Express Manufacturing, Inc. (EMI) recently celebrated its 30th anniversary. The company has come a long way since its humble beginnings and its first garage assembly set-up. Today, EMI has five buildings in Santa Ana and a wholly owned facility in China. In the past 30 years, EMI has witnessed many changes in the industry, but the company’s singular focus on its customers has enabled it to maintain its steady growth. C.P. Chin, President of EMI, notes that the company’s success comes as a result of true partnerships between EMI and its customers.
EMI’s success derives from its customer’s success, which highlights the importance of having the right match between customer and EMS provider. When asked about the key to maintaining growth over 30 years, Mr. Chin focuses on four primary areas: customer satisfaction, providing the lowest total cost of acquisition, providing manufacturing flexibility, and creating successful supply chain relationships.
The philosophy regarding customer satisfaction is simple—when a customer’s needs are met or exceeded, they will come back again and again. The ability to produce the required yield while maintaining quality is the key to keeping customers happy. EMI owes its success to its loyal customers, and quarterly surveys are one of the ways EMI ensures that customer needs are being met.
The company’s management team studies the customer feedback, and makes necessary changes to processes on an ongoing basis. Similarly, performance charts enable the entire operation team to measure their progress and ensure that project requirements are being met on a real-time basis.
A second key to success is the ability to ensure that customers achieve the lowest total acquired cost. Unit cost is always an important factor in selecting an EMS provider, but it is just one of the many factors that figure in an overall “success formula.” EMI learned early on that customers always seek the lowest total acquired costs. This means achieving the lowest unit cost when all the overhead, management, communication, and yield costs are factored in.
Many companies seek to achieve low material cost, but fail to take into consideration factors such as management time, travel time and the high cost of poor quality. The real proof of quality and total acquired cost is the customer loyalty that EMI has enjoyed for 30 years. The quest for lowest total acquisition cost never ceases at EMI.
Essential to providing the lowest total acquired cost is EMI’s third success factor, which is to enable manufacturing in either the U.S. or China, depending on the unique needs of the customer.
While there are a few exceptions, China typically has a lower labor cost than the U.S. Thus, it is not surprising that most people would assume that building products in China would automatically reduce their production costs. But a more important consideration is the labor content of the product being produced. If the product has high labor content, the lower labor costs in China can result in overall savings.
However, if labor content is low and the electronic assemblies are built by automated SMT machines (assuming component costs are the same), there will be minimal savings. Products built in China will accrue additional shipping and customs costs. Box builds usually have a higher labor cost in assembling and testing. In theory, companies gain a cost advantage by doing final assembly in China; in reality, it depends on the weight of the final products and the mode of shipping. EMI always factors in this “landed cost” of the complete unit in the customer’s cost formula.
Materials cost is another element in the total product cost equation. Electronic assemblies are made up of a bare PCB, many electronic/electrical components, and other miscellaneous items such as cable assemblies and parts such as heat sinks. While it is true that components can cost less in China or Asia, some components are not available in Asia. In this case, the sourcing has to come from the U.S. and a Chinese EMS will require special handling of these parts, increasing cost.
At times, pricing information for an item in the bill of materials (BOM) will take an unusually long time. When this happens, it can be an early warning sign of potential problems with component supply. Other considerations that factor into the total acquired cost calculation include lead time, volume, shipping time and costs, customs, and warehousing expenses and logistics.
The final success factor that has enabled EMI to flourish for 30 years is the creation of successful supply chain relationships. EMI has exhibited loyalty to its suppliers, provided they continue to deliver high quality products and services that mirror EMI’s service philosophy. For example, EMI has standardized on Fuji production line equipment in both Santa Ana and China. This enables efficiencies in terms of training, operations and maintenance, as well as allowing seamless production transfer between China and the U.S.
EMI provides the full complement of services on the EMS side. Once a customer delivers a schematic to EMI, everything can be handled by EMI including PCB layout, procurement, production consulting/support, testing, operations, and order fulfillment. Some companies, however, have a brilliant product design idea and strong financial backing but lack design expertise. Part of EMI’s supply chain solution includes finding a partner to provide first rate design services to those customers.
Similarly, part of providing a world class customer experience requires that component suppliers provide quality components without disruption. EMI has developed trustworthy component supplier relationships from its earliest days as a labor-only contract manufacturer. Over the years, these component suppliers have come to be reliable partners, enabling EMI customers to achieve cost savings and faster time to market.
In short, EMI has built an eco-system that embodies EMI, supply partners, design partners and manufacturing capabilities, all working together to enable customer success.
After all, its reputation and customer relationships depend on it.
For more information on EMI visit http://www.eminc.com/.