During an early morning conversation about today’s ultra competitive global marketplace and how companies who require Electronic Manufacturing Services must not only weigh the risks but also balance them against the perceived benefit of a bewildering array of potential supply solutions, a surprisingly simple list of observations emerged.
- Labor costs in all geographies are going up and if you haven’t experienced these increases yet, you will.
- While lower purchase price is always attractive it is NOT the only price that’s paid.
- Costs above purchase price (both internal and external) increase as the supply solution becomes progressively remote.
- Risk increases with both the remoteness of the supply solution and the complexity of the requirement, from not only a technical but also an expectation perspective.
- There is a tipping-point between the capabilities of a supply solution and the requirements of an OEM. We know from case-study analysis that if this point is reached catastrophic failure will result.
- The wholesale application of cross-hemispheric solutions is not going to be tolerated as the standard course-of-business in the future, if for no other reasons than global climate change and corporate social responsibility.
- Ultimately, a large percentage of Outsourcing will shift (back) to a same-hemisphere strategy, as it’s a trend that’s both inevitable and beneficial to not only the planet but also the EMS industry and its regional communities.
Simple but certainly not uncomplicated.
I think it’s time for that second cup of coffee!
Charlie
