Electronic Manufacturing Services & Original Design Manufacturing

Water Management

生产电脑,电脑组件s, and other electronics requires significant volumes of water. Water is becoming a scarce resource around the globe, due to increasing consumption from population growth and rapid urbanization, and reduced supplies due to climate change. Without careful planning, water scarcity can result in higher supply costs, social tensions with local communities and governments, and/or loss of access to water in water-scarce regions thereby presenting a critical risk to production, and thus revenues. Electronic Manufacturing Services (EMS) & Original Design Manufacturing (ODM) companies that are able to increase the efficiency of water use during manufacturing can reduce operating costs and maintain a lower risk profile, ultimately impacting cost of capital and market valuation. Furthermore, firms that prioritize reducing water use and greater efficiency can face lower regulatory risks as local, regional, and national environmental laws place increasing emphasis on resource conservation.

Waste Management

生产电脑,电脑组件s, and other electronics requires significant volumes of chemicals and generates air and water emissions and solid waste, including hazardous substances. The handling and disposal of hazardous wastes produced during manufacturing can lead to increased operating costs, capital expenditures, and in some instances, increased compliance costs or regulatory fines and penalties. Companies in the Electronic Manufacturing Services (EMS) & Original Design Manufacturing (ODM) industry that are able to reduce waste produced during manufacturing and ensure that it is reused, recycled, or disposed of appropriately, are likely to maintain a lower risk profile and face lower regulatory risks as local, regional and national environmental laws place increasing emphasis on resource conservation and waste management.

Labor Practices

电子制造服务(EMS)和原始Design Manufacturing (ODM) companies operate in a highly competitive environment based on cost and therefore are highly sensitive to labor costs and risks. Additionally, companies are commonly required to meet tight production deadlines for big-ticket product launches by hardware companies. Combined, these factors escalate the importance of companies maintaining strong relations with the labor force. Absent such, companies can be exposed to work stoppages and production disruptions. Such disruptions can lead to reduced revenue in the near term, as well as possible long-term impacts on productivity due to dampened employee morale. In addition to protecting a company’s reputation and social license to operate, improvements in labor practices can mitigate production disruptions.

Labor Conditions

The treatment of workers and the protection of worker rights in the Electronic Manufacturing Services (EMS) & Original Design Manufacturing (ODM) industry is of growing concern among customers, regulators, and leading companies. Critical aspects of this issue working conditions, environmental responsibility, and workforce health and safety—particularly as it relates to the hazardous materials and potentially dangerous equipment used in manufacturing. Companies in this industry operate in a highly competitive environment based on cost and therefore rely heavily on securing low-cost and contract labor. The industry’s reliance on subcontractors, labor recruitment firms, and a multi-=-tiered system of suppliers can make it difficult to improve performance on the issue. Further, companies are often located in countries with relatively low direct costs and have varying degrees of regulation and enforcement for protecting workers. This dynamic can heighten a company’s exposure to reputational risks and impacts on short- and long-term costs and sales. Such effects can arise from increasing regulation and its enforcement in response to high-profile safety or labor incidents, or through a shift in demand away from companies associated with such incidents. Companies with strong supply-chain standards, monitoring, and engagement with suppliers to address labor concerns may therefore be better positioned to protect shareholder value over the long term.

Product Lifecycle Management

公司在电子制造服务(EMS) & Original Design Manufacturing (ODM) industry, along with the industry’s customers such as hardware companies, face increasing challenges associated with environmental externalities attributed to product manufacturing, transport, use, and disposal. Rapid obsolescence of hardware products exacerbates such externalities. The industry’s products commonly contain hazardous materials, making safe end-of-life disposal a critical aspect to manage. Companies unable to minimize the environmental externalities of their products may face increased regulatory costs as local, regional, and national environmental laws place increasing emphasis on resource conservation and waste management. Through product innovation that facilitates end-of-life product recovery and the use of less-impactful materials, EMS & ODM manufacturers can achieve improvements in lifecycle impacts, reduce regulatory risk, and realize cost savings.

Materials Sourcing

公司在电子制造服务(EMS) & Original Design Manufacturing (ODM) industry rely on numerous critical materials as key inputs for finished products. Many of these inputs have few or no available substitutes and are often sourced from deposits concentrated in few countries, many of which are subject to geopolitical uncertainty. Other sustainability impacts related to climate change, land use, resource scarcity, and conflict in regions where the industry’s supply chain operates are also increasingly shaping the industry’s ability to source materials. Additionally, increased competition for these materials due to growing global demand from other sectors can result in price increases and supply risks. The ability of companies to manage potential materials shortages, supply disruptions, price volatility, and reputational risks is made more difficult by the fact that they commonly source materials from supply chains that often lack transparency. Failure to effectively manage this issue can lead to an inability to access necessary materials, reduced margins, constrained revenue growth, and/or higher costs or capital.