Screaming Circuits explains how evaluating prototyping requirements and considering options that recognize annualized spend helps minimize administrative time and reduces cost.
Outsourcing electronics manufacturing is typically a well-defined purchasing function. On volume production projects, prototypes are normally built during the new product introduction (NPI) phase by the EMS provider partner handling volume production. However, product development teams at larger OEMs often source their own prototypes earlier in the design process to smaller suppliers, since early-stage designs may not go to volume production. These transactions are often priced as one-off purchases and may add administrative activity to the engineering team workload.
Building prototypes likely to ramp to volume at the EMS provider handling volume production is definitely the most cost-effective way to source those prototypes. If there is component commonality on related projects, it may be possible to leverage those projects’ component inventories for the material needed to build those prototypes. That said, one-off engineering prototypes may not fit because these companies often lack the quick-turn, transactional, no-frills environment common to these types of prototypes.
Using a local job shop for occasional one-off engineering prototypes can be cost-effective because these companies are set up to work responsively on short runs. However, the same amount of administrative time may need to be spent setting up each purchase if these projects are infrequent.
For a significant number of engineering prototypes on an annualized basis, identifying a source that specializes in prototypes and is willing to set up a corporate account may represent an option with the project institutional memory and procurement support capabilities found at a full-service EMS provider, with the flexibility and speed of a job shop.
For example, Screaming Circuits, a company specializing in prototypes, offers both transactional and corporate business models with varying levels of support and speed. While corporate accounts can help eliminate much of the front-end administrative work necessary for order processing, the real benefit is setting up a system that conforms with the customer’s standard practices and/or special requirements.
For example, some customers use non-standard documentation or terminology. Once a customer service representative knows this, that knowledge reduces communications errors and delays. Customer service also notes the types of orders or special process add-ons that a customer places or needs. That familiarity helps ensure questions are answered quickly. This can be particularly important in leading edge technologies where industry standards may need modifying to specific customer requirements. It is also easier to accommodate logistics issues such as last-minute part shipments on partial turnkey orders, when the customer team is well known and that potential issue was anticipated.
In the current materials environment, this type of relationship also pays benefits. At this supplier, material is typically not handled differently between corporate and individual customers. However, customers establishing a longer-term relationship often develop recognizable patterns in material requirements. An example is a large bill-of-materials with one or two parts on a long lead-time. For corporate customers with a track record, this supplier can often order and hold available parts until the long-lead time components are available. That protects against other parts on the bill-of-materials going out of stock while waiting for the long-lead time parts.