Turnkey vs consigned PCB assembly: which model fits your build
The difference between turnkey and consigned PCB assembly is who buys the components. In full turnkey, the contract manufacturer purchases the entire bill of materials — actives, passives, bare board, mechanical hardware — and delivers assembled, tested boards. In consigned assembly (also called kitted), you buy every part yourself, ship a kit to the CM, and pay for labor, equipment, process, test, setup and consumables instead of for parts. Neither model is better in the abstract. Turnkey trades a materials margin for someone else carrying purchasing, inventory and shortage risk. Consigned keeps cost visibility and part provenance with you, along with the work and the cash tied up in a shelf full of reels. Many programs land somewhere in between, on a partial turnkey split. This guide compares the two, axis by axis, explains partial turnkey, and shows how the split gets written into a quote line by line.
| Turnkey | Consigned | |
|---|---|---|
| Who buys the components | The CM purchases the full BOM against your approved vendor list (AVL) — actives, passives, connectors, bare board, hardware. | You buy every line on the BOM and ship a kit in. The CM supplies process consumables — solder paste, adhesives, and cleaning agents where the flux system requires them — and charges tooling such as the stencil as NRE. |
| Who carries inventory risk | The CM, until parts are consumed. Reel MOQs, minimum buys, excess and obsolescence are the CM's exposure and get priced in. | You. Leftover reels, overage from minimum buys and end-of-life stock stay on your books after the build ships. |
| Cash flow and working capital | Materials spend is bundled into the unit price and paid against build milestones. Less capital tied up ahead of production. | You fund the whole BOM up front, often well ahead of the build. Capital sits in parts on a shelf until the build runs. |
| Lead-time control | The CM schedules purchasing and build together, so fewer handoffs — but you depend on its supplier lead times and on how much visibility it gives you. | You control when parts land. An advantage if you already hold stock; a risk if one late line item holds the entire kit, and the booked slot, hostage. |
| Price transparency | Component cost is usually rolled into a per-unit price carrying a materials margin. Ask for a line-item BOM cost breakdown if you want visibility. | You see exactly what each part cost. The CM quote covers labor, setup, tooling, test and consumables only, which makes CM-to-CM comparison clean. |
| Who owns component-shortage risk | The CM owns the search — allocation chasing, cross-references and alternates are worked on the CM side, subject to your AVL rules. | You own the search. A shortage on your side stops your build, and booked capacity may be released to another job. |
| Quality accountability for parts | The CM buys from franchised or approved sources and performs incoming inspection on what it bought; authenticity accountability for those lines sits with the CM as defined in the quality agreement. | Kits get counted and checked for damage on receipt, but a CM cannot warrant parts it did not purchase. Provenance and authenticity stay yours. |
| NRE and setup | Same hard NRE as consigned — stencil, placement program, fixtures, first-article — plus the BOM scrub and supply-chain setup the CM folds into its quote. | Narrower quoted NRE, but you absorb the hidden setup: BOM scrub, POs across multiple distributors, kit consolidation, attrition math and inbound freight. |
| Shortages and substitutions | The CM proposes alternates against your AVL and you approve or reject. Turnaround is usually faster because the CM is already watching the market. | Every substitution round-trips to you: find it, approve it, buy it, ship it. Slower, but nothing goes on a board without your sign-off. |
Choose Turnkey when
- You have no purchasing function, or your buyer's hours are worth more than the materials margin you would save.
- The BOM is mostly commodity parts with several approved sources — there is little to gain by placing those POs yourself.
- You want one company answerable for both the parts and the workmanship.
- You are ramping and would rather not carry reel MOQs, overage and obsolescence on your own balance sheet.
- You would rather a CM's purchasing function chase allocations and cross-references than have your hardware engineer do it between design reviews.
Choose Consigned when
- You already hold the inventory — leftovers from a prior build, a bulk buy, or stock bought ahead of a known shortage.
- The design uses proprietary, customer-programmed or sole-source parts that only your account can buy.
- A corporate purchase agreement or franchise distributor contract gives you pricing the CM cannot match, or requires the buy be on your account.
- You want an apples-to-apples labor quote across several CMs, with no materials margin blurring the comparison.
- Your quality system requires you to control part provenance and lot traceability from the franchised distributor forward.
