Issues: OEM, LCD Display Supplier, and Contract Manufacturer

If you’re like most manufacturers, you’ve probably outsourced your manufacturing to a contract manufacturer (CM) overseas, or even domestically, to remain competitive in today’s marketplace.

Chances are you selected an LCD display supplier to work with your CM and now feel locked into the relationship. You’ve already gone through the qualification process, investing time and money. Not to mention approving the PO in good faith, believing the CM would be getting the right cost, on-time delivery, and high-quality components from your LCD supplier.

But you’re not stuck. If the relationship is not as beneficial as you think it should be, you do have options. We explore those, as well as the entire OEM-supplier-CM relationship, in this post.

Expectations

A reasonable expectation of your LCD supplier is that they will act in your, the OEM’s, best interest in communicating directly with the CM.

Your LCD display supplier and CM should be coordinating the following:

• Schedules, including creating a stocking plan and delivery schedule
• Payments, including shipping terms
• Quality/performance checks
• RMAs
• 
  

Here’s one example of this coordination in action:

A CM had a quality issue with an LCD module. The CM felt comfortable notifying the LCD supplier of the problem. A comprehensive QA check at the supplier’s factory did not reveal any quality issues. The LCD supplier, taking accountability for their role in the end product, scheduled a visit to the CM’s factory. Working collaboratively with the CM, they discovered missing steps in the CM’s process that were compromising the quality of the displays. Quick and intelligent action meant the impact was negligible. The OEM, while informed, was not involved or burdened throughout this process.

Given the LCD supplier’s role and responsibilities, they should keep the OEM informed on aspects that pose a significant impact on products or customer perception:

• Changes to fit or form
• Changes in function of product
• Excessive quality issues
• Price issues
• Obsolescence issues

Red Flags

It’s no secret that sometimes a supplier doesn’t deliver on their promises. What makes this situation challenging is the perceived work and decision to act. Time and time again an OEM will allow excuses from their supplier only to be hit over the head later.

However difficult you think it will be to change suppliers, just imagine the headache of dealing with unhappy customers, quality issues, and more.

To avoid this, consider a few red flags that it’s time to look for another LCD display supplier:

• Line down: If your CM is waiting on LCD displays, there should be no hesitation. Start looking for a new LCD supplier.
• Lead time: Contrary to the lines you may be fed, lead-time problems are not just part of doing business. Sure, uncertainty and circumstances happen, but an experienced LCD supplier will have safety nets in place to address this, like safety stock of the longest lead time component, multiple delivery options, and pull with their factory to increase or speed production.
• Quality: Shoddy displays? Field failures? Dimensional tolerances not being met? These types of quality issues are a sure sign it’s time to start a new LCD supplier search.
• Performance: Are the displays you’re receiving simply not performing as expected or designed? There may be excessive component variability or process variability. Either way, it’s time to look for a supplier that will meet your performance expectations.

Options

For specialty components like LCD displays, it’s typical that you dictate to your CM the supplier they need to use. And if you are observing any issues with lead time, quality, performance, cost, or obsolescence, you should look for an alternate supplier.

Here’s a few things to have your CM check compatibilities with:

• Payment and shipping terms
• Any special stocking strategies

Onboarding a New LCD Display Supplier Process

Lastly, here’s a step-by-step process you can follow to easily find and onboard a new LCD display supplier:

• Identify the production issue: Delivery, quality, performance, cost, or obsolescence.
• Develop a list of alternate LCD suppliers.
• Communicate the problem to selected supplier and get quotes that incorporate the solution to the issue.
• Check supplier compatibility with CM. In most cases, this will involve creating a 100% compatible drop-in replacement for an existing product. 
• Send current samples to help with matching.
• Implement any product improvement that will help performance or manufacturing, as there will be some customizations involved.
• Review specification from supplier. (This is optional; you can state “match current samples.”)
• Test new samples.
• Make revisions, if necessary.

What to Look For

Find an LCD display supplier that has experience dealing with a contract manufacturer. There are some items that are dealt directly with the CM, such as schedules, payments, and RMAs.  But the supplier needs to know when to get the OEM involved, which is any time there may be a significant impact to your products or customer perception.