Controlling electronic product design costs becomes more crucial than ever in the current unstable economic environment. Global inflation, increased interest rates, and higher production costs have engulfed countries from South Africa to Europe and even China as manufacturers begin to steer through these challenges. Tightening consumer spending means that manufacturers now have to closely look into the cost management of new products at the earliest stage of their launch.
For electronic device manufacturing companies, cost control from the very beginning is critical to making sure that the products they come up with are viable and their businesses profitable. As part of this process, companies often meet with several different potential electronic contract manufacturers in order to obtain estimates for production based on cost. Knowing the factors of these cost estimates can help a company make a wiser decision and compare more effectively the manufacture of their products both domestically and overseas.
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Why controlled product design costs matter
There appears to be no corner of the globe that has been immune from the current global economic slump. Manufacturers in almost any part of the world are grappling with inflation, higher labor costs, and disruptions to global supply chains. Consumers and businesses alike are tightening their belts as well. So, for all companies designing new products, minimizing costs at the earliest design stage is going to become a pressing matter.
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Such would be achieved through control of design costs for products during the development phase. Companies would build cost-saving measures into the design itself, reducing production expenses and keeping the price more competitive once their product is released into the market. It would ensure better profit margins while providing flexibility when changing economies. In this post, we are going to examine ten critical dimensions that determine the cost of new concept design and product development services and how producers can utilize this insight to perfect their designs with both low cost and high quality.
10 Key dimensions that influence product design costs
There are numerous factors involved in calculating the manufacturing cost of an electronic product. Some of the most important ones include the following:
1. Component selection
It’s a very fine balancing act between cost and performance because you might compromise quality, reliability, or compliance on something that is too cheap. When it comes to electronic device design, one of the best ways you can meet your performance requirements is with high-quality components. On the other hand, there are more general-purpose off-the-shelf components that tend to be lower in cost and more readily available than a custom-built part.
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Additionally, these parts can be pre-certified, therefore reducing the time and resources spent on testing and certification. Therefore, the choice of cost-effective and reliable parts is a harbinger of the prevention of disruption in the supply chain as well as problems related to quality that ultimately lead to a reduction in costs during the manufacturing process.
2. Manufacturing process
The production costs are directly proportional to the complexity of the manufacturing process. Designs associated with increased production times and the use of more specialized equipment can increase labor hours, meaning that all these factors contribute to cost increases. This is something that can be offset by using a design for manufacturability (DFM) firm with a DFM approach to simplify their production.
Designing products to be manufactured with no impact on the assembly process or using fewer components with reduced defects in their production. Other methods, such as ongoing reliability testing, ensure that there is never a not-so-smooth production run seamless and frictionless period in terms of reliability to avoid costly rework and recalls.
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3. Material selection
Material choice significantly influences the cost and performance of a product. Exotic or high-grade materials would produce better performance, but high costs go with them. Product designers have to find ways to substitute with more affordable materials that may not lose all their functionality. For example, one could substitute non-critical components with plastic rather than metal for significant cost savings without dramatically losing some of the overall performance of a product.
The material source also has an influence on the lead time to manufacture because lesser used and special materials are surely going to take more extended periods to procure, thereby adding higher cost once more.
4. Assemblage and labor cost
Design for Manufacturing and Assembly (DFA) services reduce the cost of labor by making assembly easier. The number of parts, or modular parts, is also fewer when produced during product design to facilitate fast assembly and to reduce essential skilled manpower. This results in not only a lower labor cost but also high production efficiency.
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Automation and mistake-proofing are some other techniques that increase the level of an assembly process, such as minimizing human mistakes and inconsistencies. Line balancing reduces labor bottlenecks, maximizing the throughput by ensuring all stations in a production line have equal workloads.
5. Product size and weight
This can be very dependent on the size and weight of a product. Size and weight are enormous considerations for shipping and storage costs. A smaller and lighter product will typically reduce the costs for materials, and it will cut down on packaging and shipping costs at the same time. However, designers should ensure these reductions in size do not jeopardize the functionality of the experience the product intends to provide.
The lighter and smaller the weights are, the easier and more inexpensive it becomes to manufacture and transport the products. For this reason, they are ideal for engineering design companies that want to reduce their logistics costs.
