Does Vertically Integrated PCB Fabrication Provide Real Value to ...

Large contract manufacturers commonly offer in-house printed circuit board (PCB) fabrication to OEMs. The vertically integrated service is perceived as a value-add, since it provides a modestly lower purchase price by not involving third parties in PCB assembly.

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It’s sound logic – no additional suppliers means no additional cost stack-up. Product margins are preserved and OEMs pocket a minor percentage per PCB on the markup.

Vertically integrated PCB fabrication adds up to a smart business decision on paper, but is a one-size-fits-all approach or box build truly a value when you consider the nuances of specialized high-mix, low-volume projects, and the related PCB builds?

The question should give you pause. It should also have you rethinking your PCB build strategy and the benefits of working with a supplier — such as GMI Solutions — that doesn’t have PCB fabrication services as part of its business:

1. Flexibility

An assembly-level supplier with strong PCB sub-suppliers has the built-in flexibility to give OEMs choices in aligning complex, project-specific requirements with a supplier’s core competencies.

This supplier flexibility is also invaluable when working with pre-determined PCB vendors to maximize tooling, set-up, and fixture investments. GMI, for example, can easily work with those vendors and manage them under our approved vendor list (AVL). This approach is efficient and mitigates the inherent risk involved during an OEM product manufacturing transfer.

2. Competitive, fully transparent pricing

Large contract manufacturers or PCB manufacturers often cannot provide a transparent, competitive quote for custom PCBs. Suppliers such as GMI that accommodate low- to mid-volume projects are able to identify and leverage tribal knowledge and other assets to provide pricing that’s clear and accurate. Further, if you are using a contract manufacturer with internal PCB fabrication, it becomes impossible to quote PCBs independently since the fabrication is part of the overall business.

3. Structured support

In many cases, PCBs are incorporated into critical-use devices or are part of a larger, complex system. OEMs need somewhere to turn to ensure successful implementation, specifically suppliers that both understand the project details and are equipped to provide structured, responsive service and support — a hallmark of GMI.

4. Excellent quality at lower quantities

As a supplier of high-mix, low- to mid-volume assemblies and capital equipment, GMI has developed a strong network of PCB suppliers. They have proven proficient in the unique requirements of lower-quantity builds and consistently deliver to quality expectations.

5. Risk mitigation

If you use a contract manufacturer that sources PCBs externally, you have many more options should something go awry. If there is a mismatch on technology, equipment, or some other aspect, you need to know that your board-level supply chain can be moved to prevent having to move your entire product all at once with a line-down scenario.

6. Focused resources

Vertically integrated contract manufacturers are required to juggle multiple competing priorities. A “businesses within a business” approach may suggest efficiencies, but it can also lead to distractions. Suppliers without PCB fabrication or other similar services baked into their business model are focused solely on the OEM. GMI is non-vertically integrated so we can focus on providing a best-in-class supply of final assembly and support.

The practicalities of working with a supplier that takes a non-vertically integrated approach to PCB fabrication has come full-circle for some GMI OEM customers.

Recently, a multinational medical OEM experienced issues with a large contract manufacturer that was unable to affordably dedicate resources and support to low-quantity PCB production.

GMI’s high-mix, low- to mid-volume model fit the OEM’s needs. Moving PCB fabrication and working directly with a GMI supplier resolved all concerns, mitigated the risks of transfer, and saved money.

More manufacturers these days are realizing the benefits of using external PCB assembly services versus a DIY approach. Allowing an electronics contractor to lend its expertise has resulted in happier, more efficient OEMs.

What’s the secret to a great partnership? There are a lot, actually. A savvy PCB partner can examine your situation and offer these eight advantages:

8 Reasons to Outsource PCB Assembly Services

When it comes to PCB assembly, there's a lot to talk about. Here's a breakdown of the most important points to consider when thinking about assembly services.

1. A lower investment
2. Savings on facilities
3. All-around cost efficiency
4. Priceless expertise
5. Being able to focus on more important aspects of PCB design
6. Shorter lead times
7. Higher capacity
8. Option for aftermarket services and obsolescence management

Let's get into it. 

