Original Equipment Manufacturers, or OEMs, are constantly developing new products or continuously manufacturing their current ones. Many of these OEMs outsource part of the manufacturing process to external companies known as Electronic Manufacturing Services, or EMS. This usually involves the manufacture of a particular component of the product that the OEM makes. An example of one of these components is an LCD display. This can go beyond just the actual production of the part, but into the research and design, as well as testing, assembly, and other logistics.

Outsourcing the manufacturing of the LCD displays to an EMS is quickly becoming something that even the largest original equipment manufacturers do. This allows them to save time and manpower in the respective department, and put their forces more solidly towards improving the general product for their user base.

However, for manufacturers who currently manufacture their displays in-house, they may be wondering what the benefit of outsourcing that section of the process may be. Once properly examined, it is easy to see why so many OEMs are moving in that direction.

 

Why Should OEMs Outsource Their LCD Manufacturing?

In products that have a lot more to offer than simply the display, an OEM may realize that there is ample benefit in leaving the LCD display manufacturing to an EMS who specializes in this. Whether a small or a large original equipment manufacturer, there is a lot to be gained. The major benefits of this are listed below:

 1.) OEMs Are Able to Concentrate Their Resources

Consider smartphones as an example. There is a lot more to a smartphone than just its display. It needs to have a good camera, proper all-around build quality, and a long-lasting battery. These are just some of the hardware aspects an OEM of smartphones needs to ensure that they pay attention to. That OEM must still ensure that the software that the device runs on is properly optimized and provides a good user experience. This is all in addition to the marketing process, as well as testing of the product to ensure long term reliability.

This is a lot for an original equipment manufacturer to focus on, and as a result, labor and resources will need to be divided between all these departments to ensure a functional product that will be received positively. When one of these components is outsourced to an external company, the OEM is able to focus more on the other segments of the device to provide a better experience for their customers. The LCD display is a very important part of almost any device, but in many cases, it is not the central feature. Outsourcing manufacturing allows the manufacturer to focus more on the selling points of their product.

 

 2.) Manufacturers Can Get a Higher Quality LCD Display

While many manufacturers may opt for LCD display manufacturing that takes place in-house, they may be unknowingly selling themselves short in terms of quality. Companies that focus on LCD display production focus all their resources on that one field, mastering this trait. When these manufacturers have been in the business for years, they begin to build a higher quality product than could be achieved by an OEM that does all the manufacturing of their display screens in-house. This product will be better in terms of build quality, durability, optical quality, as well as touch performance; if required.

3.) Original Equipment Manufacturers Can Save Money

All businesses aim to be profitable in order to stay open and scale. Businesses exist to make money, and as much as they wish to provide users with a product that works for them, profit margins must always be considered. In developing many products, research and design, known as R&D, is a necessary step. It involves designing the product beforehand and ensuring that everything will work once put together. While the entire product will require R&D, so will some of the individual components. For a company that is deciding to manufacture LCD displays for the first time, or for an OEM that is looking to introduce a new model with a different kind of display, R&D will be absolutely necessary. This process can be costly, time-consuming, or both.

By outsourcing the LCD display manufacturing process to an electronic manufacturing service, OEMs are able to save money. This can be because they can select from a variety of pre-designed displays that the EMS has available. They can also inform the manufacturer that they are outsourcing to the required specifications and dimensions of the display they desire.

Also, with new and more efficient manufacturing processes, the cost to produce technology can be lower. This is the case with displays as well, and for an EMS whose whole business revolves around the development and production of LCD displays, they will be able to offer a price that is more attractive than what it would cost to produce in house.

Once costs of production are cut, the original equipment manufacturer can leverage that to increase their profit margins. This can either be by:

          1.) Allowing the reduced production price to reflect on the retail price of the device. A lower price for                     the device on shelves makes it more attractive for consumers to pick up and buy. This will translate                   to more units sold and a larger total profit.

           2.)  Maintain the same profit margin as before the outsourcing. For companies that switch over from                       in-house production to outsourcing, they will already have a sales price which takes into                                     consideration what might potentially be a more costly in-house manufacturing cost. By                                       outsourcing but maintaining the same price, the production cost will decrease, but profit margins                     increase.

However, it is important to choose a competent OEM with a good history and the experience to show for it. This is why it is best to seek the best balance between price and quality.

 

4.) OEMs Can Ensure Their Technology Stays Up to Date

Displays may seem relatively stagnant to the consumer, but to those in the industry, they will recognize that research is never-ending, and improvements are constantly being made. However, for a company that produces a device, but thinks of the display as a relatively minor component, they may not be bothered with ensuring that their liquid crystal displays adhere to the latest standards of the technology.

By outsourcing the LCD display manufacturing process, these OEMs can ensure that their liquid crystal displays utilize the best available technology, so as to provide their users with an excellent experience. This, of course, improves the perception that consumers have of the business and increases loyalty, and in turn, sales.

 

5.) Original Equipment Manufacturers Are Able to Be More Flexible

In the business world, especially market segments that are hardware-based and full of competitors, OEMs need to learn how to be as flexible as possible. New hardware developments come out with every launch window from their competitors, and sometimes these new features can give competitors the edge. Manufacturers need to be able to combat these new features as soon as they can, or risk being left behind in the market.

However, there is a lot involved in ensuring that the company keeps up with the trends of the market. The corporate section of the company needs to give the go-ahead to the R&D team, who then has to pass on their approval to the engineering team and finally to the production department. This can increase the amount of time it takes to respond and flow with changing market conditions.

However, by outsourcing segments of the manufacturing, LCD display manufacture included, OEMs are able to free up some of the delays in production. A company that produces LCD displays alone will usually be able to produce them faster than a small OEM that is pushing to produce them in-house. They will be able to adapt to requests based on changing market conditions much faster than an original equipment manufacturer that divides their production attention between different manufacturing segments.

This means that these OEMs will be able to keep up with what their competitors are doing and worry not about being overtaken or left behind.

 

What Is the Most Important Thing to Note Before Outsourcing?

It is important for OEMs to be cautious when selecting an electronics manufacturing service for their components, such as liquid crystal displays. A lower price may be attractive at first, but there is a lot more to the process than simply going for the lowest bidder.

Experience in the industry is one of the most important factors that need to be considered. A lower-priced display manufacturer may not be used to the industry and can cause devastating and costly delays in production. Experience also translates to producing a product that is generally higher-quality, with less of a chance of unit errors or faults.

When experience and cost are balanced optimally to the original equipment manufacturer’s taste, the benefits they can reap for their business can be immense. Outsourcing does not need to stop with their LCD displays but can move on to other components. However, with the number of products incorporating displays these days, LCDs are a great place for OEMs to start to begin to have the benefits of outsourcing.

About E3 Displays

We’re a global design and manufacturing company that helps the world’s most innovative companies define the future of their business display needs. With over 20 years of combined experience in display technology, E3 Displays has everything you need to develop and manufacture your custom touch display all in one place. With customer-centric solutions featuring strategic planning, competitive pricing, longevity, and support, we ensure the best products on the market to help you scale. In the end, displays are a centerpiece in any hardware that provides a very important visual message in your product. We want to ensure that the visual entity exceeds your optical and performance requirements.

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