1.1 Commercial qualification

Manufacturing capacity and engineering time are valuable, finite resources. Time spent detailing quotes for incompatible projects reduces the attention available for viable partnerships. The Commercial Qualification process functions as a vital filter to ensure that the projects we quote align with the factory’s technical capabilities and commercial risk profile.

Ideal customer profile (ICP) guidelines

Target project parameters must be defined before beginning detailed analysis. If a prospect falls outside these boundaries, the standard approach is to decline the RFQ, unless a strategic exception is authorized by Sales Leadership.

• Target Volume: 500 – 500k units/year.
  • The Rationale: Below 500 units, setup costs amortize poorly, resulting in a high unit cost. Above 500k units, dedicated line capacity constraints may be triggered, elevating Capital Expenditure (CapEx) risks.
• Technology Profile: SMT, THT, Box Build, moderate complexity (e.g. 4–12 layer PCBs).
  • The Rationale: High-mix/Low-volume builds or ultra-complex technologies (like rigid-flex boards) often require distinct, specialized manufacturing line configurations.
• Lifecycle Stage: PVT (Production Validation Testing) or MP (Mass Production).
  • The Rationale: Early EVT (Engineering Validation Testing) prototypes often consume substantial engineering resources without a guaranteed path to production volume.

Initial screening factors

These factors must be evaluated immediately upon receiving an RFQ.

Commercial & compliance checks

• Sanctions Verification: Engagement with entities appearing on OFAC/BIS Denied Party Lists must halt immediately to ensure strict legal compliance.
• Credit Terms: Requested payment terms exceeding standard boundaries (e.g. > Net 60) without accompanying credit insurance can severely constrain factory cash flow and require formal finance review.
• Revenue Minimums: Projects with very low estimated annual revenue potential (e.g. < $50k USD) often struggle to generate sufficient margin to cover the administrative overhead required to manage the account.

Technical viability checks

• Capability Match: When PCB complexity exceeds standard capabilities (e.g. > 18 layers or HDI spaces < 3 mil), it must be verified explicitly with engineering whether the equipment can hold the necessary tolerances. Committing to builds the machinery cannot reliably support must be avoided.
• Component Availability: Bills of Materials (BOMs) containing a high percentage of Obsolete or End-of-Life (EOL) components introduce significant risk for future line stoppages. Such projects typically require a formal component substitution or redesign commitment before proceeding.
• Data Completeness: The quoting process requires precise digital data. Quoting activity must be suspended when provided documentation is incomplete (e.g. receiving only PDF drawings without native CAD/Gerber files) until the proper data is supplied.

Process Optimization

Caution must be exercised when accepting a “Target Price” that appears lower than the raw BOM cost. If the customer’s target is $10 but the component cost is $12, factory efficiency alone cannot close the gap.

Risk assessment: managing exceptions

If an RFQ is a general fit but presents borderline risks, it may require a risk premium or conditional acceptance.

High credit risk accounts

• The Scenario: The prospect is an early-stage startup with limited operating history.
• The Mitigation: Requesting component pre-payment or establishing an escrow account should be considered. This protects the factory from holding liability for highly customized inventory.

Aggressive ramp-up schedules

• The Scenario: The customer’s forecast indicates a very steep volume jump within the first quarter.
• The Mitigation: Hardware commitments must be tightly coupled to verified material lead times. It must be ensured the launch plan acknowledges physical component lead times rather than just the desired sales deadline.

Making the decision

The qualification outcome must be formalized to maintain transparency.

1. Approved (Go): Projects fitting the ICP, standard terms, and technical capabilities should be assigned to an Application Engineer for detailed quoting.
2. Conditional (Yellow): Projects presenting a technical fit but carrying commercial risk (e.g. credit or volume concerns) require a quote accompanied by customized Terms & Conditions (e.g. requiring a 50% initial component deposit).
3. Declined (No-Go): Projects failing to meet core qualification parameters require a professional decline notification. Closing the loop respectfully preserves the relationship for future opportunities.

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Recap: Commercial Qualification Parameters

Parameter	Requirement	Action	Condition
Volume	500 – 500k units/year	Decline RFQ	Outside range without Sales Leadership exception
Technology	SMT, THT, Box Build; ≤12 layer PCB; No rigid-flex	Verify engineering capability	If complexity exceeds standard (e.g., >18 layers, HDI <3 mil)
Project Stage	PVT or Mass Production	Decline RFQ	EVT stage
Compliance & Credit	No OFAC/BIS sanctions; Payment terms ≤ Net 60	Halt engagement; Finance review required	Sanctions match; Terms exceed Net 60 without credit insurance
Data & BOM	Complete native CAD/Gerber files; Low % EOL components	Suspend quoting; Require redesign commitment	Incomplete data; High EOL component risk
Decision	Fit ICP, standard terms, and technical capability	Assign for detailed quote	Approved (Go)
Decision	Technical fit with commercial risk (credit, volume)	Quote with custom T&Cs (e.g., 50% deposit)	Conditional (Yellow)
Decision	Fail core qualification parameters	Issue professional decline notification	Declined (No-Go)