Special Preview: Why Some EMS Manufacturers Grow Faster Than Others

In a crowded marketplace, EMS manufacturers face significant challenges trying to differentiate themselves to win new OEM customers in a 'sea of gray' of competing EMS services.

For EMS providers: What can you do to gain a deeper understanding of what OEMs really want from their EMS providers?

For OEMs: How can you leverage this information when identifying, vetting and negotiating with EMS manufacturers?

From an electronics OEM perspective, the ideal capacity utilization for EMS manufacturers OEMs consider is roughly 75 percent when measured across 24 hours, seven days a week. Depending on the EMS manufacturer's business model and markets served this can cover cost of doing business + profit and it tells OEM prospective customers the EMS provider's services are in demand and upside capacity exists should OEM program volumes fluctuate or spike.

For EMS provider CEOs wanting to grow, you have several options. Your growth can be based on a previous relationship with the customer and/or existing piece of business with that customer. The deal win can also be with a new customer where your EMS sales person had no prior relationship with the customer. For example:

1. New sales hire lands business from previous EMS employer (existing relationship)
2. Sales person lands business based on previous deal (existing relationship)
   
3. Sales person lands ‘new’ business based on a new relationship

Most top-line growth for EMS manufacturers today comes from number two, followed by number one.

This industry tends to create lazy EMS sales efforts while maintaining antiquated marketing and sales procedures. Effective S&OP is challenging in EMS industry where work orders are often closed as a result of data silos.

Meanwhile, in some ways the EMS manufacturing industry is a liquid market. Numerous providers are willing to compete for a qualified lead knowing the prospect is also entertaining competitors.

But unlike true liquid markets the EMS sales cycle is not quick to transact plus, there is constant impact to EMS pricing depending on who is the buyer.

Finding qualified leads for EMS providers is not easy. But assuming EMS marketers do find leads, qualifying leads remains more art than science because savvy OEM buyers of EMS services are critical thinkers with independent thought plus, emotions and internal politics come into play. Other challenges facing EMS providers include:

• Difficulty identifying OEM decision makers once prospect companies are identified
• Difficulty timing EMS-OEM decision maker engagement at a moment-of-relevance
• Long EMS industry sales-to-close cycles
• High, new customer win acquisition costs: identifying suitable EMS sales employees, paid benefits, motivating manufacturing reps, S&OP systems tech and software...

When EMS manufacturers win 'new' business from 'new' customers, generally, the bigger the value of the electronics OEM program being outsourced the longer the EMS sales cycle. How is this measured for sales performance?

The ideal scenario EMS manufacturing sales people can hope for is to be inserted directly into OEM discussions - at the program quote RFP / RFQ phase - as a pre-qualified prospect.

What can EMS providers do to identify prospects at the right time-of-relevance while prospects are formulating OEM-EMS supply chain strategy?

What are industry best practices for EMS manufacturers wanting to determine new business win acquisition costs? What effective ways exist to reduce your costs and what can you do to win confidence of OEM prospects?

How can OEM equipment manufacturers use this information to position your company when vetting and negotiating with your prospective EMS manufacturing partners?

In the full article I outline EMS manufacturing marketing and sales cycles for new customer business wins beginning with ways for identifying TAM through prospect contract negotiations and deal-closing.

Paid subscribers can unlock behind-the-scenes analysis of the EMS industry sales process with answers to the questions above, and more.

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