Frost & Sullivan Research Service   Published: 31 Oct 2005
World EMS Supply Chain Markets
  SERVICE HOMEPAGE
RESEARCH OVERVIEW BENEFITS OF THIS SERVICE MARKET SECTORS
TECHNOLOGIES LIST OF FIGURES WHAT'S INCLUDED
TABLE OF CONTENTS ORDERING INFORMATION FURTHER INFORMATION
   Research Overview
 

Latency of Information Flow Decreases the Level of Responsiveness to Customer Demand

It is essential for a supply chain optimization that when something changes the status quo in the supply chain that the same information be shared throughout the chain swiftly. This will provide the supply chain partners the time they need to accommodate this new change. But more often than not, this is not realized. A lot of times, EMS providers and their partners were either given no time to react or given the minimum amount of time needed to react due to information latency. Due to this they loose out on the cost saving that could have been possible.

This challenge can be alleviated with the help of supply chain solution tools. The EMS providers are turning to technology tools that allows near real time information sharing about supply chain forecasting, border status, inventory status, shipment status and logistics data. Most of the tier 1 EMS providers are successful in reducing the latency of information, making their supply chain agile and responsive.

 

The New Government Legislative, the Restriction of Hazardous Substances (RoHS) Directive, Drives Outsourcing of Supply Chain Processes

With the RoHS directive coming into effect in July 2006, there will be a lot of implications on the OEM behavior. This directive will act a driver that will spur the outsourcing of supply chain operations. There are a lot of aspects to be considered, such as, the need to make sure that the consumption of the leaded components is done on time and also making the new components compliant to the directive. EMS providers are already gearing up their manufacturing processes to meet the directive and making sure that the transition to the lead free parts happens in such a way so as to avoid excess and wastage of noncompliant components in the supply chain. The lead-free process will also incur added expenditure for the new process technology. The conversion to lead-free manufacturing will take a significant effort and OEMs will outsource to avoid being caught in the situation. 

The EMS Industry is Expected to Witness a Steady Growth

The market revenues generated for the base year 2004 were $126.00 billion. Frost & Sullivan predicts the market to reach revenues of $320 billion in 2012. The market is expected to grow at the compound annual growth rate (CAGR) of 10.6 percent.
Though the revenue for the EMS industry is on the increase, it is at a steadily decreasing growth rate. This is due to the fact that the electronics industry is reaching maturity and will gradually saturation stage at a later date from the forecast period. Another factor to take into account is the increased competition that is being faced and in future, especially from the original design manufacturers (ODMs).

   Benefits of this Service
 

Unique Challenges Within the EMS Industry

Electronics manufacturing service (EMS) providers are more often than not under tremendous pressure to improve their supply chain efficiencies and improve their fulfillment capabilities. To make things complicated, new global competition is increasing and consumer demand is changing. At the same time, pricing, quality and design cycles have also radically shifted.  The manner in which the EMS organizations deal with and overcome their challenges will not only set them apart from their competitors but will also in the end, determine their bottom line results and market value.

Competitive Analysis of the Tiers Within the Market

Competitive factors and trends can be analyzed by comparing EMS organizations’ supply chain processes such as demand planning, process improvement and quality, lean management, inventory management, distribution channels, technology tools.  The major issue is to understand whether these processes are efficient enough to allow the EMS providers to merely compete or actually provide competitive advantage.

Effect of Government Regulations Like Restriction of Hazardous Substances (RoHS) on the Supply Chain Operations

The RoHS directive due to be enforced in July 2006 is already impacting the supply chain operations. Though this serves as a driver that increases outsourcing of OEM operations to the EMS providers, from an EMS provider’s perspective, this could very well be a major challenge. This mostly relates to the case, when they are not well prepared to meet it.  This impact mostly to inventory and logistics. It will prove to be difficult to synchronize component suppliers and OEMs on adopting lead free assemblies. The transition to lead free is a complicated process. The EMS organizations will need to have a thorough understanding of the product and the various cycles associated with it. Due to the varying demands from the OEMs and the remaining need for a few leaded components, it makes the transition very difficult even if it is going to be done in parts.

Revenue Forecasts for the World EMS Industry

This research provides the revenue forecast for the world EMS industry for seven years. This forecast is done keeping in mind the effects of the various drivers, challenges and restraints within the market.

