Our outsource feasibility client is typically a major electronics products manufacturer with materials spend of over $100 million and global “in-house” production facilities. Besides complex financial analysis partially described below, this work requires practical understanding of a broad range of economic and non-economic issues, including motivations of EMS providers to assume OEM production by take-out, take-over or asset purchase. CMC has developed a comprehensive framework for evaluating possible outsourcing strategies from the perspective of both the OEM and the EMS provider.

Our work is comprehensive and leading-edge. It includes study of production processes, supply chain management, material management, operating financials, budgets, assets, staffing and compensation, demand management, NPI and other factors. We drill-down on materials to estimate possible cost-down by outsourcing. Potential economies of scale, production efficiencies, inventory and vendor management are studied to quantify potential improvement by outsourcing to a suitable EMS provider. New costs if outsourced (e.g. CM managing costs, buffer stock) are identified and estimated.

The final report includes potential transition plan, multi-year projections of comparative COGS, balance sheet impact, after-tax cash flows and ROI. It also includes factors favorable and unfavorable to outsourcing, summary assessment, risks and mitigation plans.