An original equipment manufacturer (OEM) is no longer the sole producer of its products. Indeed, many companies outsource to contract manufacturing services. At its very basics, these contract manufacturers fabricate products/components the OEM cannot produce itself. This type of jobbing, outsourcing or contracting out is found proliferating every possible industry – although the scale differs according to industry and the company’s size and nature. In the electronics sector, the use of contract manufacturers is growing. According to some market analysts, this characteristic will continue until at least 2025.
Major Factors Affecting the Growth
The growth pattern accredited to electronic contract manufacturers has at its roots, several factors. These are helping to determine the increasing reliability of OEMs to establish a positive work relationship or partnership with contract manufacturers. Six major factors are driving the growth, and therefore the symbiotic relationship of the two companies are
- Rising demand for electronic contract manufacturing services globally
- The evolution of various innovative products
- Increased complexity of devices requiring increasingly sophisticated, advanced and complicated technology and specialized knowledge to design and produce
- Increased competition
- Intensifying pressure on OEMs to reduce costs
- Decreased product lifecycles
These currently are mobilizing the demand for contract manufacturers by OEM and show no indication of decreasing over the next five or more years.
Contract Manufacturing Services
To ensure an electronic OEM manages to address the issues while ensuring productivity, profitability, and high-quality products/components, owners and managers are working with contract manufacturers. They continue to seek their support, understanding the consumer/customer increased demand for specific technologically challenging, intricate electronic devices. Coupled with the OEM’s need for outside expertise in product development and creation the turning to contract manufacturing services is natural and the only economically viable and prudent way to satisfy current and future demands for electronic devices.
