Holiday time has arrived, and as a parent you are contemplating getting your children the latest gaming technology whether it would be a new Wii, XBox, or Nintendo DS. Have you ever wondered who actually manufactures these products? Logically enough your first guess would be the manufacturer in this case Microsoft, Nintendo, or Apple. The truth is in many cases could not be farther from reality.
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| Manufacturing in time for the holidays |
A company who manufactures another companies’ equipment is referred to as an Electronics Manufacturer Services (EMS) provider. The reason many companies chose not to make their own merchandise is that it is much cheaper to hire someone to manufacturer their products. The price a EMS provider charges to manufacture a product for per unit is summation of the expenditure to purchase the parts, referenced to as the standard cost, plus a percentage of the cost of the material as a markup, in addition, to the labor charges to account for the time and effort to assemble. Any added fees, for example, SG&A and profit, can be added in as a fraction of the material cost or all of these costs can be incorporated in the material markup.
So when you are opening those gifts for Christmas and you find that things are not working as they should you may curse the gaming company but keep in mind the contracting manufacturing company who built the product who should really bearing the brunt of your angst. On the other hand they are not paid to placate customers, they are paid to build. And build they will.
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