Saving money on production costs is a matter of optimization and transparency. Questions such as “How do I optimize my PCB designs, while maintaining similar results?” or “What are my logistical bottlenecks?” are central to maximizing profits and speeding up time-to-market results. Any improvements in operational efficiency can ultimately result in lower costs and greater profits.
The six suggestions below will help optimize the production process and help reduce costs.
1. Establish commercial goals
Define your product performance and commercial goals. Establish your objective as it applies to end-product cost, packaging, and delivery requirements. Once you have defined product criteria, you may begin assessing cost drivers.
2. Trim the fat
Analyze the product in its early stage and determine how easy it will be to turn the design into an end product. Use Design-for-Assembly software to optimize the minimum and maximum of the cost to part integrity; by applying industry-tested minimum part count criteria, you are able to minimize the number of parts needed to achieve 100% functionality in a manner consistent with customer expectations.
Eliminating unnecessary parts will directly lower manufacturing costs, and thereby, assembly cost; shaving a few pennies off the production cost of 100,000 units a month can make a difference between profit and loss. Additionally, the software will evaluate the possibility of consolidating parts into multifunctional derivatives.
Advanced Assembly helps customers save money by reviewing all designs prior to assembly.
3. Work with suppliers to use best practices
Since suppliers play a key role in the production process, their expertise can provide valuable feedback during the creation process. For example, it may be possible to combine multiple components into one and lower costs; remember that suppliers and manufacturers are sometimes one and the same.
4. Revaluate suppliers
Model the supplier’s cost-reduction initiatives over the lifetime of the partnership. Has the supplier taken any Six Sigma program (standardized process improvement techniques) initiatives? The cost reductions achieved by the supplier’s process improvement are directly transferred to savings. A good example is a supplier of General Motors’ door hinges simplified the hinge design to eliminate welding. This update saved GM 35% in the cost of procuring hinges.
5. Optimize supply chain logistics
Compare the delivery metrics of various delivery services and calculate how this translates to the total number of late shipments annually. For example, UPS has a steady 5-year nationwide on-time-delivery average of 91% on all domestic next-day services. If 9% of your annual 10,000 supply orders are late, that’s 900 late shipments per year. Take this information into account and select partners based on their delivery turnarounds. Each late shipment translates into a customer’s delayed project, which may, in turn, compromise future business prospects.
6. Inventory optimization
Use inventory-tracking systems to gain a better understanding of your supply and demand. Only purchase supplies when deemed absolutely necessary by advanced planning and scheduling to reduce carrying costs and avoid impacting a customer’s service levels. The savings you earn on a lean supply chain will directly contribute to your bottom line profits.