OEM controlled in order to gain more profit from the market, OEM and EMS services to each other for starting the infiltration area.
John Blake is Kodak's consumer digital imaging, general manager of the Department, in his daily work is full of OEM, ODM, EMS and CEM and other acronyms and industry terms. For people outside the electronics industry, these words may be meaningless. But for Blake, he needs every day to deal with the ODM and EMS.
In a recent telephone interview, the executive is almost interchangeable ODM and EMS in the two words, for these two types of partners to give the same meaning. Kodak partners with the ODM and EMS to rebuild its outsourcing model.
In the high-tech manufacturing, the past is usually obvious differences exist. But with the competitive strategy of evolving the enterprise into new markets, these differences are rapidly disappearing. The industry believes that this phenomenon is the manufacture of portable products are prominent in this area before, electronic manufacturing services (EMS) providers and original design manufacturers (ODM) are engaged in significant differences between the activities, but now This difference is gradually reduced.
"I think the OEM will not be too concerned about which martial art from its manufacturing partners, more interested and able to meet their needs partners." Technology Forecasters said Niti Agrawal, senior consultant, "In some markets, ODM and EMS provide a similar service, OEM is considering using both accomplish the same business, or by using them in different product lines. "
ODM products from the outset in the design and use of a standard PC in the field of technology. Today, ODM has become a high volume of professional computer and mobile phone manufacturers, OEM customers of these products only need a little customization you can. Has the same organization chart, EMS companies engaged in the design phase of product life cycle, the part after the bear from prototype manufacturing to mass production manufacturing of everything.
The gradual disappearance of boundaries between the two
Like all things, the situation changed only a matter of time. Today, ODM and EMS is gradually disappearing boundaries between the major reason may come from several aspects: First, ODM and EMS companies like OEM markets under the control of the source to get more profit; Second, the expectations of OEM customers constantly changing, in order to survive had to extend their service.
In this market environment, the top ODM has begun to strengthen its capacity to serve the global market. Them more quickly on a server, mobile and consumer electronics products such as non-PC access Hetong Ling Yu, and along with some of Qi Ye Qi Zhong start own brand of Chan Pinxian, ODM suppliers and retail channels in the influence continued to grow.
At the same time, EMS companies have been increasing design services. They can create the design first name of the banner, then the supply chain design, and now into a complete ODM model.
More importantly, EMS and ODM growth rate decreased year by year. Industry observers said the two camps overlap not only in its ability to provide services or the level of revenue in the market are also becoming more and more close. Technology Forecasters from the statistical data, EMS 2003, the company's operating income growth of about 7.4%, ODM was significantly increased by 35%; in 2005 the two data decreased to 4% and 21%.
Although far from the surface of these figures, but Agrawal noted that, if re-evaluation and classification of Foxconn, the situation may be big changes. The EMS from Taiwan manufacturers, the business has two major areas across the EMS and ODM.
Foxconn camp will be classified as different growth rates in these two areas will have large fluctuations. For example, the data in 2005, Foxconn is listed as ODM company, but if it is reclassified as a camp, then EMS, ODM growth rate of sales from 21% to 16%, while sales will be from the EMS 4% to 12%. "Foxconn every area involved in that, they both ODM is EMS." Agrawal said, "When we started to look at ODM and EMS data, on how to classify them, we are all different."
All areas of the OEM market, companies are committed to selling and stripping away the core competitiveness more responsibility. The boundaries between various types of enterprises will become more blurred, so the classification of electronic manufacturing companies become more complex.
Name start unification
In fact, OEM has led to change the title of the action initiated. Some PC manufacturers will ODM and EMS companies gathered in the contract design manufacturer (CDM, Contract Design Manufacturer), under the banner. ODM and EMS will focus on the broader definition of the term among the CDM, this trend implies that in the choice of OEM partners will have greater flexibility, and do not care partners to address, but rather to find the best partner to complete The task at hand.
