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How 3PL Can Fix OTD
If you’ve ever placed a PO with an EMS company, you’ve probably experienced this: It’s way easier to send the order than to receive it on time.
Here’s the good news: You don’t have to accept constant delays as inevitable. A Third-Party Logistics (3PL) provider can help fix your on-time delivery (OTD) issues—if you use them strategically. Let’s break it down.
First, What Counts as "On Time"?
You’d think “on-time delivery” would be self-explanatory. It’s not. There’s actually a fair bit of nuance here, and if you and your supplier aren’t aligned, you’re setting yourself up for trouble. Consider:
- On time to what? The date you requested or the date they promised?
- What if the supplier changed the date? Is the new promise the new "on time"?
- Does it mean shipped or received? Big difference if you’re dealing with international suppliers.
- Does partial delivery count? If you ordered 100 units and 95 arrived on time, is that a win or a failure?
Most companies define OTD as:
- The originally promised date, unless the buyer explicitly agreed to a change.
- The dock date: When the goods are physically received, not when they ship.
- 90–95% complete: This can really vary, the main thing is you and the supplier agree.
Full-Turnkey vs. Consigned/Labor-Only EMS
Before we get into why OTD is such a challenge, let’s talk about the $177b market for EMS in North America. There are two key models for working with an EMS provider:
- Full-Turnkey EMS: The EMS company handles everything—purchasing components, receiving and storing them, and manufacturing your assemblies. You just place an order and wait for the finished product.
- Consigned/Labor-Only EMS: You purchase and provide all the materials, and the EMS company focuses strictly on manufacturing.
No question it’s much easier up front to place one PO full turnkey. But if you’re experiencing OTD issues, or want to avoid them in the first place, 3PL may be your best strategy.
Why Do Full-Turnkey EMS Companies Fail at OTD?
When you outsource to a full-turnkey EMS, you’re handing off:
- Parts procurement
- Receiving, inspecting, and storing components
- Manufacturing (SMT assembly, reflow soldering, inspections, etc.)
The manufacturing line is never the cause of OTD problems. EMS companies don’t struggle to make solder joints—that’s their core business. The real issue is material delays.
If a part is late, they might not tell you because… well, it’s just not that important to them—unless you’re a major customer.
Want Better OTD? Be 10% of Their Revenue
Here’s an industry secret:
If you make up 10% or more of an EMS plant’s revenue, you’ll get great service. If you’re smaller—especially under 5%—persistent OTD problems are much more common.
Why? EMS plants prioritize their biggest, most profitable customers. That’s just business.
If you’re a small or midsize customer, trying to solve OTD problems with a full-turnkey EMS might be a losing battle.
But don’t worry—there’s a better way.
The Wrong Fix: Just Go Small
At this point, the obvious reaction is: Okay, I just need to find a smaller EMS company where I’ll be an important customer.
That’s logical. But it’s often not practical. Here’s why:
- Compliance Is a Problem: If you work in aerospace, medical, or defense electronics, your EMS provider needs certifications like:
- Location Can Be an Issue: Even if you find a small EMS company with the right certifications, they might be in an inconvenient location. Working with a far-away supplier means longer transit times, higher shipping costs, and less oversight over your production.
- Small EMS Companies Are Expensive: The small EMS companies that do have the right certifications are often much more expensive than larger ones. They’re typically serving high-margin industries (medical, aerospace, defense) and charge accordingly.
Instead of struggling to find a small, certified, affordable full turnkey EMS provider, there’s another way.
The Smart Fix: Split Materials and Manufacturing
Instead of having your EMS company control both materials and manufacturing, separate the two:
- Use a 3PL for materials procurement and management.
- Use a consigned (labor-only) EMS for manufacturing.
This way, you get the best of both worlds:
- 3PLs specialize in materials. They handle procurement, storage, and kitting efficiently—regardless of your size.
- EMS companies specialize in solder joints. When you send them kits that are 100% ready, they just build.
Think of it like a force multiplier, you now have two teams and at least twice the manpower working to insure your success.
This team building approach can solve most OTD problems.
Why This Works at Any Scale
3PL providers are far less sensitive to customer size. Their logistics processes are standardized, and they can serve small and large customers equally well.
The same is true for consignment EMS. They are usually very flexible on lot size, and their core competency of making millions of solder joints isn’t impacted by lot size.
Turbo Charge Your New Team
Want great OTD with less effort and reduced costs? Add Cofactr’s electronics-focused 3PL to your team, here’s just a few of the benefits for OTD:
- Automated supplier tracking: So you always know what’s late.
- 360 degree visibility: Everyone knows all material status all the time.
- Kitting services: So your EMS gets perfectly prepped materials.
- Full BOM Procurement: Including non-electronic components like metals and plastics.
3PL = Fewer OTD Headaches
If your OTD problems are constant and frustrating, it’s probably because you’re too small at a full turnkey EMS. Instead, separate materials and production:
- Use a 3PL to handle parts procurement, storage, and kitting.
- Use a labor-only EMS to focus on what they do best—building your boards.
This strategy works at any scale, helps prevent material-related delays, and maintains all your compliance requirements.