How to buy off your supplier's pricing, if you are from OEM

    This is a simple guide to buy off a contract manufacturer's price.... if you are outsourcing your products for someone to build. 

It is a simple guide that I would like to share. And it also has a simple process flow on how things could be done. 

Why I wrote this blog? I noticed that there are OEM folks that might not be at the competitive position to negotiate with their suppliers. Thus, they could not negotiate for a better pricing & be competitive with their competitors. 

Below is a mindmap guide as an overview, in JPEG form. I do have the PDF copy. 

Here are the details in point forms. If you would like a well formatted copy, please email me.

 How to buy off a supplier's pricing, if you are from OEM

o Pre-requisite

 You are involved in supplier pricing

 You are from OEM

 You need to approve pricing

o What do you need?

 A few suppliers

 A business or a purpose

 An RFQ package

 Complete BOM & spec package

 Manufacturing flow

 Test requirements

• ICT or Flying Probe

• BST?

• Functional test

• System Test

 Quality requirement

 Annual volume

 RFQ timeline overall

 Sample products or pictures

o What are the catchy items

 Incorrect costed BOM

 Incorrect UOM

 Incorrect labor assumptions

o General Process Flow

 Identify business/opportunity

• Identify potential contract manufacturers for RFQ

o Reach out to the CMs

 Confirm interested, send RFQ

• Info

o BOM & specs

o Quality requirement

o Manufacturing flow

o Timeline

o Test requirement

o Any materials with contract pricing?

 Provide the list

• Provide a specific format for RFQ

o Organize a Q&A session with suppliers

 All questions answered

 Suppliers worked on RFQ package

 Follow up with suppliers for RFQ status

 Suppliers to submit RFQ

 Review & buy off

o If ok, business award

o Start project? 

o Transfer project

o Qualification plan

 Once approved, full business award granted

o How to review? 

 Check BOM

• Part numbers

o CPN

o MPN

o Description

• Qty per

• UOM

 Obtain internal costed BOM

• For comparison purposes

 Check process flow from suppliers

 Check suppliers' committed capacity

 Labor cost

• Cost per component price?

o Depends on

 EAU

 Complexity of product

 Stability of design

 Items to consider? 

• Shop rate

o Building space needed

 Depreciation period

 Depreciation cost

o Water & electricity

o Total equipment cost

 Depreciation period

o Labor required

 DL

 IDL

o Wastage

o Effective working hours

o Manufacturing process

 Clean?

 Non clean? 

 Cleanroom requirement?

 Conformal coating

o Rework rate

• EAU

• Number of heads used

o To see if there is duplicated stations

• Where are the bottlenecks

• Suppliers ROCE %

• SPI?

• SG&A cost

• Inco terms

 

If you would like to have more on the strategy, please email me. I can share more on how to catch where the contract manufacturer hides their fat, and what are the items to look at. 

Hope you enjoy this. 

As usual, please email me if you have additional comments or request. Your feedback is highly appreciated.

Thank you & best regards,

Ronald Gan

Quotation Process for Contract Manufacturing.... an example

     This is an example of how a quotation process is for contract manufacturing environment. 

    There are multiple systems used in the market for contract manufacturers. Some of them are using off the shelf product to carry out a quote. While others may have developed internal system to manage this process. Of course there are pros & cons for these 2 options. Can you list a few?  

    The below picture suggest the first part of the quotation process flow. The second part of the quotation process is actually listed in my earlier blog, named "new business buy off".

   

    There might be technical terms used. Please email me if you have any questions. This could be a basic start for you to learn how to know the whole quotation process works in an EMS industry. 

    Just one additional note, this process can also be used for any major ECO (engineering change order) re-quote. 

    Hope this helps you understand a little bit more on the quotation process in an EMS industry. As usual, I appreciate your feedback & comments. If you need a PDF copy, please email me. 

Thanks. 

Best regards,

Ronald Gan

Warehouse common chaos - an analysis - Quick overview

    Throughout my working life in an EMS industry, I have seen a few well managed warehouse. However, I have also seen such many poorly managed warehouses. 

I have taken the opportunity to look into one of the warehouses and would like to share them with you. 

Below is just a quick overview:

• Warehouse Readiness

o Receiving

 Resource

• Receiving

o Critical

o Main purpose

 Receive goods in less than 30 minutes per truck

• How to shorten?

 Cleaer trucks

o Expedited materials

 Special process to handle this

o IDM

o MRO parts

o Process flow

• Expedite team

o Who? 

o Process flow? 

• Sorting process

o Abnormality

 How to handle? 

• Use "Banking" concept

o Normal process

 Provide training & guide

• How to allocate

• What do you have now?

o Can you hire temp staffs?

o Fork Lift

 Driver/operator

 Battery

 Process flow

• Normal

• Expedited

• Must provide proper guide & process flow

o People know what to do

o IQA

 Resource 

• Do we have enough people?

 Process flow

• Normal

• Expedite

• People know what to do

 If IQA lack, it will snowball

 Process flow

• Normal

• Expedited

o Store

 How to store? 

• Can the current resource complete the work?

o If no, please establish new process flow

• Place to store

o WMS

• Process flow

o Kitting

 Major challenge

 Resource

• 2 shifts

o Morning shift

 Clear all expedited kitting

o Night shift

 Clear normal kitting

• Get enough people

 Process flow & expectation

• Finish the activities the same day

o No overflow

o The goal?

 Warehouse operates normally

 Full support of production

• Normal demand

• Expedited process

o MUST Adhere to

 5S

 QBwM

 Zero defect

 No excuse

 Ask yourself this question

• Can or cannot do?