For example, Kodak in August and Flextronics of Singapore signed a contract, ranging from design to logistics of the business. EMS as the top company, Flextronics not only responsible for all of Kodak's digital camera manufacturing activities, including design and open the camera function and the related operations and logistics services. "We not only want partners to be able to bring manufacturing efficiency and cost-effectiveness, but also hope they have a wider range of capabilities." Kodak's Blake said.
Change the call is not difficult, but the products faster to market pressures are affecting the entire industry, the overlap in services and, in some product areas heated competition. With the traditional high-end products into the mass market, as well as the program platform, these products become more common, some businesses may have the same ability to spread to a number of partners who.
Although there are many choices, but in the pursuit of price discounts and guarantee quality and service under the guidance of long-term goal of consistency, OEM companies prefer to maintain a period of time with several selected partners. Therefore, an early sign the contract at the tender stage, the EMS and ODM for urgency.
But the competition is fierce. Agrawal said that in the spring of 2005, 49 enterprises interviewed 20% of EMS, said the project tenders are facing direct competition from the ODM. The spring of 2006, 43 EMS companies have 28% holding this view.
Outsourcing partner selection according to the required
For the OEM, choose the right outsourcing partner can be relatively easily. Many OEM manufacturers have shown that partners are less concerned about what category, but about who the highest quality and lowest price to complete the task, and the most flexibility. "OEM would ask what they do best and what their partners do best." ISuppli analyst Adam Pick the company said, "This will determine the OEM or EMS company will select the ODM manufacturers."
In addition, if a field of OEM PC manufacturers want to maintain price leadership, and has established a strong global supply chain, it may be because the ODM has a design capacity of the related fields tend to cooperate with the ODM manufacturers. If an OEM has a design strength and the need logistics help, it may choose to EMS companies. In addition, some vendors also may adopt hybrid manufacturing strategy in order to market a broader range of products, they will demand specific products to determine the selection of the EMS or ODM.
Respond to these demands from the OEM, Solectron and Celestica EMS and other top companies are emphasizing its strengths in the global production, including their lean manufacturing processes, and distributors, suppliers and logistics service providers between close relationship, for after-sales maintenance and warranty support service capability and their newly formed project team. In addition, they also made it clear that it will not compete with the OEM customer. However, in ODM in the field, when a manufacturer to a technology platform has accumulated sufficient expertise, it may launch its own brand, which often happens.
"Our selling point is the partnership." Solectron's executive vice president and chief technology officer Dave Purvis said, "There is a pattern we call it product management, has been relatively successful. If there is an existing product line, and OEM hope to update the product, we can assume the implementation of the product line to take over part of the design, manufacturing, supply chain and reverse logistics. "For example, he said, for some short life cycle of electronic products, such as consumer set-top box, may every three months requires a new framework. OEM only want to maintain the basic structure of a few years, every three months, also hopes to launch a variant of the architecture.
Emergence of new manufacturing paradigm
As the industry continues to converge, more models are to emerge. For example, some ODM spin out a new business, part of the remains ODM business, but the other part into its own brand business. Market research firm PRTM's director Manoj Kumar to these enterprises as "OBM". In addition, some OEM ODM, who is also the role, and the second-tier ODM and EMS companies are also trying to fight for his place. "There is huge in these areas change." Kumar said, "There is a growing awareness of the need to set the power of multiple vendors to develop, manufacture and sale of branded products."
Acer in Taiwan in 2002, recognizes this point, when the company created Wistron (Wistron), and manufacturing as a separate entity, while the parent company is focusing on developing their own brands. The PC maker's spokesman said the reason for taking this route is to avoid and other top PC OEM firms.
Ranked by PC unit shipments, Wistron ranked third highest in Quanta Computer and Compal after. The company from its parent company and other 10 PC OEM vendors get a substantial number of manufacturing contracts in 2005, Wistron's revenue of 50 billion dollars, 2.2 billion in 2002, its business growth comes mainly from PC in the field. The company spokesman said: "For us, the field can be great in the PC market, but we are facing multiple directions."
