Top 5 Challenges OEMs and EMS Must Address Before Signing a Contract
17th December, 2025 Posted by Ankush Agrawal
To thrive in business, you need the right partners. A partnership should not be based on verbal assurance but on clearly defined terms. As an OEM, you always look for the right EMS partnership because your current business and brand value depend heavily on it. When you opt for a turnkey box-build solution, your EMS partner takes care of not only the manufacturing process but also the entire supply chain, both upstream and downstream.
The real point is: what contract terms should you keep in mind while dealing with an EMS company? As a buyer of services, an OEM must receive the best product with the right quality, at the right time, and at an affordable price.
Manufacturing is the process of converting raw materials into finished goods. Therefore, the inputs you provide such as BOMs and design instructions must be accurate. And most importantly, the robustness and flexibility of your EMS provider's supply chain matters greatly. If the supply chain is not strong enough, you will never receive output on time. You may get the best quality, but your competitor could still win by entering the market at the right time.
Based on the above paragraph, we can identify five key points or challenges that OEMs and EMS providers must keep in mind before entering into a partnership.
5 Challenges That OEMs and EMS Must Consider
1. Technical Documents Should Be Complete & Accurate
"Perfection lies in detailing." A technical document must include every minute detail in a clear and structured format so the intended user does not miss any critical requirement. Even a small omission in technical documentation can lead to major losses later. When an OEM awards a project to an EMS provider, they must supply a complete set of technical documents.
These documents outline the components or raw materials to be used, detailed diagrams of the electronic device, PCB trace layouts, and drawings for wire harness and cable assemblies. Every technical document must be precise, and both parties should mutually agree on its content. In case of any malfunction, failure, or dispute, accountability is determined based on these approved documents.
Below is the list of essential technical documents:
Bill of Materials (BOM)
A BOM lists every single component with accurate quantity, dimensions, ratings, and relevant specifications required for PCB assembly, mould manufacturing, and other electronic manufacturing services.
Gerber File
The Gerber file is one of the most important documents in PCB assembly and fabrication. It shows copper traces, drill hole locations, component pads, board outline, and silkscreen layers. Because it defines the PCB layout, any error or omission can lead to product malfunction.
Step File
A STEP file is a 3D CAD file representing the mechanical design of the enclosure and the integration between the enclosure and PCB. It must be highly accurate as it directly affects product fit, reliability, and performance.
Test File
A test file defines how an electronic product should be tested at different stages, including the final validation. OEMs provide this file to guide EMS providers in setting up In-Circuit Testing (ICT), Functional Testing (FCT), boundary scan testing, or any other required test protocols.
Other Supporting Files
Additional files typically shared between OEMs and EMS companies include:
- Schematic diagrams
- Pick-and-place files/ CAD data
- Assembly drawings
- Fabrication drawings
- Firmware/software files
- Mechanical drawings
- Quality & compliance documents
- Packaging specifications
- Approved Vendor List (AVL)
- NPI checklist and process instructions
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2. Meeting Production Deadline on Time
One of the major disasters in business is when a consumer is ready to buy your product and you don't have it. "Time is money" for smart entrepreneurs, so they always want to penetrate the market. In the case of OEM and EMS partnerships, the EMS has to ensure that the delivery is always on time and ensure flexibility in production as per demand trends.
To meet production deadlines, an EMS must set up an upstream supply chain through vendor management to ensure raw materials and components are supplied on time. They must also establish a manufacturing method for efficient processing of raw materials into finished goods in minimum time. Similar to upstream supply chain management, they need to focus on downward supply chain management as well, which includes packaging and dispatching the final products to the desired location.
Most importantly, they should maintain continuous communication with the OEMs to manage the production cycle as per current demand.
Few challenges EMS faces in meeting production deadlines:
- Late supply of components from vendors due to unavailability or price changes.
- Testing procedures of electronic equipment take time.
- Communication delays from the OEM's side in giving sales orders.
- Mismanagement of inventory leading to timeline issues.
- New certifications, compliances, and policies introduced by the government.
3. Setting Up a Final Price
The most critical task for an EMS is to decide the final price for manufacturing services desired by OEMs. The challenge is that the OEM must agree to that price, and most importantly, it should be less than or equal to other competitors with whom the OEM is currently transacting.
The costing is based on various aspects such as:
- Cost of raw materials
- Cost of labour or processing
- Cost of overheads
- Indirect expenses
- Provision for price fluctuations in raw materials or components
- NRE or one-time engineering cost
- Freight & other charges
Roughly, the final price is determined based on the above parameters. The EMS needs to submit the complete costing to the OEM for further negotiation.
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4. Quality Standards, Testing Methods & Compliance Requirements
To stay competitive in the electronics market, OEMs cannot compromise with quality, not just on performance, but also on safety. Electronic products may pose risks such as short circuits or other hazards. For instance, consumer electronics that come into contact with food or health-related devices must be manufactured by an EMS partner that is ROHS compliant.
Certifications and Compliances
To manufacture electronic products legally and safely, EMS providers must hold the following certifications:
- ISO 14001:2015
- ISO 13485:2016
- ISO 45001:2018
- ISO 9001:2015
- ROHS Compliance
- BIS
Most of the certificates are issued by the Government to protect consumers from unsafe products. OEMs must verify that their EMS partner possesses all relevant certifications, including checking expiry dates and maintaining proper records before issuing new sales orders.
Essential Product Testing
In addition to certifications, EMS providers must test the final products across multiple parameters to ensure quality and reliability. Key testing methods include:
- Integrated Circuit (IC) Testing
- Functional Testing
- Burn-In Testing
- Automated Optical Inspection (AOI)
- X-Ray Inspection
By ensuring that the EMS partner meets these quality standards, follows robust testing protocols, and maintains valid certifications, OEMs can reduce risk, avoid regulatory issues, and deliver reliable, market-ready products.
5. Supply Chain & Risk Management
Three A's through which an OEM can lead the competition are Ask, Availability, and Assurance. Ask refers to what the customer is seeking and buying on a retailer's shelf. Availability means the electronic product is present on that shelf, which depends on robust supply chain management.
The third one is Assurance, which refers to the experience based on the quality or branding of that product. In this point, we are going to discuss how EMS partners may affect your last two A's; Availability and Assurance through efficient supply chain management and stringent quality guidelines while creating the electronic product.
Especially in the case of turnkey solutions, the EMS has to maintain both inbound and outbound logistics. They need to find vendors who can ensure three things:-
- Availability of raw material or components on time
- The component should meet the quality standards
- Right dimensions
- Tolerance limit
- Solder compatibility
- Available at affordable cost
The second most important part is the downstream supply chain management. It includes the final product packaging and proper logistics support with predefined systems to deliver the product on time without any mishandling. Remember, it's not only the marketing that makes the brand; it's also the robust supply chain and superior quality of product.
Conclusion
Apart from clarity and transparency, the most important thing is OEM & EMS partnership is the transfer of technical knowledge between them. But, to sustain these partnerships for a long term, the EMS must focus on developing methods to smoothen the transition of raw material into finished products.
It is achieved by developing production systems. Managing both upstream and downstream supply chain, inventory controls & management. Electronic manufacturing services are the backbone on which the credibility, reliability and availability of any electronic product depends. EMS companies like Mefron Technologies always stand on these parameters for their OEMs.