The majority of electronics manufacturing outsourcing (EMS) providers boast about having an ability to offer global sourcing capabilities to their customers, but in today’s market, what does the term ‘global sourcing’ really mean?

Electronics manufacturing providers who coordinate international Tier One level sourcing operations typically equip themselves with purchasing teams who are strategically stationed around the globe. At the regional EMS level however, this often translates into creating operational relationships with a third party who serves as a representative for suppliers in that part of the world.

Asia Night

“In many cases, businesses who do not deal directly with their suppliers can run the risk of encountering potentially large handicaps – both in terms of price, and at the core of their relationships. In Asia, business is conducted most efficiently through the formation of strong personal connections and direct relationships between individuals. One of the first things we realized after evaluating our own electronics assembly supply chain strategy was that Milwaukee Electronics had no direct relationships with our supply base in Asia! To correct this problem, three years ago we established an International Purchasing Office (IPO) in Singapore which enabled a significant increase in supplier quality, flexibility and value.” said Jered Stoehr, Director of Asia Business Development.

“Seeing the goods before we pay for them, but still having the advantage of extended payment terms has brought a significant improvement to how raw inventory cycles through the whole of our electronics manufacturing operation and, most importantly, allows us to verify quality. All too frequently, in today’s market, regional CMs eventually become overwhelmed with the soft costs and headaches caused by quality issues – due to not having a direct relationship with the supplier of their goods.” Jered added.

Surprise factory visits are routinely made by one or more individuals from the Milwaukee Electronics Asian IPO team – this has changed the nature of our relationship with these suppliers – they take ownership of quality issues and are far more responsive. In short, proximity to a direct Asian supply base drives supplier responsiveness, decreases the costs of maintaining quality and puts the relationship on a more even footing.

“In the rare case where a problem does develop, it is usually caught even before the product ships, but always before we pay,” Jered said.

“All too often, sub-$10 million projects simply get lost inside the enormity of Tier One EMS suppliers. Many customers prefer outsourcing to regional EMS providers like Milwaukee Electronics because we offer a higher level of responsiveness and we truly value their business. That being said, if you don’t have strong relationships, you run the risk of inadequate responsiveness within your supply chain. Our IPO has helped our customers experience this commitment to responsiveness which now flows all the way down through our supply chain. To them, ‘global sourcing’ translates into the strong, direct supplier relationships facilitated by both our U.S. and Asian purchasing teams.” added Jered.

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