To be a success today, contract manufacturers can’t get by on simply making stuff.
The role of the contract manufacturer — or, as known in the world of high-tech consumer products, the electronic manufacturing services provider — has expanded greatly over the years. The label “EMS” sums up the entity’s ambition to be more than an offshore factory that churns out product at the lowest possible unit price.
The transformation is nothing new. EMS providers have been offering a wide range of supporting services to brands and original equipment manufacturers (OEMs) for decades. But the disruptions and uncertainties of recent years have caused some of the industry’s leaders to double down on their “one-stop” strategy.
Jabil Inc. is among them. With approximately 100 plants in 30 countries, and servicing more than 300 brands, the U.S.-based EMS provider has a major presence as a pure manufacturer. But it supplements that role with design expertise, technical assistance, inventory management and logistics services to OEMs.
That last area has been a particular focus for Jabil and its biggest competitors in recent years. Getting product to market is just as important as making it, and EMS providers have had to become logistics experts in order to cope with COVID-19, natural disasters, geopolitical tensions, port logjams and other unforeseen challenges.
Jeannie Carpenter, Jabil’s senior director of global logistics, has more than 20 years of experience in the field, beginning with a degree in logistics and transportation from the University of Tennessee. “I own the logistics function across the globe,” she says.
Carpenter has to be nimble in order to react to sudden shifts in production and demand for Jabil’s products in times of crisis. She views an optimized logistics strategy as “the foundation of a resilient supply chain.” But putting that into action is no easy task, given the need to control costs while simultaneously executing the “near-perfect” delivery of product, on schedule and damage-free.
The extent of Jabil’s logistical support differs according to the requirements and resources of the customer. But when the pandemic hit, made worse by a series of extreme weather events, much of the responsibility for keeping product flowing fell to the EMS provider. Jabil’s role included getting shipments through the port and onto rail and other surface modes. “There were always up and downs,” she says, “but it was our problem to solve,” in partnership with OEMs.
When required, Jabil also steps in to manage inventory on behalf of the customer. That particular role has come to the fore as OEMs and brands realize the need for upping buffer stock, to mitigate the impact of temporary factory shutdowns and other supply chain disruptions.
Carpenter says the challenges of recent years have prompted logistics planners to take a deeper view of how global events impact their ability to get product to market. Past evaluations might be hindered by a siloed approach, with key decision-makers walled off from one another according to their particular roles within the organization, but that’s no longer a tenable model for planning.
The job is made only more complex by OEMs’ move to diversify the supplier base — yet another attempt to mitigate risk in their global supply chains. But Carpenter doesn’t view that trend as altering the purpose of the logistics function. “Origins and destinations may change,” she says, “but the goals are the same: on-time and damage-free. You’re just running more analytics, looking at more opportunities.”
In the end, managing the logistics function on behalf of OEMs requires a close partnership with the customer, one that covers more than just logistics, Carpenter says. It’s especially important that the two share supply and demand forecasts across multiple functions of both organizations.
The resulting plan needs to be flexible enough to take any number of hits caused by external events. To that end, insights by an engaged EMS could trigger changes in the OEM’s logistics model. “We might be telling them, ‘Watch out for this,’” Carpenter says. “We need to be as proactive as possible, and provide insights into other pieces of the supply chain.”
Timely, incisive articles delivered directly to your inbox.