What each model actually means operationally
Full turnkey starts before any part is bought. The CM scrubs your BOM against the AVL: checks every manufacturer part number for lifecycle status, flags no-bids and single-source lines, prices alternates where you allow them, and comes back with questions on the lines that will hurt. Only then does purchasing run. Parts arrive at the assembly facility, go through incoming inspection, get kitted internally, and move to the assembly line — SMT placement and reflow first, then any through-hole content joined by wave, selective or hand solder, followed by inspection and test. You get assembled boards and one invoice. The materials sit on the CM's books the entire time, which is what the materials margin pays for.
Consigned assembly inverts that. You place every purchase order, take delivery at your dock or have distributors drop-ship to the CM, and send a kit with a packing list that matches the BOM line for line. The CM receives it, counts it, and checks for obvious damage, moisture-barrier bag integrity on moisture-sensitive devices (MSDs), and reel labeling, then issues a shortage report on anything that does not reconcile. It runs the build with your parts and bills labor, setup, tooling, consumables, inspection and test.
A few operational details decide whether a consigned build goes smoothly. The first is attrition: chip passives get consumed in feeder setup, in first-article and in rework, so a kit needs overage on every line — a percentage allowance on the high-count small passives, and a fixed number of extra pieces rather than a percentage on low-count, fine-pitch or expensive parts. Ship exact quantities and you risk shorting the build. The second is the shortage report. It is not a formality; it is the document that tells you, before the assembly line is set up, which line item is going to stop the job.
A third detail is worth naming because it causes arguments later: scrap liability. If a consigned part is damaged in handling or lost in a feeder beyond the agreed attrition, who absorbs it? On turnkey the answer follows the purchase order. On consigned it has to be written down before the kit ships.
Partial turnkey: how the BOM usually gets split
Partial turnkey means the BOM is split. You consign the lines only you can or should buy, and the CM sources the rest. It is a common arrangement on hardware programs, because the reasons for consigning rarely apply to the whole BOM — they apply to a handful of lines rather than to every part number on it.
The lines customers keep are predictable. Long-lead or allocated silicon bought well ahead of the build to protect a launch date. Customer-programmed devices, where the part ships pre-loaded with your image. Sole-source modules — RF, cellular, a specific sensor — under an agreement in your name. Parts covered by a corporate purchase agreement at pricing a CM cannot match. Custom mechanical or optical items already tooled at a vendor you own the relationship with. Anything carrying your logo or your IP.
Everything else — resistors, capacitors, standard logic, connectors, regulators, bare board fabrication, hardware — usually goes to the CM, because those are the lines where a purchasing function that buys them every week has a real advantage, and where holding the stock is a burden with nothing to show for it.
Partial turnkey is also common on box-build programs. The PCB assembly sits inside a larger build with an enclosure, display, cabling and an HMI, and the split for the boards is often different from the split for the mechanical parts. It is normal for a program to consign the display module and the programmed MCU while the CM sources the passive and connector population and the sheet metal. See box build for how those layers get integrated and tested as one unit.
How the split gets documented, line by line, in the quote
The split belongs in the BOM itself, not in an email. The mechanism is a supply-responsibility column — CM or CUST — populated on every single line before anyone quotes. A BOM with blanks in that column is a frequent source of schedule slip, because an unassigned line is a line nobody buys.
A quote that handles this properly carries, per line: reference designators, quantity per board, manufacturer part number and manufacturer, supply responsibility (CM or CUST), whether alternates are permitted and which ones, attrition quantity for consigned lines, and the date consigned parts must be at the assembly facility. Then, at the header level: what happens on a kit shortfall (hold, partial build, or line-item substitution), who bears scrap beyond agreed attrition, insured value and Incoterms for the consigned shipment, and how long the CM's component pricing holds — because a turnkey quote is only as valid as the distributor quotes underneath it, and those expire.
Two more items keep programs out of trouble. First, note which consigned lines are on allocation, so both sides are watching the same risk. Second, state the alternate-approval path and name who signs — a substitution request that sits unanswered adds schedule on top of the shortage that triggered it.
Check what the quote package is built from, too. Gerbers are bare-board fabrication data — copper, mask, silkscreen, drill — so nothing can be assembled from them alone; an assembly quote needs the BOM and centroid (pick-and-place XY and rotation) data alongside the Gerbers, and it is the BOM, not the fabrication data, that the supply-responsibility split is applied to line by line. This is where sourcing scope gets defined honestly: if the CM is buying, it should say which lines it is bidding as sourced and which it is no-bidding back to you. See sourcing for what that scope looks like in practice.
