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.
Customer Consigned Kits
External Provisioning
Material inventory provided by a customer for use in their specific production order reduces the upfront capital expenditure of the manufacturer. When a project uses customer consigned kits, the buyer sources the bill of materials and ships the components directly to the assembly site. This method ensures that the buyer maintains control over component costs and vendor selection while the manufacturer focus solely on the labor of assembly.
The boundary of this arrangement ends at the point of consumption, where any surplus parts remain the property of the customer.
Inventory Liability
Managing these parts requires a rigorous receiving process to verify that the quantities match the packing list. Because the manufacturer did not purchase the items, customer consigned kits are not carried as assets on the factory balance sheet. The facility must provide dedicated storage bins and tracking numbers to prevent these parts from being used on other orders.
If a shortage occurs during production, the manufacturer notifies the customer to provide replacements rather than sourcing them from the open market. This clear separation of ownership simplifies the final billing because the invoice only reflects the assembly services and any small items provided by the shop.
Production Impact
Assembly schedules depend entirely on the timely arrival and completeness of the provided materials. When customer consigned kits arrive with missing or incorrect components, the production line may stop until the customer resolves the discrepancy. This creates a dependency where the buyer’s supply chain performance directly affects the manufacturer’s throughput.