By Greg Papandrew, cofounder of DirectPCB
In this challenging business environment, a solid PCB buying strategy is more important than ever. Do you have one?
PCB buyers need to stay competitive in the face of increased raw material costs, rising freight prices, tariffs, and inflation. They should always be working to keep each vendor’s pricing in check, regularly seeking offerings from other current and/or potential vendors to compare with the prices they’re getting.
It’s not an excuse to say board buyers are overwhelmed with too many other responsibilities. Keeping the vendor base on its toes is a core responsibility.
It’s also the job of upper management to ensure that buyers and PCB salespeople are incentivized to bring prices down.
I understand and appreciate vendor loyalty. But are you leveraging your vendor, or are you being leveraged by your vendor?
For 2024, supplier diversification is vital to your success.
Unfortunately, many OEM and EMS companies have invested too much of their annual PCB spend with only one vendor. That could prove to be a costly mistake in the coming year. The truth is, companies that stick with this one-vendor approach will have a hard time remaining competitive.
“We have used this vendor for years” is not a viable strategy. As a PCB buyer, it’s your responsibility to keep your vendor base competitive in pricing.
The problem is, as your relationship with your suppliers continues, it’s easy to get complacent about pricing when a vendor’s quality and delivery are satisfactory. But if you’re not regularly checking the pricing of your existing vendors against that of potential suppliers, you could be leaving money on the table.
If quality and delivery performance among your present vendors is comparable, you need a way to ensure that you’re still getting the best prices.
One way to do this is what I call quoting for fun. That just means giving potential vendors who are seeking your business a shot at quoting an ongoing project “for fun.” Let potential vendors know it’s an existing project and you would like to see where they stand on pricing in comparison to current vendors.
This will provide a useful benchmark against which to measure your current vendors’ pricing.
If there is a significant per-board price difference—especially if you’re having any quality or delivery issues with a current vendor—it may turn into more than just fun. It may give you another vendor to add to your base.
While a few pennies per-board difference in price is not worth switching vendors if you’re happy with existing ones, it’s wise to keep your options open.
This practice will also help keep your vendor base on its collective toes. Let your vendors know right at the beginning of your relationship that you’ll be regularly evaluating their performance in all areas, including pricing.
In my next post, I’ll break down five specific ways you can stir your PCB pricing pot to ensure you’re getting the best possible pricing in the new year.
Need help managing your PCB vendor base? Contact me at firstname.lastname@example.org.