Technology Trends and Challenges

The electronics industry is always on the cutting edge, adopting new technologies for the industry's’ constant emerging challenges. Original equipment manufacturers (OEMs) are also continually pushing supply chain pressures on their electronics manufacturing service (EMS) providers to reduce costs, reduce lead times, increase quality and on-time order fulfillment.  A flexible IT environment enables EMS organizations and their extended supply chain partners to reduce time to market and increase visibility between production and the supply chains. This research discusses the trends in the supply chain for the EMS industry.


 

   Market Sectors
 

This Frost & Sullivan research has differentiated sectors within the market by dividing them into three tiers based on the revenues.

  • Tier 1 EMS market segment: In this research service, the first tier EMS companies are those that achieved revenues of over $ 1 billion.
  • Tier 2 EMS market segment: The second tier EMS providers are those whose annual revenues are between the ranges of $ 200 million to $ 1 billion. 
  • Tier 3 EMS market segment: The third tier EMS providers are those with annual revenues are below $ 200 million.
   Technologies
 

The following technologies are covered in this research:

  • Enterprise resource planning systems (ERP): An information system that integrates all manufacturing and related applications for an entire enterprise.
  • Product life cycle management tool (PLM): It is a software that is used to document and support the complete life cycle of their products and to devise and manage ancillary services, such as product maintenance.
  • Customer relationship marketing (CRM): CRM is a software collection relating to the  methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organised way.
  • Radio frequency and indentification (RFID): It is an electronic identification system comprised of a reader,scanner and a transponder that can read or write data content. This technology is used to track the raw materials and components throughout the supply chain.
  • Real time locating systems (RTLS): is a wireless technology which is used to determine and track the real-time location of assets.
   What's Included
 
  • The current  and future supply chain trends within the EMS industry
  • Market dynamics such as drivers, restraints and challenges
  • Revenue forecasts
  • Competitive structure and mergers & acquisitions analysis
  • Competitive analysis and strategic recommendations
  • Technology and collaboration trends
  Table Of Contents

World EMS Supply Chain Markets


1. Executive Summary
   1. Market Overview
      1. Introduction
   2. Key Research Findings and Conclusions
      1. Opportunities and Forecasts
      2. Major Supply Chain Trends
      3. Major Technology Trends
      4. Competitive Analysis
      5. Conclusion

2. Total Market
   1. Introduction
      1. Market Overview and Definitions
      2. Market Engineering Measurement Analysis
   2. Market Dynamics
      1. Drivers
      2. Restraints
      3. Challenges
   3. Market Trend Analysis and Forecasts
      1. Revenue Forecasts
   4. Supply Chain Trends and Analysis
      1. Procurement Trends and Analysis
      2. Distribution Trends and Analysis
      3. Technology Trends and Analysis
      4. Collaboration Trends and Analysis
      5. Lean Manufacturing Trends and Analysis
      6. Logistics Trends and Analysis

3. Competitive Analysis
   1. Introduction
      1. Competitive Structure
      2. Competitive Landscape
   2. Competitive Analysis
      1. Market Share Analysis
      2. Analysis of Notable Mergers and Acquisitions
      3. Competitive Analysis and Strategic Recommendations

4. Frost & Sullivan awards
   1. Award 1
      1. Frost & Sullivan Growth Leadership Award
   2. Award 2
      1. Frost & Sullivan Customer Service Leadership Award 
   3. Award 3
      1. Frost & Sullivan Product Line Strategy Leadership Award
   4. Award 4
      1. Frost & Sullivan Business Development Strategy Leadership Award
   5. Award 5
      1. Frost & Sullivan Award for Competitive Strategy Leadership

5. Appendix
   1. DSD Tables
      1. Total Number of Manufacturing Enterprises
      2. Total Value Addition by the Manufacturing Industry
      3. Total Manufacturing Industry Contribution to GDP
      4. Total Electronic Components Contribution to Electronics Industry
      5. Total Number of Freight Wagons



   List of Figures
 
  • EMS Supply Chain Markets: Market Drivers Ranked in Order of Impact (World), 2006-2012
  • EMS Supply Chain Markets: Market Restraints Ranked in Order of Impact (World), 2006-2012
  • EMS Supply Chain Markets: Impact of Top Ten Industry Challenges (World), 2006-2012
  • EMS Supply Chain Markets: Revenue Forecasts (World), 2002-2012
  • EMS Supply Chain Markets: Competitive Structure (World), 2005
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