Making the call — and how Essen quotes it
Run the comparison on your actual BOM, not on the abstract question. Sort the lines by extended cost and by lead time, and look at the top of each list. If your expensive, long-lead, painful lines are ones only you can buy, you are running partial turnkey whether you call it that or not. If they are commodity parts, turnkey is probably buying back more engineering time than it costs in margin. If you already own the inventory, consigning it is straightforwardly the cheaper answer.
Be honest about the second-order costs on both sides. Turnkey's materials margin is visible; consigned's cost is spread across your buyer's time, your inbound freight, your carrying cost, and the risk that one late line item idles a booked build slot. Neither is free. It also helps to remember what you are actually comparing: in a turnkey quote, purchased material is normally the largest share of the unit price, and labor, test and setup are the conversion cost added on top of it. A consigned quote shows you only that conversion cost.
Essen quotes full turnkey, consigned, and partial (split-BOM) arrangements. Assembly is to IPC-A-610 Class 2, in production facilities in Taiwan operating under ISO 9001:2015 quality management systems. Where firmware is loaded in production, it is loaded from your image and remains entirely your IP — Essen does not write firmware and does not design circuits from a blank sheet.
On a program Essen quotes, the supply-responsibility split is itemized line by line, including the lines no-bid back to you, with alternates and attrition assumptions stated. DFM review comes back before you commit, and Go/No-Go test criteria are agreed in writing before production starts. Send a BOM, Gerbers and centroid data through the RFQ form to start that.
Frequently asked
What is the difference between turnkey and consigned PCB assembly?
Turnkey means the contract manufacturer buys the entire bill of materials — components, bare board and hardware — and delivers assembled boards. Consigned means you buy all the parts yourself and ship a kit to the CM, which supplies labor, equipment, process, test, setup and consumables rather than parts. The dividing line is who places the purchase orders, and everything else — inventory risk, cash flow, shortage risk, parts accountability — follows from that.
What is partial turnkey PCB assembly?
Partial turnkey is a split BOM: you consign specific lines and the CM sources the rest. Customers typically keep long-lead or allocated silicon, customer-programmed devices, sole-source modules, parts under a corporate purchase agreement, and anything carrying their IP. The CM buys the commodity balance — passives, connectors, standard logic, bare board. It is a common arrangement, because the reasons to consign usually apply to a handful of lines rather than to the whole BOM.
Is turnkey more expensive than consigned PCB assembly?
The turnkey unit price is higher because it includes components plus a materials margin — purchased material is normally the largest share of a turnkey price, with labor, test and setup as the conversion cost on top. That does not make turnkey the more expensive option overall. Consigned shifts real costs onto you: buyer hours, POs across multiple distributors, inbound freight, carrying cost, excess and obsolescence, and the risk that one late line item idles booked capacity. Compare total landed cost including your own labor, not just the two quotes side by side.
Who is responsible if a consigned component turns out to be counterfeit or defective?
You are. A CM performs receiving inspection on a consigned kit — count, damage, moisture-barrier bag integrity, reel labeling — but it cannot warrant the authenticity or performance of parts it did not purchase. On turnkey, the CM buys from franchised or approved sources and inspects on receipt, so accountability for those lines sits with the CM as defined in the quality agreement. It is one reason to put counterfeit-sensitive lines on the turnkey side of a split BOM.
How much attrition should I include in a consigned kit?
Every line needs overage. High-count small chip passives need a percentage allowance because parts are consumed in feeder setup, first-article and rework. Low-count, fine-pitch or expensive parts are usually handled with a fixed number of extra pieces rather than a percentage. Agree the specific attrition quantity per line with the CM before you buy, and get the scrap-liability rule — what happens beyond agreed attrition — in writing at the same time.
Can I switch between consigned and turnkey during a program?
Yes, and programs often do. A common path is consigned or partial turnkey for prototype and first production, when you already hold parts and want tight control, moving toward turnkey as volumes rise and carrying inventory becomes a burden. The switch is mostly a BOM and contract exercise: re-scrub the BOM, re-mark the supply-responsibility column, and re-quote the affected lines. Expect the CM to re-validate any line it is taking over.
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