Shammy Khan on the Logic behind Outsourcing to an EMS

Shammy Khan VP of Flextronics, a leading EMS company that offers complete design, engineering, and manufacturing services to a variety of industries, explains why OEMs (original equipment manufacturers) should consider using EMS (equipment manufacturing services) companies.

Today there is an oversupply of solar and hence fierce competition. What differentiates companies is not their solar panels, but their sell. Price is going to continue to drop, and in order for a company to survive it will need to focus on scaling. In addition, a company needs to have a superior cost structure because at the end of the day, price is #1. Shammy advises companies to outsource to an EMS anything that is not their intellectual property. Many EMS companies today have the capabilities to build solar inverters, junction boxes, and PV modules among other solar elements. You can source the cells, consign them to the EMS company and they can build the PV module for you.

So what are the top reasons to outsource to an EMS?

1. OEM can focus on what it does best, its product technology, without worrying about the logistics necessary to get its product to market

2. EMS know how to manage cost, inventory and assets

3. EMS already have infrastructure in place for production and distribution

4. EMS have distribution locations in many different geographies - allows products to get to end user faster.

5. EMS has vertical capabilities in multiple countries in the same geography

6. EMS have "Super Campuses" with 70,000 people on site with suppliers co-located on site - Advantages of this are elimination of lead time, reduction in packaging cost reduction in freight cost, and hence continues to take cost out of the system.

7. EMS helps you manage foreign duties and currency shifts more easily

8. EMS understand other cultures and what it takes to manage a company in various countries.

9. Allow company to scale faster and much more easily

10. Save the money necessary to build new factories.

Shammy was a panel member on "Fueling PV Growth Through Manufacturing" at "Growth Opportunities in the New PV Market: Projects, Finance and Policy" event at this year's Intersolar. To find out more about the company visit the Flextronics website.

Lecture filmed by buildaroo.com. Event produced by Greentech Media in partnership with the Prometheus Institute.