Locating and filtering OEM manufacturers

You’re likely reading this because you want to know more about contacting OEM suppliers and selecting the good ones.

Finding manufacturers to begin to price your product and manufacturing process looks like a daunting task, when you’re unfamiliar with the process and you’re undertaking the search for the first time. Brave and agile founders, developers and directors are often intimidated by the enormity of the task and the rumoured risks – but stiffen up the sinews, it’s really not so difficult or hazardous.

The guidance from those who know the space is to learn from their mistakes, break the task down into manageable pieces and follow some simple guidance. Carry out each step in the process, do what you can to validate as you go, be realistic and flexible, offer and expect high standards of clarity and responsiveness and you’ll get what you need, at a cost you can accept, on a timetable that works.

Our purpose in this page is to help you navigate the process, to find the right manufacturer to fulfill your needs.

Start by roughly defining the approach you expect to take to manufacturing your product. Do you expect to use OEMs in a bottom-up or top-down process? This is really the starting point for your supplier search – and almost a philosophical question – are you more motivated by controlling the details and element costs or by a big-picture view that looks to out-source effort and use lighter control?

We make no attempt to imply one is better than the other – YOUR circumstances and YOUR product inform YOUR decisions – the purpose here is to equip you with the tools to make decisions that suit YOUR needs.

Bottom-up OEM manufacturing process

Are you planning to order components and/or sub assemblies that will be assembled elsewhere – in-house, or at another OEM?

Are you looking for single material component suppliers – plastic mouldings, metal pressings, die castings etc. that you’ll then use as parts in an assembly process you direct and control in detail?

Are you looking for tooling OEMs to provide you with tools for these components that you’ll then operate elsewhere – perhaps locally to you for mass production?

Are you looking for bare PCBs that you will populate to finished electronics assemblies yourself?

Are you looking for finished PCB assemblies from a Surface Mount PCB assembly OEM (Contract Electronics Manufacturer or CEM) that you will build into your product elsewhere?

Suppliers fall into categories according to their main specialisation – and you may want to use highly specialist services.

For example – a full spectrum OEM factory that can box-build your entire product from your manufacturing data is less likely to have an in-house toolmaking team of the highest grade. They may have moulding services in-house, but the volumes they produce may not be such that their skills are the best or most up to date. Likely they’ll subcontract many such services to partner companies and this integration of services is the primary value-add they offer.

Alternatively, an OEM who does nothing but toolmaking, tool trials and plastic mould component manufacture – the type of partner that a typical full service OEM will use – may be exactly what you’re looking for. By contacting them directly, you achieve the closest technical and cost control, without an OEM connection layer that you may not feel adds value.

The same applies to PCB assemblies, rubber parts, die castings, metal pressings, rapid prototypes, silicone mouldings, custom fasteners and any number of other services.

Top-down OEM manufacturing process

Your view may be quite different – that you want to hire professional services to make your product, and that you wish to select suppliers who can integrate the range of services for you. You expect them to communicate and consult on important decisions and validate their work, but operate with the degree of independence and latitude that you agree to – and make your life easier!

This mindset suits businesses that are highly market focussed and have less reliance on technical expertise. There is, of course, a sliding scale of devolved authority – some customers in your position just ‘want it done’ and will be happy to let their OEM sweat the details. Others want to manage each step and watch closely.

Both are right, in their own circumstances – and neither is a position set in stone – when you trust more, you can empower your OEMs more – when you develop new concerns, you can insert yourself into the process anywhere you choose, because it’s your process.

The top-down approach offers the advantage that you can delegate more of the process development and documentation to your high level OEM to supervise.

If you buy components by specifying them to the high level OEM, then you do not have to be involved in any aspect of the creation of these components, as long as the specification was good enough and the parts comply with it. You don’t need to discuss tooling design, or materials suppliers, or processing conditions, or any other of the plethora of details.

If you buy a finished product, specifying only final performance requirements, you can offer the OEM greater latitude to reduce costs or speed up the process. But ONLY IF your requirements are sufficiently detailed that they will result in a product that meets your market need

Defining your potential needs

Carefully evaluate the products and components you’re looking to outsource. Not everything is suited for outsourcing to lower-cost regions.

Ensure that the products represent a large enough potential cost saving and quantity to significantly affect your BOM (Bill of Material) costs. You must be reasonably sure that the parts/assemblies have significant demand life remaining.

Prototyping and innovations alter this equation – but only in the early stages. You should try to make sure that the effort of outsourcing is worthwhile.

To test the relevance of the services, choose a well documented product, service need or component.  Be sure your docs and specs are clear and correct. Communicate your product knowledge clearly, to get good results. Fuzzy data results in wasted time and frustrations for all parties.

