The Covid-19 pandemic took place around the world, supply chains were severely affected, the prices of materials escalated, putting great pressure on companies on production costs. This is also an opportunity for companies to check and re-evaluate their production processes, optimize costs, and improve their competitiveness in the market.
Electronic companies are also not out of this challenge, products are often sold for 3 to 5 times the cost to make them. Every 1 penny you can save on cost, will make your product up to 5 pennies more affordable for the end-user.
In this article, I will show you how to reduce production costs, mostly for electronics, through better engineering, without sacrificing quality.
Reduce or cut off materials that go beyond standard requirements
In industry, and mostly in electronics, over-quality is the enemy of quality.
Every part in an electronic device has minimum required specifications. In the product research process, when a material passes the tests, it does not mean that it is the most suitable. In order to save time, some companies have not paid attention to the fact that the material specifications go beyond required standard, thereby increasing production costs.
New materials are always created every day, if in the production process, it is found that the materials specifications being used exceeds the required level, engineers can contact the vendor or new suppliers to find more suitable products.
Localization of supply chains
Many electronics manufacturing companies import materials from abroad. Thereby generating costs for shipping, taxes, customs procedures, risks, insurance, etc. In the context of the epidemic, transportation faced many difficulties, plus the scarcity of raw materials, leading to high prices.
The most effective solution at this time is to find an alternative local supplier. Localization will overcome the disadvantages of imports. Helps reduce costs and lead time.
“Same need, same solution”
“Same need same solution” means there is absolutely no reason to use a different component to perform the same task.
In one product, try to use as many of the same materials as possible. For example, for plastic-to-metal, plastic-to-plastic or plastic-to-rubber bonding applications, only one CA adhesive can solve this problem.
In the case of products that are nearly identical, example taken from the automotive industry: The Renault-Nissan-Mitsubishi Alliance produces 49 different vehicle models. All their electronics, such as the displays, the radios, the safety devices, HVAC, etc., are 99% the same, the only difference is the logo. They do so to save NRE costs by integrating only one electronic device instead of 49. Also, they have a considerable volume effect by doing it, aiming at a significant product cost reduction.
We can see below two development boards from Microchip. Starting with the board itself, the architecture is made around an Atmega microcontroller. The purpose of both cards are not the same, but as much as possible they installed common components and if possible at the same place because this way they can reduce their production cost and manufacturing process, and then being more affordable for the users.
Switching into larger size of materials
In large production factories, instead of using small size materials, it can be replaced with bigger sizes. For example, cleaning chemicals, if replaced by large cans, will help reduce costs per unit by 20-50%, in the condition that no transportation and storage costs are incurred. So, if you combine localization and increase in size, the cost will be optimized.
Moving manual production line into automative one
With the development of technology, difficult and arduous jobs are transferred to machines. For large manufacturing plants, reducing labor plays an important role in reducing costs. The cost of investing in machinery will be a big expense in the short term, but in the long run, this is a profitable investment.
Outsourcing
For small-scale factories, the investment in machinery will not be as effective as outsourcing. Specialized processing factories will have enough machines, technology, faster production time for high specialization, thereby saving costs.
For example, when wanting to protect electronic circuit boards from harsh environmental conditions, electric motorcycle charger manufacturers will think of potting method, but this method requires many technical and mechanical factors. At this time, they will look to companies that specialize in potting. Production time will be shortened, there is no cost to invest in machines and people.
Finding Experts & Consultant
Every electronic product is made up of many different parts. Each PCB, capacitor, or material in a product has a multitude of products on the market. If you want to reduce product costs, and choose the most suitable input materials. Find the experts in each field, they will give you the answer.
As we can see, there is no perfect cost reduction formula, every small cost that is reduced contributes to the total profit of the company. The most important and difficult thing to do is to maintain the quality of the product. That needs engineers to invest expertise, time and effort.
Prostech is an expert in materials and automation equipment, with a processing factory and storage in Vietnam. Contact us to find the most suitable cost optimization solution.
For more information, please contact us through:
Email: gluexpert@prostech.ph
Hotline: (+84) 984 695 398