1. Lower Investment

Surface mount machines and quality inspection machines are a massive up-front investment. So are the costs of getting certified to manufacture PCBs (printed circuit boards) for aerospace and medical projects. And don’t forget that the new hires you’ll surely need will cost you:

• Permanent, year-round salaries
• Health insurance
• Retirement packages

With outsourced PCB assembly, you worry about none of that. Keep your operation small, and only worry about your current employees.

2. Facility Savings

Renting or leasing warehouse space can really drain your funds, not to mention if you have to pay property taxes. That's why your electronics vendor can hold your parts in-house. You don’t have to find space for all that inventory. Your PCB manufacturer will take on the financial burden until the parts are shipped out.

This cost reduction lets you invest somewhere else in your facility -- R&D, marketing, you name it.

3. Cost Efficiency

Your electronic manufacturing services provider should already have in place an established infrastructure and well-rehearsed operation. Why spend years attempting your own?

Contact us to discuss your requirements of OEM PCBA Service. Our experienced sales team can help you identify the options that best suit your needs.

A PCB fabrication expert will already understand the inventory management factors that affect cost efficiency, such as:

• Short part life cycles
• Price fluctuations
• Design changes

Especially if you’re a startup with little capital, it’s easier to enlist experienced and well-run circuit board assembly services instead of trying to consolidate the process yourself.

4. Rare Expertise

The specialists will always do it better.

PCB assembly services are what the contractor focuses on day in, day out. They know the industry best and are already a step ahead of you in thinking about issues you didn't even know about:

• Lead times
• Design flaws
• Conflict materials
• Intrinsic safety

Imagine your relief when you take a project to a PCB contractor and they spot a design problem before it goes to market. Now imagine that partner offering to help you redesign or refit a board to more efficiently manufacture that product. This actually happens all the time with PCB assembly outsourcing!

5. Put Your Focus Where It Should Be

A contracted company can take a big burden off your hands.

With an OEM’s collective hands and minds free, it can instead focus on engineering or another part of the business. Maybe your resources are better suited for marketing your product or trying to break into a new market.

6. Shorter Lead Times

Your PCB contractor will almost certainly have long-standing relationships with multiple component makers. The vendor will have an established supply chain with part brokers and other folks that may benefit your lead times.

You and your facility, on the other hand, already have enough strain. It can take a large team and a lot of space to assemble circuit boards. If you have neither, you’re not going to get orders to customers very quickly.

An electronics manufacturer with a sole focus on PCBs can knock out an order far faster than your company can.

7. Higher Capacity

Outsourced PCB assembly benefits capacity much in the same way it reduces lead times: a bigger team and more space to work with.

Furthermore, a contractor will better recognize the economy of scale. Once you get into the 10,000s with order volumes, you may need to redesign the board to make it more manufacturable on a larger scale. A trusted assembly service can assist with that.

And, because it always seems to come back to cost in the end, remember: If you want to assemble high-volume orders on your own, you’ll need super-expensive mounting and inspection equipment to meet capacity needs.

8. Opportunity for Aftermarket & Other Services

A PCB manufacturer can become a business partner who has a vested interest in your success. The right vendor can become your partner in everything from PCB design layout to the distribution process -- and beyond.

Such a vendor will have an on-staff engineering team to help with redesigns. If you’re trying to focus on a new product but also need someone to manufacture a legacy product, you’ve hit the motherload.

After your product hits the market, the partnership can continue. The full-service PCB vendor can perform a failure analysis to figure out how quickly products are failing out in the real world. That’s important data going right to your doorstep or inbox.

When you make it an all-in-one manufacturing experience, using contract PCB fabrication is the long-term answer.

Peace of Mind

Unless you’ve got a huge team with nothing else to do and a truckload of cash to throw at new machines (which we doubt), you’re better off outsourcing PCB services.

If you want to enjoy extra benefits like obsolescence management and design assistance, make sure that your partner is an all-in-one contract manufacturer. The peace of mind will be worth it, no question. 

Are you looking for an electronics contract manufacturer but are unable to visit the facility due to cost or Covid? 

Matric Group offers virtual tours. Click below to learn more.

Editor's Note: This article was originally published June, , but has recently been updated. 

Are you interested in learning more about PCB Electronic Board Assembly? Contact us today to secure an expert consultation!