Venture Outsource Launches Online Directory Comparing EMS / ODM Companies Driven by PPV and Disasters While 2012 EMS Industry Total Revenues Forecast Sees 7% Growth

Venture Outsource announced today the launch of its online EMS Resources Directory that provides all site visitors a free and unique experience based on specific search parameters and proprietary algorithms enabling users to locate and compare electronics manufacturing services (EMS) providers and original design manufacturing (ODM) companies across North America, Europe and Asia.

Targeted Search Results

With more than 125 company listings already in its database, the EMS Resources Directory delivers targeted search results and EMS / ODM company listings by markets served, services offered and geographic location with each EMS or ODM listing sorted by degree of match with company differences visually highlighted for easy comparison by users.

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EMS Industry Navigates Rough Waters

"Despite worries the EMS industry will be flat in 2012, IDC sees opportunities for ODMs from strong growth in tablets, the launch of ultrabooks and ultra-thin PCs, and computer OEMs returning to the smart phone segment," says Michael Palma, research manager for electronics manufacturing services at IDC.

IDC indicates growth in these end-markets and from these OEMs is expected to help the EMS industry grow total revenues by 7.0% in 2012, down from 2011's estimated 8.7% growth rate.

However, “EMS firms will face a more challenging 2012 with revenue growth at half of the total industry's due to weaker enterprise spending and tough end-market demand and outsourcing in the emerging segments,” adds Palma.

Given the continuing economic headwinds, outsourcing companies are even more on the lookout these days for effective ways to get their message in front of OEM decision makers and to capture valuable mindshare.

“Our research shows that a lot of our site visitors regularly use our domain to help them make purchasing decisions for products and services offered by EMS and ODM companies,” says Mark Zetter, founder with VentureOutsource.com, a Venture Outsource, LLC Website.

“VentureOutsource.com has carefully built credibility with technology decision makers over time by providing helpful on-line tools and publishing authoritative articles submitted by experts who understand the challenges industry faces,” says John Bran, vice president of global sales and marketing with SMTC (SMTX:NASD) (www.smtc.com), a global EMS provider with projected revenues of $240-$260 million for 2012, with facilities in USA, Canada, Mexico and China serving end markets such as computing; communications electronics, industrial, medical, and others and listed in the EMS Resources Directory.

Savvy OEMs Manage Purchase Price Variance (PPV)

Some industry reports previously estimate possibly two-thirds of operating profit margins for EMS providers is derived from component purchase price variance (PPV) where EMS providers negotiate lower costs for components purchased by suppliers, while OEM customers pay a mark-up price.

“Not all EMS providers play the PPV game, but they must be allowed to make a profit. Meanwhile, many OEMs today are becoming savvier supply chain negotiators as they gain more access to good EMS industry supply chain knowledge giving them added insight into decision-making,” adds Zetter.

This increased knowledge many of today’s OEMs have regarding best practices and ways to improve outsourcing strategy further contributes to the hyper-competitive environment EMS industry providers find themselves in.

But, while tech OEMs are constantly searching for ways to increase profits, better decision-making is not the only activity impacting OEM supply chain profitability while adding to the hyper-competitive environment for today’s EMS providers.

Big, or small, no company can protect itself or its supply chain 100%, all of the time.

Natural Disasters Drive Decision-Making and EMS Resources Directory Traffic

Stalwart Japanese tech and consumer electronics firms like Panasonic (PC:NYSE), which recently said it is forecasting a $10 billion loss, and Sony’s (SNE:NYSE) TV operations, which continues to suffer losses, are both having trouble finding footing.

Both Japanese companies have been hit by the appreciating Japanese yen which makes some of the products these companies produce less competitive against other Asian tech companies like Samsung (5930:KS) and LG (66570:KS).

Another factor is a lot of Japanese firms have their manufacturing located in Thailand and that country is still recovering from floods occurring last year.

VentureOutsource.com noticed a considerable jump in overall Website traffic, and search queries specific to the EMS Resources Directory - lasting for several weeks - immediately following flooding in Thailand.

Similar increase patterns in site traffic and Directory search were also noted following the March 2011 Tōhoku earthquake and tsunami in Japan.

Both increases in site traffic and search queries are believed to have been driven by electronics industry supply chain decision makers searching for alternative contract manufacturing sources.

OEM-EMS Relationships

According to various reports from EMS industry research teams at Citi Investment Research and Credit Suisse, Sony outsources some of its product manufacturing in partnerships with EMS providers Flextronics (FLEX:NASD), Hon Hai (2317:TT) plus the Japanese OEM also has a partnership with Taiwanese ODM company, Quanta (2382:TT).

Panasonic outsources some of its products with Celestica (CLS:NYSE), while Samsung engages EMS provider Foxconn International Holdings (FIH – 2038:HK).

LG also partners some product manufacturing programs with FIH and the Korean electronics giant also has some partnerships in place with Flextronics and Jabil (JBL:NYSE).

When it comes to creating OEM-EMS relationships, VentureOutsource.com has helped introduce hundreds of OEM decision makers to EMS and ODM companies.

Zetter says Venture Outsource is a heavy user of its own Directory. “We regularly use it to help us identify providers that could potentially be suitable matches for OEMs who submit their outsourcing program requirement to us through our online form, EMS Matching for OEMs, asking us to help them find alternative EMS and ODM companies.”

Outsourcing = Operational Excellence

Outsourcing is not going away because OEM companies recognize the value EMS providers bring to the outsourcing relationship: operational excellence often accompanied by lower cost.

As OEM-EMS partnerships become even more important to global technology supply chain executives, Zetter says industry keywords driving organic search traffic to the domain shows evidence “VentureOutsource.com is capturing OEM decision makers at the right time, while they are engaged online and actively gathering information on EMS companies and best practices to help them make more informed purchasing decisions.”

As with OEM companies, EMS and ODM companies are also benefitting from the EMS Resources Directory.

“We’ve already engaged several qualified business leads as a result of being featured in the EMS Resources Directory. VentureOutsource.com is an innovative and forward-thinking Website providing real value for the industry,” adds SMTC’s John Bran. (See: SMTC listing in EMS Resources Directory)

Additional links

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About

VentureOutsource.com is the knowledge gathering and sharing online resource, owned by Venture Outsource, LLC, for the global electronics contract manufacturing industry providing open job listings, expert-written articles and helpful tools like the EMS Resources Directory, Outsourcing Calculator for OEMs plus the VO GlobalNet community forum designed to inform and help people in electronics engineering; purchasing, manufacturing and supply chain operations roles create and enhance relationships across North America, Europe and Asia and make better business decisions.

Keywords

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