Supply chain management shifts to contract manufacturers

Citation

(2000), "Supply chain management shifts to contract manufacturers", Soldering & Surface Mount Technology, Vol. 12 No. 1. https://doi.org/10.1108/ssmt.2000.21912aae.004

Supply chain management shifts to contract manufacturers

Supply chain management shifts to contract manufacturers

Contract Manufacturing from a Global Perspective, 1999 - Technology Forecasters Inc.

Keywords: Publication, Supply chain

By shifting supply management from their own control to that of their contract manufacturers, original equipment manufacturers (OEMs) are hoping to take advantage of the resulting efficiencies to reduce costs, according to the new 7th-edition report Contract Manufacturing from a Global Perspective.

"Electronics contract manufacturers are migrating along the value chain to boost profits, increase revenue, achieve greater technical capabilities, and satisfy OEM customers' hunger to reduce cost of goods sold", said Dr Charlie Mullen, director high-technology consulting at Technology Forecasters, Inc., a consulting firm in Alameda, CA, specializing in electronics manufacturing strategy. "These business advantages are realized when contractors build close relationships with suppliers and share production forecasts and inventory levels in exchange for similar information".

To successfully manage suppliers further along the value chain, contract manufacturers are purchasing advanced information-technology tools. They also are hiring personnel - often from the OEMs and suppliers themselves - adept at finding and managing suppliers of services and products as diverse as system design, ASICs, sheet metal, shipping materials, and toll-free order services.

Tisha Reed, worldwide quotation manager at contract manufacturer Dovatron International (Longmont, CO), said "Compared to two years ago, we now are quoting quadruple the number of parts. And these purchases, such as for massive network systems for NorTel, are more and more complex". Considering that with every new OEM customer a new set of suppliers is acquired, a significant challenge to the contractor is to reduce the number of suppliers and obtain the highest quality products and services.