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A Manufacturer's Guide to the Make-or-Buy Decision for Electrical Control Panels
Sunday, July 5, 2026
Estimated read time: 10 minutes
Part 2 of 3: The Costs Nobody Puts on the Spreadsheet
The Numbers Behind the Decision
Before we get into the details, let’s talk about the basic math. At its core, the make-or-buy decision comes down to two numbers: what it costs you to build the panel yourself, and what it costs to buy a finished assembly from a specialized panel manufacturer.
The procurement world has a straightforward way of looking at this. You need four numbers to get started:
- Your volume – how many panels you need, per day, per week, per month, per quarter, per year?
- Your fixed costs – skilled personnel, tooling, floor space, equipment, inventory carrying cost, and infrastructure required to build panels in-house.
- Your per-unit direct cost – the raw materials, parts, components, processing time, and labor for each individual panel.
- The supplier’s per-unit landed cost – what a finished, tested, ready-to-install panel would cost you from a dedicated panel manufacturer.
From there, the formulas are simple:
If your cost to make exceeds your cost to buy, the numbers are telling you something. And if the reverse is true, that’s worth knowing too.
But here’s where most manufacturers get tripped up. They plug in the obvious numbers from the BOM cost (the price of the wire, the circuit breakers, and switches) and stop there. What they don’t account for are the soft costs and the hidden costs. That’s where the real money hides.
Figure 1. The make-or-buy math: two formulas, four inputs, one decision rule.
The Costs Nobody Puts on the Spreadsheet
When your accounting department looks at in-house panel manufacturing, they see the hard costs: wire, circuit breakers, busbars, faceplates, switches, and terminals. Those are easy to track. They show up on invoices and purchase orders.
But there’s a whole layer of expense sitting underneath those numbers that rarely gets calculated, and it can make the difference between a profitable operation and one that’s quietly bleeding money.
The Purchase Order Burden
Let’s start with something every purchasing agent knows, but few companies actually quantify: the cost of managing multiple vendors for a single assembly.
To build an in-house electrical control panel, your purchasing team might be juggling 25, 50, or 100 line items. Breakers from one supplier. Busbars from another. Custom blank or faceplate panels from a third. Wires from a fourth. Terminal blocks, indicator LEDs, rocker switches, and labels from several more. Each of those parts and materials that will require their own purchase order, lead time, receiving, stocking, invoice processing, and payment.
Industry benchmarks from the American Productivity and Quality Center (APQC) put the administrative cost of processing a single purchase order between $50 and $150 when you factor in requisition, approval, receiving, quality checks, and accounts payable. Now multiply that by 5, 10, or 20 invoices per build set. It adds up fast.
Compare that to the outsourced scenario: one part number, one vendor, one PO, one invoice. Your buyer manages one relationship and one lead time. If a component is missing or backordered, that’s the supplier’s problem to solve, not yours.
The Weight of Inventory
When you build panels in-house, you’re not just buying parts for one specialty vehicle or one boat. You’re buying safety stock to make sure the line never stops. And that safety stock comes with a carrying cost and its own set of problems.
Dead stock risk. If you decide to change a switch style mid-model year, or a component gets discontinued by the manufacturer, you might be left sitting on thousands of dollars of inventory that will never get used. It just collects dust on the shelf until someone eventually writes it off.
Shrinkage and damage. Small components like fuses, LEDs, and circuit breakers are easily lost, damaged, or “borrowed” for other projects without being tracked. It’s not theft, but the effect on your bottom line is the same.
Opportunity cost of space. Every square foot of floor space dedicated to storing bins of electrical components is a square foot that could be used for something more productive, like a second assembly station, a testing area, or additional production capacity.
Capital tied up in work-in-progress. Your money is locked up from the moment you purchase parts and components until the boat or vehicle is delivered and paid for. With an outsourced panel manufacturer, the clock on your capital doesn’t start ticking until the completed assemblies arrive and the NET 30 terms have reached the payment due date. That’s a significant difference in cash flow, especially for smaller operations.
Figure 3. The four costs hidden inside that 25%.
Sources:
APQC's inventory carrying cost benchmark measure definition
The Logistics Management article that cites the specific APQC numbers (7.3%, 10%, 16.4%)
Engineering and Skilled Labor
Building electrical panels isn’t just about installing switches to a blank panel. It requires someone who understands wiring logic, circuit protection, load calculations, and industry standards like ABYC, RVIA, and ISO. That’s either an electrical engineer or a skilled electrical technician. Either way, you’re paying a premium for that expertise.
When you build in-house, you’re paying for all of that “thinking time” on every single unit: wire routing decisions, crimping specifications, labeling layouts, and troubleshooting when something doesn’t test right. That skilled labor cost lives on your payroll whether you’re building 5 panels a week or 50.
When you work with a panel manufacturer, that engineering cost doesn't disappear. It either becomes a one-time NRE or setup fee at the beginning of the program or a transparent line item in the per-unit price. Either way, it's predictable, it's visible, and it's only there when you're actually building panels. Compare that to carrying a skilled technician on your payroll year-round, whether the line is running or not.
Warranty Exposure and Liability
This is the one that keeps operations managers up at night. When you build panels in-house, every warranty claim on an electrical failure traces back to your team. A loose crimp connection, a miswired breaker, or a nut that wasn’t torqued properly. Those failures don’t just cost you parts and labor to fix. They cost you customer confidence and, in some cases, the customer entirely.
On a boat or any specialty vehicle, the stakes are higher than they are on a typical commuter roadway. A consumer's car breaks down, and it's an inconvenience. They pull over and call roadside assistance. The customers Paneltronics builds for don't have that luxury. A boat losing electrical power in the middle of the ocean is a safety event. So is a fire truck stalling on the way to an emergency call, an RV stranding a family miles from anywhere, or a specialty work vehicle failing at a remote site? Reliability isn't optional in marine and specialty vehicle applications. It's everything.