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6. Energy efficiency
Energy efficiency is one of the most significant themes to be adopted by electronic products in design. Firstly, the energy-efficient devices currently produced attract the ecowarriors, yet they guarantee that the firms comply with new sustainability regulations in several countries, including the Ecodesign regulation in the European Union. Other merits of an energy-efficient product are its ability to be operated at a cheaper cost and for a longer time, hence providing more value to the customer.
Design for efficiency in energy reduces the chances of companies becoming obsolete, especially when competitors are offering more energy-efficient options. Products that are environmentally unfriendly enough to accomplish consumer expectations may have a hard time getting a foothold in the marketplace.
7. Design for manufacturability (DFM)
As discussed earlier, DFM emphasizes product design that is easy and cheaper to make. The reduction of parts, simplification of the assembly process, and use of easier-to-machine materials all reduce the costs without compromising the quality of the product. A proper DFM strategy requires careful planning and control. Experienced managers usually face the responsibility of overseeing the DFM process so that the set design objectives are met and any cost-saving opportunity is identified and implemented.
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8. Testing and quality assurance
Significant cost savings can be had in the long run through investment during the design phase in thorough testing and quality assurance. Such products tested for reliability and quality are less likely to have problems during production or post-consumption, thus preventing any costly product recall, warranty claims, and reputational damage.The installation of self-testing capabilities in devices also allows for continuous quality control since manufacturing companies can even test how their devices work even after they have shipped.
9. Compliance with regulations
It is a fact that most electronic devices function through some form of regulation, such as FCC certification for those RF frequency transmitting devices. Ensuring that a product complies with all the relevant regulations at the design level will save the companies from fines, delays, and having their products restricted in the market.
Designing with compliance in mind at the front end will eliminate costly redesigns, missed deadlines, and litigation. For companies entering multiple markets, designing for compliance with one region’s regulations first should come before rolling out to other regions once the product is generating revenue.
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10. Product lifecycle costs
The product lifecycle includes the time it takes to get a product to market. If production or development is delayed, an organization risks higher costs, such as missed opportunities. Skipping parts of the product lifecycle in an attempt to save time may cause a company to produce low-quality products, which could then become expensive problems to fix.
While designed, if manufacturability and assembly are considered, it reduces the product lifecycle and speeds up time-to-market by getting products to market faster. It saves some lost time when the company is not generating revenue and can regain a quick return on development costs. Consider finding a product development expert to help you with your product lifecycles.
Domestic vs. overseas manufacturing cost comparison
When manufacturing services are making cost estimates from various ECMs, they should also decide whether they should manufacture at home or abroad. While overseas manufacturing may appear to be the cheaper choice to make, in terms of labor, it is associated with some other costs:
- Shipping products manufactured abroad is more expensive, and there could be losses due to logistics: Products from overseas have more overhead in shipping and logistics when trying to get the product to a customer.
- Lead times: With overseas production, there is more lead time, and thus, the date of launch for products is delayed, and there may be increased overhead for inventories.
- Quality control: Domestic manufacturers may provide better quality control and more effective communication that could minimize risks of production errors.
- Protection of intellectual property: Manufacturing in the domestic territory may provide better protection of intellectual property, especially in industries where counterfeiting is a concern. In any case, a company would want to weigh the total cost of manufacturing. Things like shipping, lead times, and the kind of quality control should be put into the equation to decide whether domestic or overseas production is appropriate.
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Wrapping it up
In today’s economic climate, where things are almost unstable and uncertain, control over product design cost comes in as a very vital aspect of the success of new products launched into the market. Knowing the important aspects of product design costs on which one depends to make decisions will only add to the outputs if one produces more cost-efficiently. Component selection, material choice, energy efficiency, and regulatory compliance are some of the insignificant aspects of the design process wherein dollars can be saved.
Such electronic contract manufacturing partners and employing approaches like Design for Manufacturability and Design for Assembly will help decrease the cost of production, but while doing so, it would never compromise on quality or performance.
How Cad Crowd can help
An engineering service company will always sink without ever knowing how to charge the proper and reasonable rate for its electronic product design and development projects. The proper learning in it can go a long way to set the right fees. Cad Crowd can connect you with the finest engineering services companies that can provide outstanding results without compromising on your budget. Get a quote today.
