ALAMEDA, CA -- There is a continuing disconnect between what OEMs want and what they say they are receiving from the contract manufacturers that build their products. That's according to a new study by research firm Technology Forecasters Inc.

Based on interviews with approximately 130 managers at more than 100 OEMs, the top priority is a need for their contract manufacturers to reduce the total cost of ownership.

EMS firms were ranked in five categories. On average contract manufacturers with annual revenues of $5 billion to $10 billion received the highest ratings. Among the worst performing were companies with annual revenue of $1 billion to $5 billion.

"This study gathered ... some surprising results. For example, 64% of the OEMs interviewed said that communications with their manufacturing suppliers were implemented through phone, fax, and email, rather than through any kind ERP system," said TFI senior economist Matt Chanoff, principal writer of the report, EMS/ODM Report Card and Buyers' Guide. "Although nearly all companies on both sides of the supply chain run their own automated ERP systems, the majority appears not to be connected, and many respondents expressed frustration."

 
Respondents identified early-stage involvement in the design process, or design for manufacturability services, as the most effective way to reduce the total cost of ownership. This was followed by the tactic of designing contracts with periodic price reductions, which is a standard practice.

 
The report examined four other categories of concern to OEMs in addition to reducing total cost of ownership: contractors' flexibility and responsiveness; how well they leverage technology; global supply chain co-ordination; and environmental compliance services.

 
The study rates the performance of 16 contract manufacturers -- 12 EMS providers and four ODMs including Asustek Computer, Celestica, Flextronics, Foxconn, Jabil Circuit, Quanta, Sanmina-SCI, Solectron and others.

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