The three models
| Full turnkey | Partial turnkey | Consignment | |
|---|---|---|---|
| Who buys components | Factory | Factory, except the parts you supply | You |
| What you pay the factory | Unit price including materials | Its materials plus assembly | Assembly, test and some consumables |
| Component price visibility | Low unless costing is open | Full on your parts | Full |
| Working capital | Mostly the factory, often with deposits from you | Shared | You |
| Shortage management | Factory | Split by part | You |
| Defective component risk | Mostly the factory | Split | Mostly you |
| Your workload | Lowest | Moderate | Highest |
The terms come mainly from electronics assembly, such as PCBA at an EMS provider, but the same choice applies to box build and other materials.
What changes between them
Cost. Under turnkey, the factory adds a margin to the materials it buys, and materials usually make up most of the cost of an electronics assembly. Consignment removes that margin but moves the purchasing work, inventory and logistics to you. Material margins are usually charged as a percentage, so ask whether high-value parts such as processors and displays carry the same rate as low-cost passives.
Risk. Under turnkey, the factory manages lead times and shortages, but you are still exposed: if a part is short, your build slips. For parts bought specially for you, excess and obsolete stock usually comes back to you under the agreement, so read the liability terms. Under consignment, a late or defective component is your problem from the start.
Sourcing during shortages. When a part is hard to find, a turnkey factory may buy from brokers or non-franchised distributors to keep the line running. Those parts carry a higher risk of counterfeit, remarked or poorly stored components. Require approval before any purchase outside franchised channels, and agree what testing such parts need.
Control. Consignment gives full control over sources, which matters for long-lead or allocated parts, parts with high counterfeit risk, and parts that carry security keys or licensed content. Turnkey depends on the factory sticking to the approved manufacturers on your BOM, which should be written into the agreement.
Logistics. Consigned parts must reach the factory on time and in the right quantities, with an attrition allowance for parts lost during machine setup and placement. Parts shipped into mainland China for assembly and re-export often move under processing-trade customs arrangements, which the factory must be set up to handle.
When each model fits
- Prototypes and early builds. Partial consignment is common: you supply the hard-to-get or expensive parts, and the factory buys the PCB and passives.
- Scaling production. Turnkey or partial turnkey is usually simpler, provided costing is transparent and the approved parts list is enforced.
- Specific parts. Consign parts where you have better pricing or allocation, a direct relationship with the chip maker, or a need to control parts that carry keys or licensed content.
What to agree in writing
- Material margin and how component costs are passed through, ideally open-book for major parts
- Excess and obsolete liability, and how non-cancellable, non-returnable parts are flagged before purchase
- Who may approve alternate parts and purchases outside franchised distribution
- Attrition allowance for consigned parts and how losses are reconciled
- Who inspects consigned parts on arrival, and who pays when they cause failures
- Regular inventory reports for consigned stock held at the factory
These terms change the price you are quoted, so ask for them in the RFQ and compare them alongside the unit price and landed cost. A contract manufacturer may offer all three models; an ODM selling its own platform usually works turnkey.
Where Zefinity helps
Comparing supply models across quotes is part of RFQ management and quotation analysis in Zefinity’s Connect service, and supplier coordination continues through Launch.
Frequently asked questions
Is turnkey or consignment cheaper?
Neither by default. Consignment removes the factory's margin on materials but moves purchasing, inventory, logistics and component risk to you, and those cost money and time. Turnkey can be cheaper overall when the factory buys the same parts at better prices or with better allocation. Compare total cost, including your own effort and inventory, not the factory's line items alone.
What is partial turnkey?
Partial turnkey is a mix: the factory buys most materials, such as the PCB and passive components, while you supply selected parts, typically expensive, scarce or strategic ones such as a main processor, a display or parts you buy directly from the chip maker. It is common in early builds and for products with a few critical components.
Who is responsible if a consigned component is defective?
Usually you, unless the agreement says otherwise. The factory is responsible for assembly workmanship, but defects in parts you supplied, and the cost of reworking boards built with them, normally sit with the buyer. Agree who inspects consigned parts on arrival and how failures are investigated and charged before the first kit ships.