To remain competitive and profitable, electronic manufacturing companies must strictly manage all their costs and expenditures. Often, cost reduction measures are taken at the point of component procurement, with much of the weight resting on the shoulders of the component buyers. Listed below are 4 electronic manufacturing cost reduction tips for electronics manufacturing services (EMS) and original equipment manufacturer (OEM) buyers.
1. Scheduled Orders:
An easy place to start reducing costs is when ordering electronic components. With scheduled orders, a larger quantity of product can be purchased at one time but shipped in smaller quantities as needed. There is often a discount that comes with buying in bulk, as price breaks are based on total order quantity.
Additionally, scheduled orders and stocking packages are vital parts of the Zero inventory and Just In Time (JIT) inventory management systems. These management systems are great for electronic manufacturing cost reduction because costs can be cut in so many places. For example, by reducing transportation and warehousing costs, fixed costs can be cut which results in a higher profit margin on the goods sold. By reducing the amount of stock in holding, JIT inventory management frees up resources that can be used differently and, usually, more effectively. By working with a supplier to set up scheduled orders, OEM and EMS buyers can secure inventory, increase efficiency, and reduce costs.
2. Look for Crossing Opportunities:
Another electronic manufacturing cost reduction tip is to work with your supplier and explore crossing opportunities. Many parts made by popular manufacturers have alternatives that are of the same quality and perform the same but are lower in cost. Looking for potential alternate manufacturers or “crossing” opportunities for commodity-type components can result in huge cost savings and better delivery schedules.
Another major benefit of crossing as a means of cost reduction is that it provides a second approved source on your approved vendor list (AVL). This allows for more flexibility in your supply chain. It can also reduce the need to spot buy and pay premiums for expedited deliveries.
3. Cost Down Spot Buys:
Spot buys are usually seen as a negative because of the costs associated with them but that does not have to be the case. Being proactive with cost down spot buys can help mitigate future issues and save you money in the long run.
Spot buys are often one-off, smaller orders and occur when there is an unexpected or immediate need, such as when a part goes obsolete and an alternative is needed or when not enough stock was acquired to fulfill a project. Having a good relationship with a supplier who can keep an eye on the market for your parts means that negative or pressured buying situations can be avoided.
4. If You Can, Bundle Services:
When sourcing electronic components outside factory direct channels, parts usually have to be sent to a lab for inspection and testing, which can be costly. If a supplier does not offer in-house testing capabilities, OEM and EMS companies can end up having to spend substantially more money to send out parts to a third-party lab.
If possible, bundling any services needed can be beneficial to overall electronic manufacturing cost reduction. By working with a supplier or hybrid distributor who can handle any necessary secondary services, this will cut down on costs associated with shipping and transportation.
Sensible Electronic Manufacturing Cost Reduction:
As a certified hybrid distributor, Sensible Micro can help OEM and EMS buyers reduce costs in many different ways. We can set up scheduled orders and custom-stocking packages, plus our internal component sourcing team can find potential alternate manufacturers or “crossing” opportunities for commodity-type components.
With our in-house, ANSI ESD S20:20 certified warehouse and inspection and test lab, Sensible Micro can help with electronic manufacturing cost reduction by streamlining costs associated with secondary services. Schedule a call with one of our sourcing experts today to discuss the ways we can help you in electronic manufacturing cost reduction.
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