Successful EMS companies understand their strengths, acknowledge their limitations and avoid making promises their operations cannot support.

In the electronics manufacturing services (EMS) world, it is critical for companies to understand who they are and what they stand for, rather than adopting aspirational marketing taglines that make them appear indistinguishable from everyone else in the industry. Without that level of self-awareness, mistakes can occur when pursuing new business or serving existing customers.

Time for some honesty. Occasionally, nothing is more satisfying than a tall glass of cold milk and a homemade cookie. The comfort of a great piece of meatloaf with a side of mac-and-cheese, or a slice of pizza paired with a robust glass of cabernet, can be hard to beat. While none of these choices may qualify as health food, acknowledging the enjoyment they provide makes it easier to appreciate them without regret the next day.

The same principle applies to business. EMS companies benefit from recognizing and accepting the realities of their operations.

Pursuing business that does not fit the company's model, making promises that cannot be delivered after an account is won, placing excessive stress on operations that are already operating at their limits, or damaging a hard-earned reputation among OEM customers are just some of the consequences that can result from trying to be something the organization is not.

Many industry myths have persisted since my career in electronics manufacturing began in 1979, and several remain surprisingly common today. While not every EMS company makes claims that stretch reality, and certainly not every organization suffers from delusions of grandeur, some marketing messages continue to reflect aspirations more than facts.

Every EMS company benefits from periodically comparing its claims against operational reality and making the adjustments necessary to ensure its business model accurately reflects its true capabilities. Here are some examples I have encountered over the years.

Myth: Claims are made that “we want to grow our business.”

Fact: There is little to no investment in sales to growing existing customers or obtaining new ones, no expanding of the services offered, no M&A plans, and no evidence in marketing activity to increase brand awareness.

Myth: Taglines such as “we manufacture the world’s leading technologies.”

Fact: The reality is most EMS companies build medium technology at best and lack the manufacturing capital equipment, experience or process controls to support bleeding-edge technology, nor do they possess the needed inspection or test systems capable of validating the builds.

Myth: “We measure everything.”

Fact: Making that claim indicates that nothing is important. Correct KPIs are critical to managing a complex business. This claim means you are just data-collecting and unable to make effective decisions on a daily, weekly or monthly basis.

Myth: “Quality is job #1.”

Fact: There is no evidence of a BoM scrub, capability for DfM/DfT, lacking critical quality certs, lower than usual yields, bone piles of offline WIP are stacking up, the MRB cage is full of outdated material, or there are unacceptable scrap and RMA percentages. I have even seen end-of-month forced billings (shipments) with known nonconforming products approved to “make a number.”

Myth: “We manage risk well.”

Fact: No evidence exists of standard terms and conditions on every quote and online, vendor terms and conditions are missing, excess-obsolete-slow moving inventory coverage is nonexistent, A/R is high, turns are low, and all OEM contracts are just signed as-is.

Myth: “We have SMT setup time down to only a very few minutes.”

Fact: While dialing out old jobs and dialing in the next job that has been offline validated, this can’t include the first piece run through, allowing the next production run to proceed. Is it more important to advertise an unrealistic changeover time or have a measurement of the actual time it takes to dial out the old job, setup and validate the new run and conduct a first piece validation run indicating production readiness?

Myth: “We can build whatever our customer needs.”

Fact: You have never performed an honest SWOT analysis on your entire business and do not know what you are capable of, what you excel in and what you don’t do very well. BTW, no EMS can be everything to every customer.

Myth: “We offer engineering design services.”

Fact: Most EMS companies do not have actual design services in-house and at best only offer design for supply chain (DFSC), design for manufacturing (DfM), and design for test (DfT, which is just a point-to-point capture).

Myth: “We manage our customers’ BoMs better than our customers are able.”

Fact: The best management of material is a strong partnership with your customer, where input and details are traded back and forth to overcome the inventory issues we see daily. A collaborative effort for BoM expansion, BoM early-warning details (NCNR, NRND, obsolete, sole-sourced) and notices of changes in part-number status as the BoM ages should be offered. As many material teams are bogged down in the tactical execution of day-to-day issues, leaving no time to act strategically, a hard look at your investment in this function may be needed.

Myth: “Our board of directors is engaged and supports us.”

Fact: The board has little to no factual knowledge of the company's day-to-day operations and isn’t investing in the EMS's growth needs. The quarterly data dump rarely provides the board with the knowledge they need to make decisions that can move good EMS companies toward greatness.

Myth: “We know who our best customers are.”

Fact: Many EMS companies have never done an analysis of each customer, by part number, to assess the actual profitability of that customer and rely on revenue size and a gut feeling to guess who the best customers are. In almost every case, I drove this process; EMS companies were shocked to find those they thought were their best customers weren’t.

Myth: “Our people are our greatest asset.”

Fact: Performance reviews and guidance are only given once a year, small percentage raises are doled out evenly as no KPIs are considered, and mediocrity is rewarded the same as excellence, morale is bad, there is little intracompany communications, and successes are not celebrated with the entire company. How does your employee base know if they had a good week or a bad week?

Myth: “We invest consistently and proactively to keep up with technology changes seen in our dynamic industry.”

Fact: Many EMS companies have lumpy and inconsistent year-over-year capital equipment expenditures, usually investing when one piece of equipment ceases to be functional and quality, OTD, and customer satisfaction are impacted. Even with strong preventive maintenance measures in place, machines wear out.

EMS is a complex business, and it is easy for smoldering issues to go unnoticed amid the daily demands placed on leadership teams. When operational challenges consume most of the workday, finding the time and objectivity needed for honest self-assessment can be difficult. That is why many organizations benefit from engaging an unbiased, experienced third party to conduct a comprehensive SWOT analysis. Such an assessment can identify what is working well, what should be discontinued and what opportunities may be overlooked.

Ignoring reality rarely improves performance. Confronting it often becomes the first step toward meaningful progress.

Jake Kulp is founder of JHK Technical Solutions; This email address is being protected from spambots. You need JavaScript enabled to view it.. He assists OEMs and EMS companies with optimizing demand creation offerings and deciding when and where to outsource manufacturing. He previously spent nearly 40 years in executive roles in sales and business development at MC Assembly, Suntron, FlexTek, EMS, and AMP Inc.