Q1) What are Indtec’s typical lead times?
A1) Typical lead-times for turn-key PCBAs are 6-12 weeks after receipt of order (ARO) and assuming that all parts are readily available from OEMs or franchised distributors.
Typical lead-times for consigned material PCBAs are 3-4 weeks after receipt of order (ARO) and assuming that all parts are received from customer (complete kits).
Lead times fluctuate depending on demand volatility and parts availability.
Q2) How does Indtec deal with component shortages or lack of availability?
A2) Typically, when a customer requests turn-key service, we check pricing and availability when we quote the job. If a part is unavailable from the OEM or franchised distributors, or has an excessively long back-ordered lead time (> 2 months), we try to provide this feedback to customers when we quote, so they can make a decision. Customers either find an alternate part or an alternate source, or they agree that we will wait for the part to become available, and we modify the order’s delivery date.
We try to collaborate with the customer on the path that makes the most sense for them. Some of our customers take risks on unverified broker parts, and others might require that we only accept parts from franchised distributors. Essentially, we look to the customer for guidance. We never guarantee part availability. As a small business, just like any other business, we can only purchase what is available in the open market. If we receive a firm turn-key order and the parts are available, we will purchase them with the expectation that the customer will take delivery of the finished boards or compensate us for the costs incurred if they decide to cancel the order. If we receive a firm turn-key order and the parts become unavailable, we inform the customer and work on alternative parts or sources of supply. We never guarantee availability.
Q3) Does Indtec provide expedited service / “quick-turn” service, or can you deliver sooner than stated lead times? A3) We certainly work with customers to do better than stated lead time, especially when we are not extremely busy. If a customer requests an expedite, and we commit to their expedited timeframe, we will likely charge an expedite fee (minimum $500 expedite fee). However, if we fail to meet the expedite due date, the expedite fee would be waived. The amount of the expedite fee varies widely. We negotiate expedite fees to dissuade customers from always demanding “quick-turns” that are very disruptive to the production schedule. If a customer wants to cut in front of other customers and disrupt the schedule, there is a cost associated with that, and it is greater than $500. If the customer wants us to commit to an expedite, and they are not willing to pay the quoted fee, they can try negotiating it down, or go with another vendor. These are the risks we take, but this also keeps us from charging an exorbitant fee. We generally do not want to lose business because of an expedite fee, but we can’t expedite every order all the time for free, either.
If the customer would rather not pay an expedite fee, but they want boards sooner than stated lead time, we will attempt to do a best effort to their desired due date. This is probably the best option. If we say an order will be ready in 3-6 weeks, but you want it completed in 2 weeks, we might be able to accommodate that with no additional charge. However, we will not commit to a 2-week turn without an expedite fee in the PO. Often, we will accommodate a reasonable best effort turn-around that is better than the stated lead time, but without any explicit commitment.
Q4a) How do consigned orders differ from turn-key orders at Indtec? A4a) For consigned orders (where the customer has procured and supplied the parts to Indtec), we request that the customer provides some excess quantity of parts to act as a leader, especially for tape and reel and surface mount components (2”-3” of extra tape or 1% excess for tubes, trays, and bulk parts). We request that parts are provided in cut tapes, partial or full reels, tubes, trays, boxed tape (ammo packs) instead of loose parts. We request that the customer provide a packing list, based off the bill of materials (BOM), where the customer identifies each part, its reference designator, the assembly quantity per board, the extended quantity needed for the order, and the actual quantity supplied (should include some ~1% excess). Indtec segregates customer consigned inventory from our inventory. These parts will be entered into our MRP system in the customer’s stock location with a $0 inventory value. Unless the customer wants for us to retain consigned parts for future orders, Indtec will return all excess parts to the customer upon job completion, using customer’s collect freight account, or we will invoice the customer for their shipping method of choice. For consigned orders, lead times begin after all parts are received (full kit, no shortages). Indtec does not warranty customer-supplied components. If there is a noticeable concern or defect, we may reach out to the customer to address it and receive guidance on how to proceed. Generally, we accept customer-provided parts without scrutiny (provided that they are delivered in sufficient quantity and labeled/identified appropriately). It is the customer’s responsibility to ensure that they provide components of good quality, free of any defects, and are not counterfeit, damaged, or otherwise deficient.
For turn-key orders, Indtec will check cost and availability for most components during quoting. However, between the time of quotation and receipt of customer Purchase Order, some parts might become unavailable, or costs may increase >10%. If parts become unavailable, or material costs increase greater than 10%, we will reach out to the customer, and we may request to adjust the pricing or delivery date. The customer has the option to accept any adjustments or cancel the order. We never guarantee parts availability, and we do not guarantee that costs will not increase after a quote has been issued. The value we provide in turn-key service is that we perform the labor of quoting, procuring, and kitting raw materials for production (as opposed to the customer doing this for themselves). Turn-key service is purely additional labor value added. We do not assume any additional risks, such as the customer’s supply chain risk, inventory holding risk, or part obsolescence risk.Q4b) What else should we know about turn-key service at Indtec? A4b) Again, “turn-key”service at Indtec is purely additional labor value added. We do not assume any additional risks, such as the customer’s supply chain risk, inventory holding risk, or part obsolescence risk. What does this mean? It means that when a customer designs a board and selects their components, there are inherent risks in parts selection, such as the availability of supply and risk of obsolescence. We are not in a position to assume these risks from customer design decisions. If Indtec receives a customer PO, and we begin to purchase materials, we expect the customer to pay for the materials and labor costs incurred.
For turn-key orders, customers may push out delivery dates up to 90 days (3 months) without additional cost. If a customer wants to push out a delivery date beyond 90 days, it will incur an additional charge of 2% of the line-item value for every 30-day period beyond 90 days. Why do we do this? We do this because (theoretically) a customer might place an order, even a large order, with a reasonable due date. Then, after Indtec obtains all of the materials and the job goes through production, the customer might decide to push out the order date because they don’t have customers willing to buy their products yet. They might continue to do this, unless they are charged a fee. It is not free to hold inventory. It is also not free to execute multiple change orders for the same job, while repeatedly pushing out the date. Ultimately, the order went through production and took up capacity that could have been used for another customer who was willing to take delivery and pay promptly. Indtec is not in the free inventory holding business. We provide turn-key assembly services for customers who are willing to accept delivery of the products they ordered and pay within the PO terms.
For turn-key orders, unless the customer indicates otherwise, we assume that for passive components we have leeway to use similar components in terms of same resistance or capacitance value, tolerance, package size / footprint, operating voltage, etc. Most of our customers are okay with this. However, some customers want us to strictly use only exact components and manufacturers as called out in their BOMs. In this case, the customer should confirm in writing (generally via email or in PO) that they want exact components as listed in the BOM (no substitutions or deviations). Generally, this will increase cost, since we may have to meet minimum order quantities or buy a full reel, box, or bag of parts that we would not otherwise use. If a turn-key customer wants their excess unique parts returned to them, we are glad to do so, provided that the customer pays for the additional shipping and labor associated with packaging and returning the parts.
Q5) What payment terms does Indtec offer? A5) For existing customers, our standard payment terms are 2%-10 / Net 30. Customers who pay within 10 days of invoice receive a 2% discount. The balance is due within 30 days. For new customers, we may require an up-front payment for materials, and the balance would be due upon delivery (within 10 days of receiving the invoice). We accept payment by check, wire transfer, or ACH electronic deposit. In some cases, we may accept payment by credit card via PayPal, with a 3.5% convenience fee included. In some cases, we may accept payment in cash for small orders, if the customer desires.