The OEM–Electronic Manufacturing Services Provider Relationship Is Being Redefined. Not by Price, by Risk.
For decades, OEMs selected Electronic Manufacturing Services (EMS) partners using familiar criteria.
Those metrics still matter.
But they are no longer enough.
Over the past five years, nearly every major disruption has exposed the same reality:
The greatest risk isn't choosing the wrong EMS.
It's treating a strategic EMS like a transactional one.
What Changed?
Think about the last five years.
None of these challenges were solved by negotiating lower prices.
They were solved through collaboration, transparency, planning, and trust.
In other words...
The OEM–EMS relationship became a competitive advantage.
The Data Tells the Story
Companies across industries are changing how they work with suppliers.
McKinsey found that organizations with stronger supplier collaboration consistently outperform peers in growth, profitability, and operating performance. In automotive alone, deeper integration between OEMs and suppliers could unlock €40–65 billion in annual value through better planning, forecasting, and execution.
The trend is moving beyond cost optimization.
It is moving toward strategic partnerships.
A Different Way to Think About EMS
Most OEMs still evaluate EMS providers using supplier scorecards.
On-time delivery.
Quality.
Cost.
Responsiveness.
Those metrics measure operational performance.
They do not measure strategic value.
Ask yourself:
Would losing your largest EMS partner impact revenue or company risk?
If the answer is yes...
They are no longer simply a supplier.
They are part of your operating model.
Mini Case Study
Two OEMs.
Both experience the same component shortage.
OEM A
The relationship is transactional.
The EMS provider informs the OEM about the shortage.
The OEM calls an internal meeting.
Engineering evaluates alternates.
Procurement contacts suppliers.
Planning adjusts schedules.
Customer service updates delivery dates.
Days pass before decisions are made.
OEM B
The relationship is strategic.
The EMS provider already has forecast visibility based on strategic meetings months before.
Engineering teams have agreed on approved alternates
Supply chain teams share inventory data and are transparent.
Executive teams communicate directly.
Within hours, both organizations agree on a recovery plan.
Same shortage.
Different outcome.
The difference wasn't manufacturing capability.
It was the relationship.
The New Competitive Advantage
Historically, OEMs asked:
Who can build our product?
Tomorrow, the better question may be:
Who can help us navigate uncertainty?
That requires a different type of partnership.
One built on:
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✓ Shared planning
✓ Data transparency
✓ Executive alignment
✓ Joint risk management
✓ Long-term investment
What OEM Leaders Should Ask
Before your next supplier review, ask:
☐ Does our EMS partner understand our three-year growth strategy and technology roadmap?
☐ Do they have meaningful forecast visibility?
☐ Are we sharing risks—or simply issuing POs?
☐ Do executive teams meet outside of quarterly business reviews?
☐ If another disruption occurred tomorrow, could we solve it together?
If the answer to most of these questions is "no," the relationship may still be transactional.
What EMS Leaders Should Ask
Strategic partnerships require more than excellent execution.
Ask:
☐ Are we helping customers reduce business risk? Do we have the systems, processes, and people to address such risks?
☐ Are we providing insights—not just status updates?
☐ Do we proactively identify risks before customers ask?
☐ Are we contributing to faster decisions?
☐ Would customers describe us as a supplier—or as part of their business partner?
The distinction matters.
The Research Supports It
Research into OEM–EMS outsourcing relationships identified the same themes long before today's supply chain disruptions.
The strongest partnerships were built on:
The weakest partnerships were not typically undone by price.
They were undone by misalignment.
Today's business environment has simply raised the cost of that misalignment.
Executive Takeaways
For OEM Executives
Evaluate EMS partners on more than operational performance.
Also measure:
☐ Risk management
☐ Supply chain resilience
☐ Engineering collaboration
☐ Executive alignment
☐ Decision speed
☐ Business continuity
The lowest-cost supplier is not always the lowest-risk partner.
For EMS Executives
If you want to be viewed as strategic, demonstrate strategic value.
Show customers how you improve:
☐ Time-to-market
☐ Supply chain resilience
☐ Decision quality
☐ Revenue protection
☐ Risk visibility
☐ Operational agility
Customers don't become strategic partners because we say they are.
They become strategic partners because the business depends on them.
Final Thought
For decades, OEMs optimized supplier relationships for efficiency.
The next decade may require optimizing them for resilience.
Because in today's environment...
Your most valuable EMS partner may no longer be the one that builds your products.
It may be the one that helps protect your business.
One Question
If your largest EMS partner disappeared tomorrow...
Would your biggest concern be replacing manufacturing capacity—or replacing the trust, knowledge, and collaboration that has been built over years?
The answer may tell you whether they're truly a supplier—or already a strategic partner.
Excellent, very good insight and a much better way to understand the current challenges.
Great summary, David O. Chavez, DrBA as it represents my understanding of partnership and value far beyond manufacturing service, but value creation, while scorecard shows the real value of partnership if you look at the longterm. If you consider an EMS as a partner you‘ll see each other on a regular base (monthly) not to talk about the scores, but between people and the future.
David, the reframe you're describing is spot on, and the mini case study drives it home better than any statistic could. I'd add a question to the Competitive Advantage list: can they scale and continue to support us during periods of rapid growth? Right now that question is just as critical as resilience in a downturn. The OEMs we work with in data center infrastructure and automation are facing explosive demand, and their suppliers who can't keep up are becoming a bottleneck. Uncertainty cuts both ways. The right manufacturing partner needs to be built to support volatility in either direction.