That is the point at which all the electronics manufacturers come to a halt when margins are under pressure, customer expectations are rising and the need to reduce costs without compromising quality is becoming urgent. It seems counter intuitive, but it isn’t. With the right mindset and smarter processes, reducing costs and maintaining quality aren’t opposites. They’re partners.
Now let’s go over some of the most effective and practical examples of how it is being achieved in the corporate world.
Design First, Production Line Second
One of the things that many manufacturers find out the hard way is that by the time a product is ready to hit the factory floor, the majority of the costs are in place. As much as 70–80% of manufacturing costs are fixed at the design stage.
Design for Manufacturability (DFM) is the design of a product that takes into account its ability to be efficiently produced. This translates to:
- Selecting items that are readily available.
- Limiting the variety of components.
- Organizing assemblies in a way that makes them easier and quicker to assemble.
This is a very minor change in the schematic, but will save lots of time and rework downstream. If your engineering team isn’t regularly collaborating with your production team during design reviews, that’s a good place to start.
An Alternative Approach to Component Sourcing
Components can easily be the biggest line item on an electronics manufacturer’s budget. Yet a lot of businesses continue to work with the same supplier due to the familiar relationship or because they are keeping too large a stock of safety stores because they’re afraid of a disruption.
Some strategies that are effective:
- Approved Vendor List (AVL) expansion: Multiple qualified sources for critical components provide leverage and supply chain resiliency. Whether you know it or not, if you are fit with just one brand for the main component you are paying for that sole source.
- Strategic inventory management: Don’t have excess stock, it ties up cash. Too much leads to line stoppages. With lean practices of inventory management and improved demand forecasting, inventory carrying costs can be reduced significantly without putting you at risk.
- Standardisation of components: The fewer different part numbers you have, the less purchasing, logistics and quality inspection costs you incur. While not very glamorous, the savings of Passive components (Resistors, Capacitors, Connectors) over time across product families can be substantial.
Make the Most of Your Assembly Operations
This is where the cost savings can be felt most readily and where quality problems can be most immediate if changes are not handled carefully.
Optimizing SMT Assembly
Surface mount technology has revolutionized the way circuit boards are made on a large scale. If the SMT assembly is optimized well (accurate stencil printing, well-tuned reflow profile, placement programming), the first-pass yield will be greatly improved, thereby directly reducing the amount of rework and scrap. The trick is to think of process optimization as an ongoing operation, rather than a one time set up. Soldering paste application, component placement accuracy and reflow conditions should be regularly monitored in order to prevent drift from becoming a bad product.
Interconnects and Wiring
The same is true for interconnect systems and wiring: The efficiency benefits are real, but so are the quality implications. There is more manual labor involved with cable harness assembly than people are perhaps aware of and mistakes made during the assembly process (whether it’s a wrong wire routing, a missed crimp, or an incomplete seal) can be hard to detect and costly to repair. Proper tooling, training and inspection fixtures at this stage result in quick payback in reduced field failures.
Adopt Automation When Appropriate
While “automate everything” isn’t a strategy, automation is one of the best ways to reduce your costs and increase consistency. It is a method of wasting capital. The more important question is: What are the most dangerous or inefficient places where people vary?
Typical candidates include high volume repetitive tasks such as:
- Soldering
- Inspection
- Labelling
- Testing
Automated optical inspection (AOI) and in circuit testing (ICT), for instance, can detect defects much more quickly and reliably than manual testing, and provide information that you can use to improve your process. However, assembly tasks that produce small quantities, but are highly diverse, are not always worth the investment in automation. The set up time consumes your savings. Know the difference.
Invest in Quality to Reduce Costs
This idea is not obvious to everyone, but is one of the most supported ideas in manufacturing: quality programs that reduce defects also reduce costs.
Consider the cost of a defect scrap, rework labor, delay, customer return, warranty claim, reputational loss. Field failures are exponentially more expensive than catching a problem on the production line.
The investment in Statistical Process Control (SPC), time and time again calibration of equipment, and good incoming inspection programs are not overhead; they are investments to decrease the total cost of poor quality. Companies that view quality as a cost center, miss this completely.
Don’t Underestimate Your Workforce
Lean manufacturing principles are effective. But they work, and it is due to people, not despite them. Providing production personnel with actual quality data, empowering them to identify waste and investing in training staff to carry out various production tasks makes employees proactive in minimizing waste.
The quality of the work is determined as much by the attitude of the operator as by his training, and a well trained operator with a good attitude is going to catch more quality problems and cause less than another operator who is under trained and has a poor attitude.
Conclusion
Reducing costs in electronics manufacturing is not an either/or proposition. It’s about being smarter at every stage design, sourcing, process, automation and culture. The businesses that do this well, aren’t spending less, they are spending better.
Begin by identifying the area with the biggest impact to your operation, measure the change, and work your way forward. Little by little small gains add up to a real, competitive business, able to produce quality products profitably and regularly. It is not a compromise at all. That’s the goal.
