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January 2017 • SMT Magazine 91 This timeframe tends to run a little quick- er than the previous phases, usually lasting one to six months. I have seen protected negotia- tions run much longer than necessary at times though. From my perspective, three terms that seem to be most coveted by the EMS commu- nity are the FOB point for revenue recognition, the expected payment terms and coming to an agreement on the timeframe that raw materi- al is deemed excess or obsolete so ownership and cash exchanges can occur. I know there are many pages of additional elements always nego- tiated but these three, along with factors affect- ing the cash to cash cycle of the EMS and terms that overlook the fact that this is a build to the OEM specification, AVL and print relationship; tend to be the sticking points on protracted ne - gotiations. Award Phase Once an OEM awards an EMS a job, the sales process now morphs into one of execution for the winning EMS. It remains critical for fre - quent, honest and open communications but now key performance indicators (KPIs), better known as metrics, are tracked and analyzed to assess the health of a sustaining relationship. From the time the initial orders are placed with the EMS to when the outsourcing is completed, the EMS community has experienced a dramatic lengthening of this phase over the years. What used to take six to 12 months to fully load the EMS with the desired outsourcing of the avail - able products, now may take two to three years for full ramping. Nobody I talk to, in either the EMS or OEM communities, seems to be able to offer sound reasoning for this phenomenon, other than we all seem to be "doing more work, with less people." When you start to accumulate the times the EMS NBD person spends on each opportunity brought to a close, it can easily add up to one to three years of time; and even then, there is no guarantee they will become the chosen source of supply to that OEM. Since time is one asset nobody has figured out how to recoup, it is im - perative that the fit between the OEM needs and the ability of the EMS to serve those needs be vetted as completely as possible. The sooner a misalignment of those two aspects of any deal can be uncovered, the less time will be wasted by both the OEM and the EMS with each other. Here is the summary of the entire process that completes with a win or a loss for the EMS company (Figure 1). My final thoughts to recap the five phases of the typical EMS sales cycle are that while no two outsourcing deals have the exact footprint or timeframes, the discussion and flowchart above accurately reflect the process much of the time and the difficulty for both the OEM and the EMS to make the appropriate decisions throughout this entire process. The discovery and qualifica - tion phases are arguably the most critical as the fit between the OEM and the EMS determines not if an award is made; rather if an award oc- curs, how probable it is that the relationship will endure. No EMS wants to frequently churn new clients and no OEM wants the risk and cost to once again move their electronics manufactur - ing. The pursuit phase is really where the sales side of new business development is deployed. It is usually characterized as being the most ex- pensive phase as far as EMS resource utilization goes. In the final re-qualification and award phases, deals that are a good fit are won or lost. Years of investment by both the EMS and OEM can be lost, so the art of closing the sale can't be overstressed. SMT Jake Kulp is VP, New Business Development, at MC Assembly. BREAKING DOWN THE LONG, COMPLEX SALES CYCLE IN THE EMS INDUSTRY " No EMS wants to frequently churn new clients and no OEM wants the risk and cost to once again move their electronics manufacturing. "