Annual turnover of 1 billion U.S. dollars of the D-Link Systems Inc. in the OEM and ODM development path to take another route, it is the United States D-Link's North American department. From a business model point of view, D-Link is also OEM ODM, production of advanced networking products, broadband, digital, voice and data communications products, has its own brand, and to undertake other OEM ODM work. "Our key to success in the flexibility." The Steven Joe, president and CEO, said the existing products, about 70% of its own brand, and the remaining 30% is for other OEM products . "In the short span of 5 to 7 years ago, these numbers just the opposite."
With the D-Link build up your reputation, it also plans to outsource manufacturing operations to other ODM or EMS companies, and chip manufacturers, technology providers and distribution channels to establish closer ties between.
The survival of two companies
EMS and ODM industry has been a major shift in all the top manufacturers in the body, but it is not proved that two companies reflect not sensitive enough. According to data published by iSuppli Corporation, the top 10 EMS companies and top 10 overall in 2005 ODM contract manufacturing accounted for 67% of the market, total revenues reached 1,470 million. The two ODM and OEM manufacturers have a regional advantage, and focus on niche markets, these advantages will enable 23 companies overall business size in 2010 45 billion U.S. dollars, far higher than the 19.1 billion in 2005. This EMS provider Elcoteq of Finland and other vendors is good news, the company established ODM business the last five years, for the communication industry.
Elcoteq decided to use the ODM business to complement its EMS business, in order to deal with mobile phone services and related technology platforms to mature situation. "In our value chain to offer fully integrated ODM model, from design to manufacturing, delivery and after-sales support." Elcoteq product development senior vice president Anssi Korhonen said, "Our ODM model the main areas for certain quantities and markets well-known OEM companies. "
Despite the emerging model, but there are still long-term viability of the contract manufacturing industry questions. "ODM and EMS will be on how the competition is uncertain." ISuppli analyst Adam Pick the company said, "ODM or EMS companies getting the better of the industry, they must determine their competitive advantage and long-term defense strategy."
With the emergence of new business
Increasing competition led ODM EMS providers and access to new markets and develop new business, which they need in any means possible to protect them. Design and innovation, lean manufacturing and 6 Sigma tools of production, supply chain and logistics efficiency, and any other tactics to attract OEM look.
So, how to position themselves these competitors do? EMS and ODM what measures are being taken to highlight the characteristics of their own? Moreover, with the division of labor increasingly blurred, the electronics industry to face in the inflection point of these two very different manufacturing mode? for the vendors, the answer varies. But the industry says that no matter what strategy adopted, success in the industry are due to its ability to show up.
"If you are a OEM company, you will face enormous pressure to at the right time right place to launch the right products." ISuppli's Pick said, "OEM will first consider what they do best what their partner What is the most good, which will determine the ODM or OEM will select the EMS. "
When the design is becoming an important business, EMS companies are packaging their services will become more complete solution. For example, Celestica's senior vice president of strategy Art Cimento, said the company has created called "Bell Bay" solution accelerator, which is an advanced telecommunications computing architecture, can be modified to suit the specific products . The speed for the OEM to provide a basic design platform to customize it.
Celestica is expected to launch such a service can help customers shorten time to market of new products. It is reported that it has seen a customer time to market from 6 to 9 months, reduced to 3 months. "We provide professional design services and technology mainly aimed at OEM reluctant to part such as mechanical or enclosure, etc. 宸ヤ綔." Cimento said, "Youliaozhege Jiasu Qi, Womenxianzai to prove that the product concept of Zhengque production Zhi Qian sex and the preparation of the Operational Guidelines. "
EMS companies also make long-term plan. They knocked on those in the slow pace of outsourcing OEM door efforts and aerospace, medical, telecommunications and other industries in the high-end manufacturers may take longer to establish the duration of the contract. Cimento said, this strategy can make EMS companies to offset their computer, cell phones, inkjet printers and some types of servers of dependence in all Zhexie products have or are in the transition to the ODM.
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