When people think of contract manufacturers (CMs), many think of them as companies who simply build products as specified by the OEM. The reality is contract manufacturing companies have significantly evolved in the past decade, developing advanced technology and managing global supply chains for some of the most respected Fortune 500 companies. OEMs are increasingly turning to integrated manufacturing solutions (IMS) partners to design, manufacture, ship, and repair virtually all products they market.
There are a number of factors driving this shift. First, because some IMS companies have specialized in the production of certain types of equipment for many years, they have developed substantial design and technology expertise. And second, the global footprints and supply chains of IMS companies are often more extensive than those of OEM's.
In addition, the shift towards end-to-end outsourcing is also enabling OEMs to improve profitability by changing traditional business models. Rather than investing in facilities, capital equipment, core technology development and business processes such as supply chain management, companies collaborate with IMS providers to manage these aspects of their business so they can focus resources on the development of unique products, IP and services that are the core of their business model.
Here are four examples of the business benefits of collaborating with an IMS partner.
Years ago, electronics companies developed most of their core technology. This was costly, timing consuming and often resulted in elements of their technology being uncompetitive. Fast-forward to today and OEMs can partner with a number of companies including some IMS providers who can develop, test and manufacture complex technology. For example, a company with innovative software as a service (SAS) intellectual property (IP) engaged Sanmina to design and develop core technology including high speed PCBs, enclosures and backplanes based on Sanmina's experience in providing these same technologies to other communications companies. This allowed the company to focus and invest in their core SAS product development. Leveraging this more or less turnkey design and technology solution eliminated substantial design and development time and investment.