When it comes to scaling up production, small electronics manufacturers, hardware startups, and OEMs of various electronic and electromechanical products confront certain challenges. One of them is getting a PCB assembly catered to their requirements and budget. In this case, first, they need to choose the right service provider and then choose from various models or service types, such as turnkey or consignment PCB assembly. Both approaches offer distinct advantages and challenges, especially for companies with limited resources or those in early-stage production. Turnkey assembly provides a streamlined process, handling everything from component sourcing to final assembly, while consignment allows manufacturers to retain more control over sourcing and costs. This post explores how each method works, helping you determine which is best suited for your needs as you scale and grow your business.
What Are Turnkey and Consignment PCB Assembly Models?
In the turnkey model, the PCB assembly service provider takes care of everything. From sourcing the components to assembling and testing the final product, the service provider handles the entire process. This model is ideal for companies looking to simplify their production process as it reduces the burden on internal resources and ensures streamlined operations. This involves a significant cost.
In the consignment PCB assembly model, the manufacturer supplies the components to the assembly service provider. The manufacturer takes on the responsibility of sourcing and managing the parts, and even provides their design file to the assembly provider. The assembly provider focuses only on the assembly, testing, and sometimes basic quality control. This method is budget-friendly.
Key Considerations for Small-Scale Manufacturers
For small-scale manufacturers, selecting between turnkey and consignment PCB assembly models requires careful consideration of several key factors. Here are the most important aspects to evaluate.
- Cost control: Turnkey includes all services, but involves significant investment owing to the convenience of having everything managed by one provider. Small manufacturers may find this cost-efficient for low-volume runs or limited in-house resources. By sourcing components directly, manufacturers retain more control over cost. This model can be more economical if you have established supplier relationships or if you are sourcing in bulk. Also, when choosing this model, you need to be aware of the technical details such as PCB design, the type of components it would exactly require, and so on.
- Inventory management: Turnkey provider manages component inventory, reducing the burden on the manufacturer. This can be helpful for small businesses with limited storage or logistics capabilities. In consignment, manufacturers need to manage and store their own inventory, which requires space, resources, and a streamlined supply chain process in place.
- Flexibility and customization: In turnkey services, there may be challenges in terms of customization options, particularly for low-volume or specialized parts. This is because you may not get the exact part numbers from the service provider’s vendor network, and may have to choose an alternative. Consignment assembly allows manufacturers to choose specific components or customize according to their needs.
- Scalability: Turnkey services are often more scalable for companies moving from prototype to production as they can quickly handle increased volumes without needing to expand internal capacity. Consignment may require additional internal systems, resources, and suppliers as production scales up.
Key Considerations for OEMs
Below are the key factors OEMs should evaluate when choosing between these two models.
- Volume and production scale: For OEMs looking to ramp up quickly and efficiently, turnkey PCB assembly can provide an advantage in handling larger volumes with minimal internal effort. They can handle both small-runs and large-scale productions. While consignment is often suited for smaller, more specialized batches, it can be less efficient for large-scale operations unless the OEM has a streamlined supply chain.
- Quality control and testing: Turnkey assembly ensures consistency across the entire production process, including using automated testing processes. However, it also gives OEMs less visibility and control over the testing and quality assurance stages. With consignment, they can test the assembly at their own site or be involved in the inspection process.
- Risk management and flexibility: The turnkey model offers a low-risk option for OEMs that want to avoid the complexities of managing multiple suppliers and vendors. However, it does reduce flexibility since the OEM is dependent on the service provider for both assembly and sourcing. Consignment allows for greater flexibility in managing the risk of component shortages, price fluctuations, and supplier reliability. The level of risk depends largely on the level of technical experience and expertise dealing with PCB assemblies in earlier projects, and more.
- Cost efficiency: The convenience of turnkey assembly comes at a higher price point, which can be a challenge for OEMs looking to optimize margins. On the other hand, consignment allows for better cost control, especially when the OEM can negotiate favorable terms with suppliers or source parts in bulk. However, if you have a good budget, turnkey is a better option as it relieves manufacturers of any risks associated with wrong parts, design flaws, and the subsequent additional costs.
Both turnkey and consignment offer distinct advantages, and the decision must be based on your priorities such as cost control, speed, quality, and flexibility. Whichever model you choose, it is important to associate with an experienced PCB assembly service provider who offers custom options. You can contact Accelerated Assemblies that offers tailored turnkey and consignment PCB assembly services to meet the unique needs of small-scale manufacturers, OEMs, and startups. Contact the team at Accelerated Assemblies today to discuss how they can help streamline your production process and bring your product to market faster.
