Consigned Kits against Turnkey Purchasing on the Same Board
Split procurement saves component markup fees on high-cost ICs but demands strict kit audits, overage management, and clear contract defect attribution rules.
Component Scrap Allowance
Scrap Ratio
Contractual yield loss factors represent agreed percentages of raw surface mount parts set aside to cover normal machine setup and tape attrition during automated placement. High-speed pick and place machines require extra components to thread reel leaders and absorb vision rejection spikes. Component scrap allowance establishes the precise volume of overage that an electronics manufacturing services provider may consume without triggering a financial penalty or requiring buyer reauthorization.
Material Cost
Automated assembly equipment routinely discards small surface mount passives during mechanical feeding and optical alignment. Standard contracts set specific scrap tiers based on component package sizes and unit costs. Small discrete passives like 0201 chip resistors usually carry a three percent scrap allowance, while complex integrated circuits in ball grid array packages frequently carry zero scrap allowance.
Buyers supply or fund parts according to these negotiated baseline percentages. When scrap rates exceed the agreed threshold, the assembler absorbs the replacement cost for the lost inventory.
Procurement Boundary
Material planning software calculates mandatory reel purchases by adding nominal scrap margins to the raw bill of materials demand. Unused overage remaining after production completion remains the property of the customer or gets credited back to the assembly contract. Component scrap allowance applies strictly to mechanical setup loss and operational attrition during assembly, excluding damaged parts resulting from incorrect feeder setup, board misprints or unauthorized operator error.