers. If your current customers are used to getting products next day, that information needs to be passed over to the EMS provider.

Getting it right

At the end of the day, a good EMS provider will ask you the right questions to get the information they need. And they’ll challenge you if things don’t add up. This isn’t to test you. It’s to ensure they can provide the most accurate quote and ensure things are smooth sailing once they start working with you.  

If you need more time to gather your information and get your ducks in a row before you reach out for a quote, then take it. The more prepared you are when you first speak to an EMS provider, the easier and faster it will be for them to provide you with an accurate quote. And once you’ve chosen your preferred provider, you'll be on a better path to a successful partnership.

An Introduction to Outsourcing Your Electronics Manufacturing

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