Try to identify manufacturing issues early. Problems you have already identified will not vanish when you move to a low-cost environment, they will only be solved by care and attention.

Your products do not need to be highly labour intensive for this to offer value, there are VERY skilled suppliers in lower labour cost regions who can offer value across the full range of industrial services – don’t think sweat-shops, think smart businesses with lower overheads than yours.

 

Locating OEMs that suit your needs

How to find high grade OEM manufacturers?

Use your contacts. Use search tools. Use trade fairs. Use on the ground advisory contractors.

You already know someone who knows someone. If you exploit your networks you can often get recommendations, or find experts who can help you find the right suppliers. Don’t hesitate to ask – when people in the product space have a strong view (either negative or positive), they will usually be happy to share it! Learning about the good and bad experiences of others will empower you with greater understanding – and usually lead to introductions that will be useful.

Internet search tools

The web is, of course, the default tool for knowledge – like walking into a library whose shelves fall on you. General Google etc. searches are unlikely to be useful, but a range of B2B platforms will be fruitful. Online sourcing platforms such as Alibaba.com, GlobalSources.com and Made-in-China.com exist to connect people like you with supply chains. To use these sites to their full effect;

Learn the platforms and their quirks.

Issue RFQs with meaningful details – the suppliers who see this will filter for relevance, so 80+% who contact you will be relevant to your needs

Be ready for clunky user interfaces on the platforms – they work, but you’re better off moving to email once mutual interest is established.

Expect a potentially overwhelming response – you need to have a quick discussion with suppliers who respond well. Generally it’s not worth engaging with those who respond generically or do not evaluate the data you provided in the RFQ – but try to not throw out jewels with the trash!

You CAN filter based on site ratings and reviews – this isn’t a perfect system but it likely catches the ones you DO NOT want to use. Alibaba gives its highly rated suppliers gold ratings, which indicate trustworthiness and capability. Similarly, Global Sources has a verified supplier category, which can be less informative as the verification process is reportedly not detailed.

There are tens of thousands of suppliers in China – and in any one narrow specialisation there are likely to be thousands who present as capable.

It is worth noting that many businesses presented by these and other search engines and sourcing platforms may be resellers, not manufacturers. If you are seeking suppliers of existing parts or products to use in your manufacturing process, these people may be fine. When you need unique components that must meet your exact specifications – such as PCBa, die cast, stamped and plastic moulded parts, agencies can present as manufacturers but will leave you one step further removed from the process. This generally reduces costs, as you’ll not then pay a margin to an agent. Weeding out resellers by verifying suppliers is not so hard – and we will discuss that later.

Gold or verified ratings are only a first indications of trustworthiness. Basically any supplier who pays Alibaba an annual fee for premium membership can spoof these status ratings, which increases the vendor’s visibility on the site. However, such ratings do suggest mid to larger suppliers who have not just appeared – and an ongoing presence is a strong indicator of past customers.

Verified supplier can simply mean that the supplier has been shown to exist by a third party. It certainly does not indicate that the platform has tested that the company is what it is claiming to be, rather than evaluated their manufacturing capabilities and production facilities.

As with any web activity – use any indicators you can to filter out the less able or honest – but rely on human contact, customer references and your own assessment of the story/responsiveness to inform your final in-out choice. The overwhelming majority of people who respond to an RFQ will be honest, capable and diligent – as with all professional encounters, you should treat them as such until you have reason not to.

Industry networks

Your own industry networks represent a very useful resource. Recommendations from industry and even government trade organisations, your own contacts (and their contacts) and even other companies can all be helpful.‍ This is a great route to find the most locally tested supply chains – but it can also put you squarely in the higher cost, cautious space. That’s not a bad thing, but recognise that if PRICE is your biggest driver, you’re better off going back to first principles and making your choices safe for you by groundwork and relationship building.

The same rules apply in relation to any suppliers you approach through your networks – trust but verify

Trade fairs

If you are able, visiting trade fairs in your preferred region of explorations is an excellent way to find the higher grade (and higher cost) manufacturers or suppliers. Those who invest in trade show presence – both buyers and sellers – accept costs and expect a return. Spending that level of resource will only be practical if your business is larger, and you need to take care to target shows aimed at the kind of products and services that you want outsourced,  and your budget.

Visiting fairs will help you better understand the world’s factory and give you a clearer picture of what the market looks like.

As an example, China’s largest trade fair is the Canton Fair, which is held in Guangzhou in April and October. This houses some 26,000 exhibitors and 180,000 buyers from across the world (in a non-pandemic year) and is a great first step, for those looking for new products and services to add to their inventories. The “trade show of everything” is not a place for small tasks because of the significant cost of attending.

There are many smaller and more sector targeted fairs such as the China Diecasting fair, held annually in Shanghai. It pulls in equipment manufacturers, OEM die casting foundries and suppliers of materials and has included up to 450 sector exhibitors and 19,000 visitors.

