What You Should Know About Buying PCBs

Originally published on Buymanager Blog

Most printed circuits boards are currently produced in the Asia-Pacific region (APAC), representing more than 90% of global PCB production, including China which covers about 50% of global PCB and PCBA requirements on its own. Over the last five years, China’s PCB manufacturing sector grew by 8.4% to reach $95 billion in 2018. Outside this region, there are PCB manufacturers in North America, Europe (France, Germany) and smaller players in Africa and Latin America.

Regardless of where they are produced, PCBs often need to be exported from their country of origin in order to be assembled. China is a key country for sourcing PCBs but it is not always easy to manage logistics and purchasing. Here are the essential points to know.

The 3 approaches to PCB sourcing

There are three methods for PCBs sourcing:

1. Directly from the supplier

First, you can decide to support the relationship with your suppliers internally: you source, audit, manage and control the supplier. Sourcing is relatively easy via the web, trade shows like Electronica, etc.

However, once the commercial relationship is established and to build a long-lasting relationship, the commercial interface will not be enough because the technical teams will have to exchange. If they do not speak a common language, the sourcer quickly becomes the translator and the main communication channel between the technical teams.

Managing the supplier directly also means taking care of the logistics. Most PCB suppliers sell EXW or FOB. It is necessary to drive shipments and to source an overseas forwarder familiar with Asian transiting. Depending on the purchase order flow and the production needs, it may be relevant to combine various transportation solutions (sea, air or express). Grouping orders in shipments and consideration of the transit leadtime are rarely taken into account by the ERP, delivery dates updates become tedious. Upon receipt, any customs controls, duties and taxes payment and transport invoice control increase the complexity. This requires adequate human resources, familiar with customs transit and international transport, speaking English fluently, if possible Chinese.

2. Working with a PCB importer

As another solution available, you can work with an importer who will do the sourcing and qualification of the suppliers. He will fully manage the relationship with them and manage all the logistics. He sells a global service: PCBs prices are delivered to your premises. Responsibility is delegated to him, he is responsible for the PCBs industrial risk.

3. Calling on an agent

Finally, you can choose to work with an agent. Depending on the service provided, he will source, manage the logistics (provide his language skills and his knowledge of transit) or facilitate the daily relationship with suppliers. He can help you with your suppliers because he speaks Chinse and hence serves as interface. The agent is either paid by the sourcing company or commissioned by the PCB manufacturer.

As for the direct relationship, the industrial risk is carried by the PCB supplier.

Choosing between one of the three options requires an overall cost analysis. In addition to the purchase price, the analysis must consider the direct costs related to:

  •  Supplier sourcing and auditing
  •  Transportation and its management
  • Additional cash mobilization.

But also, indirect costs related to:

  • The loss of flexibility related to the transportation leadtime (especially regarding to the implementation of new versions of PCBs),
  • The time spent by the sourcer on tasks that are not necessarily part of his mission.

Modes of transport

Four modes of transport exist:

  1. Express (from 48h to 4 days): The fastest and the most suitable for small volumes (prototyping for example) but can be used for a large flow if your rates are well negotiated. In many cases, the integrator removes the goods daily from suppliers. This mode of transport has a high cost.
  2. Air (7 to 10 days): Fast but expensive, it is more used for small series. A customs forwarder takes charge of the goods ex works or once the customs export is made, stores it and groups it with other goods. The forwarder negotiates its tariffs with airlines to route the goods. The fuel surcharge is charged by the forwarder so that he is not dependent on the kerosene cost.
  3. Sea (5 to 6 weeks in total): As soon as the volumes are important and/or that the sourcer an anticipate sufficiently, the maritime transport is the most suitable because it is more economic, but it takes longer to ship the goods.
  4. Sea-Air: a balanced alternative. For transit from China, the goods are shipped by sea to Dubai and then transits by air. This mode of transportation saves about 30% of the cost of transportation compared to air and saves 50% of time compared to shipping.

Depending on the mode of transport, the cost is determined as follows:

  • Air: Goods are taxed at weight-volume. Above 6m3 for 1 ton, the price is calculated according to the volume.
  • Sea: the goods are taxed by weight, 1 ton per 1m3.

Note that PCBs containing a lot of copper, they are heavy and always taxed by weight. The higher the number of layers, the greater the weight.

Choosing the right mode of transport based on delivery times and volumes is one way to optimize your costs.

Quality control

Ensuring that PCBs meet your needs is indeed a critical aspect. It is important to perform quality audits as part of a new vendor certification process or regular audit. An effective audit will focus on assessing the vendor’s mastery of manufacturing processes. A documentary audit of compliance with a standard such as ISO 9000 or ISO TS 16949 will be less relevant.

The sourcer does not necessarily have the required expertise to perform audits. However calling on inspection bodies is not a appropriate solution because they perform controls according to a protocol provided by the sourcer.

Conducting an audit in China presents additional challenges. During the control, questioning the operators on specific points can be difficult because only few speak English and all the documentation is obviously in Chinese. Unless the buyer speaks and writes Chinese fluently, being accompanied by a trustworthy translator is essential. The translator knowing the sector of PCB manufacturing is a real asset.

You should also know that subcontracting between manufacturers is a common practice in China, you must ensure that the audited factory is the actual site where you PCB are produced.

In summary, no matter which method of sourcing you choose, pay attention to the overall cost. Audit and challenge regularly your suppliers. Check and adjust your logistics.

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