Repair Services Being Outsourced by OEMs and EMS Firms

EBN

(03/04/2003 4:44 PM EST)

Under pressure to fulfill growing repair obligations in the United States, some OEMs and EMS companies are outsourcing projects to product-lifecycle managers.

In the past year, ExpressPoint Technology Services Inc., Minneapolis, has noticed more interest in its aftersales support services from U.S.-based OEMs as well as Taiwanese contractors that don't have a U.S. presence, said Vincent Trovato, ExpressPoint's director of marketing and business alliance.

"OEMs want end-to-end manufacturing solutions, and many times Taiwanese contract manufacturers need to service a U.S. product beyond just test and screening for defects," Trovato said. "They sometimes have to send back defective products to China or Taiwan for repair. That can take a long time and require a large inventory investment, particularly for a short product lifecycle."

U.S.-based small and midsize contract manufacturers also can find it difficult to quickly meet OEMs' aftersales expectations, so they, too, are likely to tap product-lifecycle companies for help-desk support and product failure diagnostics, Trovato noted.

"Contractors might go to someone else for depot repair or outsource rework, depending on their business model and whether they feel comfortable with it," said Tony Hilvers, vice president of industry programs at IPC-Association Connecting Electronics Industries, Northbrook, Ill.

ExpressPoint and competitors DecisionOne and Teleplan are eager to tap the global repair services market, which Merrill Lynch & Co. Inc., New York, estimates is a $100 billion opportunity.

ExpressPoint began 20 years ago as Amcom Corp., which sold refurbished computer parts to IBM Corp. The company evolved into its present form after merging with several other companies that targeted keyboard and printer repair along with system boards and aftersales technology support for OEMs.

"We've gotten a number of referrals from our OEM clients to work with their contract manufacturers," Trovato said. "They want to ensure that the components are serviced in the U.S. We can make products better by looking at failure rates and tracking failure data and feeding that back to the manufacturer. The production cycle for a given product is improved."

In addition, if an OEM's product is recalled because of engineering problems, ExpressPoint engineers are able to make the necessary changes, according to Trovato.

"We can add a chip or put in a different class of resistor or capacitor to make the product work for a given environment," he said. "We can step in and make the upgrades for particular hardware change or component-level programming."

ExpressPoint tallied sales of $56.6 million last year, and expects that to rise 12%, to $67.9 million, this year.