10 ways to lower the cost of your electronic product

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    05-Jul-2015

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Lowering the cost of your electronic device is especially crucial to offset lower sales and maintain your competitive edge during these difficult times. Here are 10 different strategies which over the years have proven to deliver the best value for money.

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  • 1. 2012 October10 Ways to Lower the Cost of Your Electronic ProductLowering the cost of your electronic device isespecially crucial to offset lower sales andmaintain your competitive edge during thesedifficult times.Here are 10 different strategies which over theyears have proven to deliver the best value formoney.1. Eliminate unnecessary complexityYour product does not have to meet 100% of the wishes of 100% of all people. AsApple demonstrates its not necessarily the product with the most features whichcommands the highest margin. In fact, Steve Jobs famously quipped thatInnovation is saying no to 1,000 things. For many new products, satisfying 80%of functionality demanded is more than enough. Do not get trapped trying to satisfyeach and every wish of that one clamorous prospect, if in fact most of thecustomers do not really need them and you wind up paying for the cost of all theseunnecessary bells and whistles.2. Leverage existing platformsMake use of existing technologies instead of starting from scratch and reinventingthe wheel. For most products, there are factories already making something whichcomes pretty close and can be customized to fit your requirements, user interface,and styling. Not only does this ensure you pay less in development fees but it alsoavoids a lot of debugging, and so speeds up time to market. Bear in mind thoughthat a factorys priority is to sell their product and the number of units you want toproduce will have to be incentive enough for them to customize the device andreconfigure their production line.3. Simplify mechanical designIn their relentless drive to lower assembly time engineers in the West often comeup with very complex parts. But as labor is still very affordable in China you areoften better off splitting the part in two, the cost of a really complex mold is a lothigher than that of two simple ones, and far outweighs the savings in assembly cost,especially if you are producing in batches of say 5K.4. Design electronics in AsiaIn many markets the only way to be cost competitive is to design for low costmanufacturing in China right from the start. Once the whole design has alreadybeen completed and certified in the West it will be very hard to achieve substantialcost savings China, because it would take a lot of time and effort to re-do thedesign for Asian components and manufacturing methods. Another issue is that themost cost effective ICs are those produced by companies such as Allwinner, Holtekand a host of other brands an engineer in the West has never heard off, let alone

2. be able to design a board around it without any support, since that supportunfortunately often only comes in Chinese.5. Embrace standard partsUse off-the-shelf parts and modules as much as possible. Since almost everyproduct is made in China these days there is a also a complete supply chainsupporting for almost everything, and there are very few parts which cannot besourced ready-made, at prices you can never get close to using a custom design. Ifyou manage to standardize on parts over your various products you will realizefurther savings on material handling, purchasing, and inventory management, whileyou can also expect discounts when purchasing in larger volumes.6. Design for testingAvoid a lot of rework at the end of the production line by making sure that youhave proper testing SOPs and integrate test points in your PCB design to allow forin-line testing. Special firmware developed only for testing may also be necessarywith some devices. Matt Rogers, founder of Nest, started his career working atApple in a department that is only responsible for in-linetesting: http://www.youtube.com/watch?v=HegU77X6I2A advance video to19:55.7. Pick popular componentsThe less popular a component the higher the price and the longer the lead-timesthe factory may only run another batch only after they have slowly collected theorders from a number of clients, and lead-times may go up to 8 weeks or more. Itsvital to stay in touch with the component markets to get a heads-up before acritical component becomes scarce or even goes End of Life (EOL). We recentlyrecommended a client to go for a 7 instead of a 6 size LCD screen because the 7screens are much more popular in the market, and so despite being larger the priceis actually lower, and availability immediate.WARNING: Dont go for something too popular though; otherwise youll be in thesame position with regard to lead time and availability.8. Use materials wiselyDetermine the appropriate material you need according to surface quality,durability, and what kind of environment the device will be used in. Some kinds ofplastics can easily cost considerably more than your garden variety polypropylene(PP). 3. 9. Involve your mold maker early onIn the West over molding TPE on ABS is often done with a very expensiveautomated 2K mold installation, but in China we simply take the still warm ABS partfrom one mold to place it in the next for a shot of TPE rubber. The cost of both themolds and the injection machines needed to run them are only a fraction of theautomated process, so unless youre producing a million toothbrushes the manualprocess is a lot more economical.The molding method chosen has of course some implications for the way the partdesign is optimized, so ideally involve the tool maker already during the designstage; get early feedback from them on potential production challenges, materialproperties, and tolerance issues.10. Bundle your purchasesTry to consolidate purchasing of components from one or two sources instead ofsplitting it. It will be easier to negotiate price when you have one vendor handlingyour component needs. While ordering more of a component reduces the price,with specialized components its advisable to pay attention to the SPQ (StandardPacking Quantities) so that you dont wind up with a lot of expensive surplus youwont be needing for a whilea components SPQ may at times determine thenumber of units you should produce.WARNING:Buyer beware: Stringent testing and on-site factory qualification are essential whenselecting a new vendor, do not base your purchasing decision on the few carefullyselected samples you get from a trader on websites like Alibaba; chances are theywill not be able to deliver the quality you need in a consistent way. If a price lookstoo good to be true, it usually is.Titoma Design takes on the complete design and manufacturing of your electronicproducts in Asia. Our end-to-end solutions include product design, engineering,programming, prototyping, mold making, certifications, mass manufacturing andlogistics.Titoma has Western designers, engineers and project managers permanently basedin Taiwan and China. We know how to get things done right in this part of the world.With Titoma youre in good hands.Send us an email if youd like to discuss your project with us.Find this article interesting? Visit our Product Development Knowledge Center formore information.