• Want or don't want to

I hope you enjoy the above article. 

I appreciate your feedback and comments. 

If you would like to know more, please let me know. 

Best regards,

Ronald Gan  

Example of Information gathering before a SWOT analysis

    I have the opportunity to make a good info gathering of an EMS company, before getting into the SWOT analysis. The above graphic is how I draft my work using a mind mapping tool called Simple Mind.

    Generally, information gathering is more difficult to do, when compare to SWOT analysis. You will need to have full information before a proper SWOT analysis could be done, as well as preparing for a way to counter the SWOT. 

Hopefully you will enjoy.  

Company XXX SWOT - Info gathering

Topics

 BD

 Program management

    • Extremely weak

    • No proper training

        o Hit the ground running

    • Very junior

    • Does not really serve the full purpose of this team

 Strategy

    • Nvr change

    • Arrogant 

    • Want to grow to usd X B

        o Did not know what to give & take

 Quotation 

    • Know how

        o Not many really understand the details

        o Not many encouraged to explore variations

        o Not many knows really how the format works

    • Succession plan

        o Slow

        o Not ready

    • Highly secretive

        o Too many fat hidden in the costing file

    • Only good for PCBA

        o HLA, system build & System integration is not well costed

        o Distribution & Direct Fulfillment is not well costed

        o Reverse Logistics is over priced

    • Excel file

        o Macro written by one person

        o No back up plan

    • CBOM weaknesses

    • Overall process weaknesses

 Finance

 Senior management

    • Poor succession plan

    • Very biase

    • Perception

    • All of them have their own agenda

 Engineering in manufacturing

    • 90% of them are weak in these areas

        o Experience 

        o Exposure

        o Skills

        o Knowledge 

        o Language

             Spoken

             Written

        o Problem solving skills

        o Integrity

 Problem solving

    • Weak like hell

        o At working level

        o At senior level

        o Just want to get over it

    • No standard way

 Quality

    • Very poor

        o Don't know how to manage the situation

             Fail to solve a complex problem systematically

    • Bad mentality

    • Significant escapees

        o R&D

        o Manufacturing

    • Majority of the team is weak

    • There is no proper & systematic problem solving tools being used

    • Most of the times, failed to even identify the "Problem Statement"

        o Jump directly to root cause

 Overall Integrity

    • Very lack of integrity

    • No professionalisme

    • All based on personal perception

    • Top management can do what they like

        o Will get their "watch dogs" to run the dirty work for them

             Spread news

             Influence

             De-fame

             Gather information

             Benefits 

    • Only good for senior management - Director & above level

        o Always there will be food & drinking sessions at top level

             Using company's money for "personal agenda"?

    • Lousy medical coverage

 Customers visits

    • Very good

    • Systematic

    • Senior management's involvement

    • Flexible

    • Utilize MH Green Sheet

    • Excellent salesmanship

 CRM tools

    • Ms Dynamics 365

    • IBM cognos

    • IBM TM1

    • Miller Heiman

        o Blue sheet

        o Green sheet

        o Used at all level

                 Standard language

    • Power BI

    • Annual customer survey

        o Customer is getting annoyed by this survey

        o No proper actions taken

             No change

    • Customer review

    • Great tools, BUT

        o Not many people knows how to really use it

             For the real purpose of self improvement

 Engineering R&D - focus in APAC

    • Poor succession plan

    • Not qualified as senior management

        o Poor in managing customers

        o Unable to manage situation

    • Charges are extremely high

    • Lack of business people that is able to quote based on what the customer wants

    • Very inexperience

        o Too young 

    • Always over charge

    • Don't know how to be flexible

    • Refuse to accept the fact that they are weak

        o Still thinks they are the best

    • Arrogant 

 Succession plan - weak

    • Functional / Department head

    • GM

    • Senior level

        o Questionable

    • Operations Directors that are capable

    • Not based on how good a person is

        o Based on how much top management likes the person

 Secret projects

    • Way too many

    • Too secretive

 Internal politics

    • Among regions

        o Massive

    • Personal gains & agenda

    • At top level

    • Very unhealthy

    • Worst I have ever seen

    • Always in a blame game

 Supply Chain

    • It is a big political mess in this group

    • Very weak

        o The team thinks they are very good

             That is because they were never exposed to real good SCM team

    • Leadership sucks in APAC

    • There is no proper plan & long term goals

        o Don't have the know how

    • Sub teams

        o Costing

        o Sourcing

        o Procurement

        o MRO

        o Logistics

        o Warehousing

        o Materials system

    • ERP system used is really outdated

 Travels

    • Senior level travel in business class

    • Hit the ground & start to work

        o No time for rest

 Pay & package

    • Lower than industrial standards

    • Lower than competitor

    • Extremely lousy package in APAC region

    • Package is very good only for Director & above level

 Work hours

    • No flexibility in APAC region

    • Very calculative

Note: 

The information gathered is based on my personal view. If further information is desired, please email me. 

Last but not least, would appreciate your feedback and sharing. 

SWOT Analysis example

This is an example of a SWOT analysis that I have prepared.
S: Strength (Internal)
W: Weakness (Internal)
O: Opportunity (External)
T: Threat (External)


Why is a SWOT analysis so important?
What can we get out of this SWOT template? There are a lot we can achieve using this template. Can discuss more....

Please email me if you need further discussion/info or example for this SWOT template.
If you need a spreadsheet in Excel format, please email me too.