Outsourcing comment from Jacqui Malpass of Axiom Manufacturing Services – June 2009

Electronics Weekly 17/06/2009, page 15

The original attraction of outsourcing per se was that it allowed OEMs to concentrate on core competencies and develop new products while their chosen CEM could take over aspects of the manufacturing element on their behalf.

The shift over recent years has seen a large proportion of manufacturing being shipped off-shore to places such as the Far East and more recently Eastern Europe. At Axiom we still firmly believe that high-value, high technology work is better placed where close interaction among companies can be facilitated by close physical proximity, personal contact, close collaboration, shared language and shared cultural experiences.

The UK CEM sector is adapting and responding to shifting trends in order to serve the changing needs of OEMs. Unit production cost is no longer the only consideration for those seeking a manufacturing partner. Those considering such a move are now thinking more about the ‘total cost of ownership.’  That includes an analysis of both production cost and of the value the contractor can add to the product, for example through innovation, design input, supply chain management or other services which benefit the customer.

Outsourcing to a local CEM can help OEMs achieve their business objectives through a variety of measures. Not only can CEMs often help offer a reduced time to market through investment in modern and up-to-date technology and equipment, they can also factor manufacturing, procurement and test issues into the design stage of a product in order to save time further down the line.

Investment in equipment, technology and expertise is crucial to the success of a CEM’s business model as this can set them apart from their competitors and also offer the added benefit of helping to manage costs for the OEM – a factor that is crucial in the current economic climate.

By involving an outsourced CEM into the design process of a product (instead of waiting until prototype or production stages) and tapping into the CEMs knowledge and experience, OEMs can be advised of factors such as procurement, manufacturing process and testing procedures at the forefront of a product’s lifecycle which will prevent problems occurring during early market launches.  

Experience tells us that cost is very difficult to remove after the product is designed, and usually the focus is then on parts and labour, not the total acquisition cost.  For example if companies design products for lean production then overall costs can be dramatically reduced up front.

Within contract manufacturing the challenge is also to create flexible and unique supply chains for each customer to better manage risk and to deliver value.

The key lies in adapting the business to the diverse nature of your customers business which can range from a customer who can provide an accurate sales forecast to one that offers its customers a 24 hour turn around on orders.

Axioms role is tie together all of the important pieces, make this meaningful to the organisation, communicating that to its suppliers and ensuring that everyone is fully aligned.

Axiom works closely with Intellect UK who champions the belief that issues such as IP protection and product development are highly increased when UK-based OEMs work with UK-based CEMs. As a result of this we incorporate these beliefs into all aspects of our work.