There are trade fairs in America and Europe that attract manufacturers from overseas, such as The National Hardware Show, annually in Las Vegas – with a whole section focussed on international sourcing. Or the International Manufacturing Technology Show (IMTS), which is held every other year in Chicago, commonly connecting buyers and sellers from 117 countries.

These exhibitions allow you to build contacts with outsource exhibitors of products and services. But it will be a limited pool of overseas suppliers – and while pre-filtered to be capable, serious and useful, they will NOT be the lowest cost options.

Sourcing agents

A secure route to outsourcing OEM services is to use sourcing agents, whose whole service is to support your search for suppliers and guide you through the process step by step.

Sourcing Allies is a prime example of such an agent, serving clients in the US and Western Europe to manufacture and source goods from China, India and Eastern Europe. They have proven track record and can be a safe pair of hands – but paying for expat services in overseas markets is not among the best ways to restrain your costs!

They guide their clients through seeking quotes from suppliers, review the capabilities of OEM factories. They can act as introducers, letting you handle the follow on work – or they can act as ongoing agents. Overall, such services can be quite expensive – and while they do offer diminished risk, you can achive the same by your own efforts and by relationship building with your suppliers.

Shortlisting OEMs

However you find suppliers, the information you present to them will elicit a response – and it’s based on these responses that you can begin to shorten the list. In publishing an RFQ – either to some recommended suppliers, or to an agency, or on a B2B platform, there is core information that should be included in order to short circuit the clarification phase;

Documentation of the components you expect to manufacture – 3D CAD data, Gerbers/schematics, 2D drawings, component and assembly specifications.

Your expected order quantities and desired schedule of shipments.‍ Be realistic – if you overstate your quantities or only describe your hoped for levels, you establish a stressor in the relationship right at the start. Most suppliers are not fooled by moon-beams and will respect clarity and reliability just as much as you do.

You may wish to offer a price expectation, but be prepared for this to be accepted – which indicates you overestimated!

Sample requirements – such as 3D prints or hand made one off test pieces.

Development needs, if you are asking the supplier to help with development.  If the development need is extensive, this may begin to put you into ODM service requirements which alters the nature of the potential suppliers. This process can consume more resources and many OEMs will not be capable or interested – where others will be delighted to support (at a price).

Your material expectations – although you should be prepared to receive advice on this – and if the supplier has expertise, such guidance can often be very valuable.

Always ask for more information about suppliers than they give you at first, as their responses (and attitude towards the request) will inform your verification process. This could be details such as:

How long have they been in operation? How long have they been at their current site? Businesses that move often are to be avoided for a range of reasons.

What other services they offer, apart from the component you’re enquiring for? Wider skills may be directly useful to you and they may indicate a smarter business.

Whether they already export to your region? Have they solved the export shipping, local taxation and international payment issues?

Will they introduce you to an existing export client as a reference? Nothing can offer you greater confidence than a positive endorsement from a clearly real customer.

Business licences, certifications that they have related to their production capability. Companies without quality certifications, full local licensing and proper employment law compliance can be very dangerous partners.

Shortlist OEM suppliers based on the responses they offer, and look to score them on a range of aspects. Pick suppliers who specialise in the area you need service in, rather than Jacks of all trades. You will likely choose to focus on manufacturers in one region – either because of regional specialisations or because it will make your subsequent supplier visits MUCH simpler.

Verify the credentials of the OEMs by whatever means you can – site ratings/verifications, references, recommendations from your network, quality of impression and communications and instinct. Look to evaluate:

That whether they are a factory or an agency – are they what they say they are?

Do they have the technical expertise and production capability they claim – which is best assessed by the quality of the samples they provide, their guidance and technical engagement (and potentially by a third party recommendation or reference).

You could also identify the factory Chinese name, its location and the local government office under whose jurisdiction it falls. This office will have the factory’s registration records, which you can use to verify the details they have provided to you, if you have any doubts. This process may need you to use translation services – or a contract QA service local to the supplier – who may be known to the factory but has a public reputation to uphold, so is unlikely to misrepresent.

It is strongly recommended that you visit shortlisted factories before you finalise your choice and place an order, if at all possible. You can combine such a trip with visits to trade fairs, to extend the value of the travel.

Conclusion

Identifying and selecting potential partners with whom to outsource your products and processes is just like every other business task – it requires a thorough and orderly approach and the building of confidence and strong relationships.

When you have partners who know they’re valued and understand that they.re integrated into your business model, you gain supporters who are motivated to enable you to succeed.

Whether the main driver is technical competence, volume capacity, raw cost or a range of other characteristics, you can find great suppliers and learn a huge amount about how to make your business better – skills that will serve you for the rest of your career.