Two customers send the same BOM to the same assembly house and get quotes 30 percent apart. One ships the parts, the other asks for a turnkey price. The gap is rarely the labour rate. It is who owns the material when something goes wrong, and what that ownership is worth.
It also decides who is standing in the line when a reel comes up 200 pieces short two days before ship date.
The two models side by side
| Point | Consignment, customer supplies | Turnkey, supplier buys |
|---|---|---|
| Who buys the parts | Customer, on its own account | The assembly house, against the approved list |
| Who owns the material in transit | Customer, from its dock to the line | Supplier, until delivery of finished goods |
| Cash flow | Customer pays for parts months before the finished unit is invoiced | One invoice, parts inside the unit price |
| Who carries shortage and scrap | Customer, unless an allowance is agreed | Supplier, within the agreed allowance |
| Traceability records | Customer's own lot data, if it kept it | Supplier's goods-in records per lot |
| Part change control | Customer approves every substitution | Supplier proposes, customer approves in writing |
| Exposure to price movement | Customer, at the moment it buys | Supplier, inside the quoted validity |
| Speed to first build | Slow if the customer is still gathering parts | Faster when the approved list is clear |
Neither column is better in general. The mistake is picking one for the whole company instead of per programme.
The costs that hide under consignment
Consignment looks cheaper because the parts are bought at the customer's own price, often a negotiated annual price that an assembly house cannot match on a 500 piece order. Then the other costs arrive.
- Freight and duty into the build country. Two shipments instead of one, customs entry, and a declared value now visible to a customs authority. Documentation errors here delay a build more often than shortages do.
- Incoming inspection. Every consigned lot still has to be counted, date coded, checked for packaging and inspected for authenticity. That work does not disappear, it moves onto the assembly invoice.
- Shortage and scrap. Placement losses, damaged parts and engineering samples come out of somebody's material. Without a stated allowance, every lost 0402 becomes a purchase order.
- Storage and moisture control. Parts stored for a year need controlled space, and moisture sensitive parts need baking before use. Somebody pays for both.
- Replacement lead time. A defective reel means a new order and a second shipment, which can cost two weeks nobody recovers.
- Administration. Purchase orders, shipping documents, material receipts, returns and reconciliation at close of programme all land on a buyer and a planner.
Where consignment still wins
There are programmes where supplying the parts is the right call, and the reason is usually control rather than price.
- A fixed approved vendor list the customer is contractually bound to. Aerospace and defense contracts often name the source, and the assembly house cannot buy outside it.
- Customer owned long lead material. Parts bought at a last time buy, or allocated parts held under a customer agreement, belong to the customer and should stay that way.
- Programmed or proprietary devices. A part carrying customer firmware, or a device under a customer specific part number, should not pass through another party's purchasing.
- Price controlled pass through. Where the customer buys at a global contract price far below market, consignment keeps that advantage.
Everything else, passives to connectors to power devices, is usually better inside a turnkey quote: the house buys the same part across programmes and sees the market weekly.
The hybrid that most programmes end up using
In practice the split is per line item. The customer supplies the three long lead devices and the programmed MCU, and marks every other line as buy. The BOM is issued with a status column: consigned, buy against approved list, or buy with customer approval before substitution. That single column removes most of the arguments that follow, because the ownership of each line is decided on paper before the order.
For a first build the split also protects the schedule: long lead parts follow the customer's dates, the rest is bought when the build is confirmed.
The documents that stop a dispute
- Consigned material list with full part number, quantity, date code and lot per reel or tray.
- Declared value and Incoterms for the inbound shipment, agreed before it ships.
- Scrap and shrinkage allowance, stated as a percentage and as a minimum quantity.
- Defect disposition: who decides a part is unusable, who pays the replacement, and who pays the freight both ways.
- Return of unused material at the end of the programme, including who pays for the return and in what condition.
- Storage terms for material held over 90 days, and whether baking is chargeable.
An assembly house that asks for these clauses is not being difficult. A three year programme hits every one.
How SUPERB handles both models
SUPERB Tech quotes turnkey with a customer approved list, so a substitution only happens in writing. Consigned material goes through the same goods-in gate as bought material: quantity counted on an X-ray counter, date code and packaging checked, moisture level read, and the lot recorded against the work order so a finished board can be traced back to the reel it came from. Authenticity checks follow the same procedure in both models, which matters because a counterfeit part does not care who bought it.
Assembly runs to IPC-A-610 Class 2 or Class 3 against J-STD-001, on a floor under ESD S20.20, with 3D SPI before placement, 3D AOI after reflow and 3D X-ray for BGA and QFN. Where a programme mixes PCB and assembly, panel and stack are quoted together, so material and process are decided in one place.
- Component sourcing: how a BOM is priced and what an approved list does to the quote.
- BOM cost guide: where the money actually sits in a bill of materials.
- Counterfeit detection: the inspection that applies to your parts as well as ours.
Frequently asked questions
Can I consign some parts and let you buy the rest?
That is the normal arrangement. Mark the status of each line on the BOM and the quote will follow that split, with separate lines for consigned handling and bought material.
What happens if a consigned reel is short?
The shortage is reported against the counted quantity at goods-in, before the build starts. Whoever supplied the reel replaces it. That is why counting at receipt matters: a short reel found on the line stops a build, one found at goods-in delays a purchase order.
Who is responsible for a counterfeit part I supplied?
The supplier of the part owns the authenticity. What the assembly house owns is the inspection record that shows the part was checked at receipt. Agree the inspection scope in the contract, and keep the record with the lot.
Next step
Send the BOM with the status column filled in, the annual quantity and the date of the first build. The reply splits the quote into consigned handling and bought material, states the allowance and the inspection scope for each, and flags the lines where a substitution would need your written approval.
