It’s almost mind boggling, but there has existed no realistic opportunity for EMS middle market companies to outsource their materials operations without also outsourcing their production operations along with them.
Among the myriad of suppliers of electronic materials – from global giants like Avnet and Arrow to the thousands of smaller regional players – not one can come close to providing a full and complete BOM, which, along with a standard fare of commodity components, almost always includes a plethora of custom components and custom materials like raw PCBs, cables, metal or plastic enclosures, labels and manuals, and final packaging.
Thus, unless an EMS middle market company can claim materials among its core competencies, it will likely suffer from one or more maladies, including:
paying too much for materials, given its diseconomies of modest scale;
squandering scarce capital on excessive inventories, since the daily pressures of producing and shipping product will eventually overwhelm inadequate materials controls and insufficient staffing; and
tolerating continuous production inefficiency, which is the inevitable result of the start-stop syndrome caused when almost every job is missing one or more scheduled-but-not-yet-arrived parts.
Alternately, middle market companies that have outsourced their manufacturing operations to EMS suppliers have incurred the risk of slowly losing control of their materials supply chains, which is tantamount to losing control of their products. Moreover, and adding insult to injury, a core expertise of most EMS suppliers – especially mom and pop operations– is almost never materials, which means they will eventually pass through to their customers the same consequences of high materials costs, excessive inventory, and inefficient start-stop production. Yet the obvious antidote for this unhappy circumstance – retaining a supplier with core materials expertise to supply materials to one or more suppliers of production services – hasn’t been available.
That’s why AMI offers the EMS middle market a complete portfolio of full BOM materials services, which are detailed in the nearby descriptions of AMI’s sourcing, kitting, and materials management services.
As important, AMI’s customers never lose control of their materials supply chain because, consistent with AMI’s unique policy of costing and pricing transparency, its customers receive regularly updated reports that provide part number detail for each item on their consolidated BOM, including supplier and alternate supplier contact information and last cost, average cost, and standard cost per unit.
The benefits of AMI’s full BOM materials services can be enormous. Here are a few.
With a substantial annual material spend and AMI’s alignment with a New England electronics distributor, AMI is capable of leveraging material savings compared with what OEM’s may achieve on their own.
With the customer firmly in control of its materials supply chain it can achieve greater accountability from its production services providers. For example, with AMI shipping full BOM kits to these suppliers, most of the excuses are taken away, there is less opportunity for finger pointing, costs are more transparent and understandable, and moving business from one supplier to another can be almost seamless.
For customers with more than one production services supplier and with the benefit of having consolidated their materials spend with AMI as one materials supplier, the customer can better reap the benefits and greater flexibility of multiple production services suppliers. Since full BOM materials kits can be strategically directed and redirected, these enhanced benefits include the opportunity to retain multiple production services suppliers for the same product or products and, given that, the ability to quickly and easily reallocate assembly work from one supplier to another based on changing supplier performance, shifting customer demand, and inflexible supplier capacity. In addition, complementary benefits are available in AMI’s Tool Kit for Multi-Sourced Manufacturing.
Taken together, AMI’s full BOM materials services provide the EMS middle market with new and uniquely better options and strategies for business process outsourcing.
AMI is the right size and the best choice for the EMS middle market.