Virtually all electronic components benefit from mass production. As it turns out, it’s harder to benefit from buying a few parts compared to buying many. This is true for the production and ordering of Oven-Controlled Crystal Oscillators (OCXOs). There are several important advantages to buying these in bulk instead of in small quantities, including lower setup costs, shorter lead times, and reduced impact of supply chain issues.
1: Lower Setup Costs
A certain amount of setup is required to manufacture any component. If a manufacturer must change molds, patterns, or chemicals, or perform any other retooling between batches of components, you can expect those costs to be passed along to the customer. Costs of retooling can be quite high, and include labor, maintenance, consumables, and other items, and will occur even if the manufacturer has all these supplies on hand.
Therefore, to reduce the overall costs, it’s better to buy more parts less frequently. This will mean fewer retooling and setup costs for the manufacturer, and less costs passed on to you.
2: Shorter Lead Time
It’s counterintuitive but true. Buying parts in bulk can often mean shorter lead times. How can buying more of something make it arrive more quickly?
First, there is the issue of retooling. When someone places a large order of parts, retooling becomes a priority for the manufacturer, and that order gets started much more quickly. Smaller orders may get delayed, sometimes in an effort to reduce costs. For example, a small order might be pushed out a day or two and performed right after some preventative maintenance on the equipment, which may reduce some of the retooling costs. These savings get passed onto the customer, but the lead time suffers.
Second, linked to retooling, is the fact that it’s much easier to produce a lot of the same part rather than switch between parts constantly. This has been known to be true since the invention of the assembly line, where one task is performed over and over again, instead of performing all manufacturing steps throughout the process to produce one part.
Third, quality control drastically improves when the same process can be repeated multiple times in a row instead of tooling up for one process, retooling for another, and then tooling up again for the first process. Consider making three good sandwiches: if the person makes all three of them at once, they will likely be very similar. If they make a sandwich, put away the supplies, eat the sandwich, then make another one, and repeat this process, those three sandwiches may be slightly different.
Because quality cannot be sacrificed when it comes to OCXOs, any quality excursion increases the lead time, delaying the delivery of the finished goods. Therefore, you should order parts in bulk to reduce quality variations and, in turn, reduce the lead time.
3: Reduced Impact of Supply Chain Issues
While there was a drive for Just-in-Time (JIT) manufacturing in the past, the recent supply chain issues have led many companies to keep extra supplies on hand. In a finely tuned JIT manufacturing process, each part or raw material would arrive and be converted into a saleable product, and then instantly shipped to market. In JIT, there is no storage of either raw materials or finished goods.
As tempting as that sounds, the reality is that supply chain bumps mean those raw materials and goods may not arrive on a regular schedule. COVID delays, shipping issues, shipping container shortages, semiconductor manufacturing plant fires, and other problems have impacted the delivery of goods across the electronics industry over the past few years. If a critical component doesn’t arrive on time, the entire process can be impacted while a replacement part is sought or the lead time is increased.
By purchasing OCXOs in bulk, there is less dependence on the ups and downs of the supply chain. Adequate stock can be kept on-hand to minimize the impact of shipping delays, fluctuations in demand, and other obstacles that can trip up JIT manufacturing operations.
The Benefits of Buying in Bulk Depend on the Longevity of Products
Perhaps when one thinks about buying in bulk, they think in terms of buying big boxes of cereal or the large bag of salad greens. At first, buying in bulk looks like a great idea; per part or per ounce, the cost is a little lower. However, most people have had the experience of buying a product in bulk, only to have it expire before it can be used, meaning the actual unit price is much higher, based on the product that was not wasted. The shelf life of the product is significant when buying items in bulk.
This is not a concern for OCXOs. Unlike perishables, OCXOs have incredibly long shelf lives, so they will be just as functional when they are ready to be used as they were when they were manufactured, with no significant degradation on performance.
With the reduced turnaround times and long shelf life of OXCOs, it makes sense to buy them in bulk. It will save money, shorten lead times, and reduce the impact of supply chain issues.
Interested in learning more about OCXOs? Read our eBook, An Introduction to Common Oscillator Types >>