It’s no secret that the global economy has engulfed the electronics manufacturing services (EMS). Production of technology and devices based on electronic components is at its full capacity. Meeting consumer ever-increasing demand for electronic devices has set production on an international scale. Nowadays, electronic manufacturers are involved in a global supply chain, in order to deliver products to the end user. However, the global supply chain is increasingly difficult to manage.
The fact of the matter is that electronic components must pass through various touch points that involve three or more continents, different organizations and various countries. Also, manufactures must ensure that components can meet various standards, rules and regulations along the way, in order to reach the consumers successfully. These difficulties have created an urgency for a quick solution. That’s why modern electronic manufacturers are considering implementing blockchain technology into the supply chain. Here’s how blockchain technology can help EMS supply chains.
How can blockchain improve the situation?
The first question that comes to mind is who should support blockchain technology development for supply chains, either EMS or OEM (Original Equipment Manufacturer) or both? Answering that question is based on who will benefit the most from the technology. It may seem that blockchain technology will benefit one side or the other. However, various issues OEMs experience can be better solved by EMS.
In such cases, it may even come down to OEM customers being more willing to pay for an integrated and well-developed solution from the EMS. In essence, it comes down to the relationship OEM will establish with a reliable electronics manufacturer. As an example, even though EMS provides high volume manufacturing processes that blend in a lot of electronic components for consumers, EMS may provide external manufacturing for lower volume, but better quality products to their OEM customers. Moreover, EMS could even potentially handle their OEMs own customer fulfillment processes.
Benefits of blockchain for EMS
EMS can utilize blockchain technology to reduce operational costs and improve their overall efficiency. Here are a few examples of how EMS can make it work.
- Blockchain technology can be used to streamline and secure purchase orders EMS have with suppliers in less developed regions, including shipments, responses and payment processes, such as invoicing. Blockchain can cover both the suppliers and their financial institutions.
- EMS can leverage blockchain technology to establish a more efficient finance mechanism with their financial partners. In other words, blockchain can help automate EMS access to work capital and make the entire process not only cheaper, but also more seamless.
- Blockchain technology can help EMS track both inbound and outbound stream of materials, as well as finished goods. This task is truly important for EMS, especially because manufacturers must know when their shipment of components will reach the manufacturing place. This will helps EMS provide customers with detailed delivery dates for their finished products.
How blockchain technology can help OEMs
OEMs can also benefit from implementing blockchain technology in various ways. Here are a few examples of how this technology can help OEMs.
- OEM can use blockchain technology to help gather important data on inbound shipments from EMS. After all, crucial data is most commonly lost or misinterpreted in supply chains. With the help from blockchain, OEM can analyze and pre-approve shipments even before they arrive. That means that quality department can review the data on time and have products ready for processing as soon as they arrive.
- Blockchain can help establish relations between OEM and component suppliers. With a good and well-designed system in place, suppliers might be more willing to offer better prices, and offer flexible schedule changes to OEMs. Both parties can also implement a virtual process for purchases and sales to process permits in the supply chain more efficiently.
- Blockchain technology can also be used to improve the security of components in the supply chain. For example, blockchain can be used to secure delivery of products provided by EMS that have sensitive data implemented, such as private keys and trademarked software. Blockchain is renowned for increased security, as it can time-stamp transactions and can also be configured to increase security for every aspect of manufacturing process.
New technology can create new difficulties in various industries, but it can also provide various solutions as well. That’s why industries are able to properly adapt to the use of new technology. For the EMS industry, blockchain technology may just as well be the solution that will deal with the challenges and difficulties imposed by the global supply chain and consumer demand.