When you purchase a finished panel from a qualified panel manufacturer, the warranty liability shifts. The supplier stands behind the product. Component failures, wiring defects, and workmanship issues become their responsibility to resolve, not yours. That’s one less thing your team has to worry about and one less line item on your rework budget.
Beyond the Numbers: The Strategic Picture
The make-or-buy decision isn’t purely financial. If it were, every manufacturer would just pick the cheapest option and move on. The reality is more nuanced than that, and the best framework we’ve seen for thinking through it comes from the world of strategic procurement. It breaks the decision into three pillars: Business Strategy, Risk, and Economics.
Figure 4. The decision rests on three pillars. Adapted from strategic procurement frameworks.
Pillar 1: Business Strategy
The first question is simple: Is building electrical panels your core competency? If you’re a boat builder or a specialty vehicle manufacturer, your competitive advantage probably lives in design, function, ride performance, interior fit and finish, quality, reliability, or brand reputation. The electrical panel is a critical component of your build, absolutely. But it’s not the reason your customers choose your product over the competition.
Think of it this way. You wouldn’t manufacture your own tires or propellers, and you probably don’t make your own HMI displays or steering systems either. Those are specialized components built by companies whose entire business revolves around doing that one thing exceptionally well. Electrical control panels are no different. A company with intimate knowledge of ABYC, RVIA, and NEC, with decades spent refining electrical panel and assembly design, testing, and manufacturing, is going to deliver a more consistent, more reliable product than a team that builds panels as a side task between other production responsibilities.
The key question to ask your team: does building panels in-house give us a meaningful competitive advantage, or is it simply something we’ve always done?
Pillar 2: Risk
Every sourcing decision carries risk, whether you make it or buy it. The question is which set of risks you’d rather manage.
Building in-house means you carry the risk of component shortages, obsolescence, quality control failures, and the ongoing challenge of keeping skilled labor. If your one master electrician retires or takes another job, your panel assembly operation could grind to a halt overnight.
Buying from a specialized panel manufacturer shifts many of those risks to someone who has a team better equipped to handle them. A dedicated panel manufacturer has deeper relationships with component suppliers, larger purchasing volumes (which means better prices and better allocation during shortages), established quality control processes, and a team of trained technicians rather than a single point of failure.
That said, outsourcing introduces its own risks: lead time dependence, a single source of supply, and the need to clearly communicate your specifications. These are real concerns, but they’re manageable. And they’re the kind of risks that a strong supplier relationship, built on clear communication and mutual accountability, is designed to handle.
Pillar 3: Economics
We’ve already covered the soft costs. But there’s one more economic factor worth highlighting: production speed.
When you build panels in-house, every unit moves through your facility at the speed of your slowest process. If your electrician is wiring panels, those panels are being completed one at a time, in sequence, and any disruption (a missing part, a wiring error, a sick day) ripples through the entire production schedule.
When you receive finished panels from a specialist, installation becomes a fraction of the time. Your team unpacks the panel, positions it, connects the pre-built wiring harness to your main harness, and moves on. What used to take hours of skilled labor now takes much less time to install. That time savings compounds across every unit you build, and it frees up your production floor to focus on what actually differentiates your product.
True Cost Comparison at a Glance
Figure 5. Same panel, two cost structures. The visual headline; line-item detail follows below.
| Cost Category | In-House (Making) | Outsourced (Buying) |
|---|---|---|
| Procurement Labor | High: managing 20+ vendors and multiple POs per boat or specialty vehicle | Low: managing 1 vendor and 1 PO per boat build or specialty vehicle |
| Inventory Carrying | High: safety stock, dead stock risk, shrinkage, storage space | Low: reduced carrying cost, controlled delivery of finished assembly, minimal inventory |
| Engineering Labor | High: requires skilled electrician or engineer on every unit | Low: one-time NRE or setup fee at the beginning of the program or a transparent line item in the per-unit price |
| Production Speed | Slow: manual wiring, sequential assembly on-site | Fast: plug-and-play installation in minutes |
| Warranty Liability | You own it: all rework, failures, and field service | Shared: supplier covers component and workmanship defects |
| Quality Control | Your responsibility on every individual component and connection | Supplier delivers tested, certified, ready-to-install units |
So Where Does That Leave You?
If you’ve made it this far, you’re probably already running some of these numbers in your head. Maybe you’re thinking about how many vendors your purchasing team is managing right now. Maybe you’re looking at that shelf of safety stock and wondering what it’s really costing you. Or maybe you’re just starting to ask the question that matters most: is this really the best use of our time and resources?
We’re not here to tell you what to do. Every operation is different, and the right answer depends on your volume, your capabilities, your market, and your goals. What we are saying is that the decision deserves a closer look, especially if it’s been a while since anyone ran the real numbers.
In Part 3 of this series, we’ll walk through the partner approach in detail. We’ll talk about what the hybrid model looks like in practice, how to evaluate a panel manufacturing partner, and the questions you should ask before making your decision. We’ll also share some perspective from nearly five decades of working with manufacturers across the marine and specialty vehicle industries.
In the meantime, if this article got you thinking, we’d love to hear from you. Whether you’re ready to explore your options or just want to talk through the numbers, the team at Paneltronics is always happy to have the conversation.
About the author
|
Edwin (Ed) Robledo, Paneltronics Senior Technical Marketing. 10+ years of published content creation and technical writing in the electrical and electronics industry, including articles and white papers on circuit, electrical design, and engineering best practices. Connect on LinkedIn |
In collaboration with:
Pedro Pelaez, President of Paneltronics
