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Talking Points in OEM-Contractor Negotiation

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Barbara Jorgensen
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OEM/EMS
Barbara Jorgensen   4/23/2012 5:40:00 PM
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Douglas--thanks! And Charlie has been around awhile, he used to work at a major EMS. I believe he is doing a cost analysis of engaging and disengaging as well. I'm looking forward to the analysis.

Douglas Alexander
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Re: OEM/EMS
Douglas Alexander   4/23/2012 3:39:08 PM
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Barbara,

Thank you for the notice of Charlie Barnhart's contribution. He must have been around the block a few times. It is imperitive to consider the amount of work bringing up a new CM and when you add to that the learning curve for an entire PLM system, a company has years of investment in education and training to look forward to.  I appreciate your experience and contributions immensely.

Barbara Jorgensen
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OEM/EMS
Barbara Jorgensen   4/23/2012 3:27:41 PM
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It is really difficult for an OEM to disengage with an EMS once they've been together awhile. The information came from Charlie Barnhart, who said it could take up to 18 months to transfer business to one EMS from another. And this is an apples-to-apples comparison. If you need to make ECOs or create a new AVL, it may take even longer.

 

_hm
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Re: Talking points
_hm   4/22/2012 1:08:19 PM
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@Barbar: I agree with you. It is with wealth of information. We go through this evreyday, and it is very demanding and time consuming.

 

Douglas Alexander
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Douglas Alexander   4/21/2012 10:46:54 AM
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Prabhakar, Yes, it you are referring to working conditions as a criteria for establishing a business relationship. This makes me think of Bolaji's earlier article about more product introductions being made overseas first. Let's just hope that other countries pick up the ethical mandate of prequalification based upon working environment and human rights. The EU REACH requirement automatically demands a higher level of attention to human health and safety, but until working conditions become a high priority qualifier for doing business, big CMs are going to save or make as much money as they can. Unfortunately, the most flexible and manipulative place to cut cost is still the working wage and working conditions of the employees.

Douglas Alexander
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Re: Talking points
Douglas Alexander   4/21/2012 10:35:51 AM
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Clairvoyant, Good point about the CM survey. I can see where this article would tie in with the previous one about Supplier Quality Audit checklist. I think all of these disciplines are known by most Manufacturing people, but it takes time and deliberate focus to make sure all of the company's key people and impacted representatives are actively involved. The follow up is also key to setting a continuing expectation with the CM.

Clairvoyant
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Re: Talking points
Clairvoyant   4/21/2012 8:38:36 AM
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Yes, great article, Douglas. It is very informational with everything that should be talked about in meetings. Something else I would like to mention is the OEM's Quality Assurance representative should be involved in visiting the CM's facilities to ensure they have the right equipment and follow the proper standards when manufacturing.

elctrnx_lyf
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Great guidance
elctrnx_lyf   4/21/2012 8:15:47 AM
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A really good article that could explain the all the details to a novice going for a negotiation with a cm. hope to see more details in future articles.....

prabhakar_deosthali
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prabhakar_deosthali   4/21/2012 2:14:52 AM
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Douglas,

The list almost looks like a blue-book to go by for OEM-Contractor negotiation.

With reference to the Apple-Foxconn issue where some other issues became the point of public discussion , is it advisable to include those issues in the contractual negiations and make them part of the contract?

Douglas Alexander
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Re: Talking points
Douglas Alexander   4/20/2012 7:32:55 PM
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Barbara,

Thank you for the compliment. I want to give this practical advice because there is so much to gain from anticipating as many issues as possible and so much to lose by rushing into agreements with so many unknowns. I believe some responder to an earlier blog commented that it is no light task setting up with a CM and that to find and hone a good OEM/CM relationship could take up to a year. I believe this was in reference to Apple moving from Foxconn  to another CM.

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