Industrial Semi: Turnkey Services Smooth Uncharted Waters

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Todd Burke
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Re: Good but how much is hidden cost?
Todd Burke   4/23/2013 4:36:55 PM

@_hm: It is interesting that hidden costs are mentioned because the very reason industrial companies are showing an interest in turnkey sourcing and inventory management services of electronic components is because they are seeking to reduce their overall cost of acquisition and possession of a commodity which they lack the expertise to properly store and handle themselves.

In working with turnkey service providers, companies are directly addressing a litany of hidden costs associated with sourcing (e.g., time and resources), purchasing (e.g., transactional costs, equipment, insurance, etc.), not to mention the value realized by having a secure supply chain partner when one must navigate the waters of counterfeit-rich EOL components to service expensive equipment with life-spans that far surpass the components within. Companies are turning to best-in-class providers, those with broad and deep supply chain experience, who can provide the full range of services, processes and procedures around electronic components.

In terms of turnkey service costs, there is, nor should there be, anything hidden about them. They can simply be tied to the value of the managed inventory as a percentage of the total - charged on a per transaction basis, for example - or negated altogether by agreeing to and meeting pre-defined monthly or quarterly sales targets. In the end, turnkey services are centered around a partnership in which both parties want the other to succeed and thereby both do.

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Supply Network Guru
Good but how much is hidden cost?
_hm   4/20/2013 9:10:31 AM

Turnkey services are very good. But it is very interesting to know the actual cost of adding this service. Profit margins are quite thin and if supply chain turnkey service takes away significant part of this profit, it may not be worth it. It is prudent to evaluate it for each organization.

Also, turnkey service work on words in contract and ideally may not be as dedicated as an employee, afraid of its job contribution and security. This is more true in case of exigency or sudden and very odd requirement. This haapens very often. Turnkey service may not dedicate much time because they do not get paid by hours. They may offer very facile and not so cost effective solution.

This approach needs attention, but finding suitable partner with similar goals is chimerical.

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