Let’s explore 10 factors that affect the cost of electronic product designs and the reasons why they do and tips on what you need to be aware of. Anyone bringing new products to the market who is interested in controlling costs should at least consider some of these factors during their product design and development phases.
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Why is controlling product cost important these days?
Most countries seem to be affected by post-covid economic issues which have led to everyone being more careful with their spending. Manufacturers are no different, and controlling product costs during the design phase is a great way to do so. There are 10 key factors that impact product costs during design, so let’s check them out here… (01:14)
1. Component Selection.
When selecting components you need to balance their cost with their performance and quality. If low cost is paramount for you, you might choose one of the cheaper components as long as the quality is ok and the performance is within acceptable tolerances for your product, but it should be said that lower-cost components are a risk for many electronic devices that must reach certain performance, reliability, or compliance requirements. Selecting more common ‘off-the-shelf’ components is, of course, a good way to control costs over selecting rare or custom-built components (most everyone has heard about the global chip shortage by this point). (03:26)
2. Manufacturing processes.
A complex product or one that requires complex manufacturing processes to build will see the cost impacted as it takes longer, and requires more manpower, energy, and more. Optimising manufacturing processes to use approaches like DFM: Design for Manufacturability, is a good way to control the costs associated with manufacturing processes because you’ll be designing the product specifically to be simpler and ‘easier’ to manufacture. That probably includes using fewer components, fewer fasteners, modular components, simpler processes, etc.
Ongoing Reliability Testing, or ORT, is also a good approach here. After production starts you can start taking samples and testing their reliability. If issues are found this may require manufacturing processes to be investigated and fixed and, in those cases, costs will be saved over having more unreliable products hitting the market and being returned and/or warranty claims being made. (05:35)
3. Material Selection.
Materials include plastics, sheet metals, glass, etc, and their selection obviously has an impact on the cost of your product, especially these days when certain materials are scarce and have long lead times. It’s common sense that a product design including numerous different exotic materials will cost more than one that doesn’t. Designers will consider trade-offs between materials to reduce costs while maintaining good enough levels of quality and performance, for instance, perhaps they can use plastic instead of metal, or transparent acrylic instead of glass? (08:01)
4. Assembly and Labor Costs.
Complex products made from many parts will usually require more assembly operators to put them together, therefore a product can be designed to have fewer parts and a streamlined assembly process which will reduce the costs of assembly and manpower once products are on the production line. Also the assembly processes can be examined and areas of improvement found, as it may be possible for one operator to do two or three tasks quickly before passing the product along the line, even though they’ve only been doing one task up to now, for example.
Just designing products for assembly is probably not enough, though, as assembly processes are so complex with many things that can go wrong and add to costs. Therefore, mistake-proofing, automation, and line-balancing are also approaches that might also be complemented at the same time here to reduce assembly and labor costs, too. (09:58)
5. Product size and Weight.
A smaller product may be less costly to manufacture, for example, but it may be too small for the users’ needs, so a balance needs to be found. In some cases, it is possible to reduce weight and size and reduce costs accordingly, though, so designers will be looking out for areas where this can be done. Shipping costs need to be considered too, as these are really influenced by the product’s size and weight, not to mention packaging and storage costs, too. For instance, packaging will need to be stronger and (probably) more costly in order to protect heavier items during storage and shipping. (14:14)
6. Energy Efficiency.
The drive to create more energy-efficient products is a real trend today. Designers will have eyes on creating a product that has a lower environmental impact, one that is cheaper to run for consumers, and one that complies with new sustainability legislation that is coming into effect in certain areas such as the EU. If we look at consumers, their requirements for energy-efficient products have grown a lot today, especially in the West, so if you’re designing an inefficient product will it sell in comparison to more efficient competitors? If not, this will have been a costly exercise for your business. (17:31)
7. DFM (Design for Manufacturability).
DFM involves making the product easier and faster to assemble and, therefore, reducing the costs involved, by designing it to use fewer parts, simpler assembly processes, fewer operators, easier soldering, less power consumed, better quality parts, easier testing, and so on. An experienced leader is required to implement DFM, set goals, and control the process. They need to be able to bring together both the development and manufacturing departments to work on this as a team. (21:03)
8. Testing and Quality Assurance.
Product testing for reliability and quality can affect costs as it assists you to avoid putting a product on the market which will later cost you in lost customers, warranty claims, product returns, repair costs, etc. Designing electronic products to have self-diagnostic functions using software can help to find and correct problems before they are shipped, saving you money that would be spent to deal with customer returns and warranty claims. Engineering-level tests on single components, PCBs, etc, help to avoid poor-quality inputs going into the product which will cause problems later. Product-level reliability tests help you to understand if the product will work consistently well in users’ hands after it has been sold, so creating a solid reliability test plan that takes into account the worst-case scenarios a product may find itself in when being used in the field is critical here.
Quality inspections during design and development and on the production line are also necessary, as finding and fixing quality issues as early as possible will also help you avoid damaging costs later on. Feedback from quality inspectors will influence product design and may result in improved tolerances, measurements, etc.
The cost of poor quality and reliability are not to be taken lightly and these can be mitigated at the product design stage by implementing a thorough reliability and quality testing plan. (24:14)
9. Regulatory Compliance.
Product compliance can be forgotten, but bringing a non-compliant product to market will be costly because more work will be required on a completed product to make it compliant. This could be a redesign to accommodate new design changes or components, for example, all the while your business is missing deadlines and not selling the product. Never mind the risk of fines from market surveillance authorities if they consider the product to be a potential hazard. Therefore, designing the product to be compliant and testing it accordingly during development is necessary.
Compliance testing can be quite expensive, so entrepreneurs and SMEs may find it more cost-effective to focus on one country or region first, start making sales, and then once the product is selling, invest more funds into testing for global compliance and open up new markets in that way. (28:18)
10. Product Lifecycle Costs.
Product lifecycle costs often have to do with the product design and development stages, where a product that can be designed and developed faster will save your business money as it will make it to market and be sold sooner. Trying to reduce the time could lead to cutting corners on quality and reliability which raises risks and possible costs, but if the project is taking longer than planned this is also a problem and something has gone wrong somewhere and, again, costs will be rising. Delays may also occur during manufacturing, for example, if the sourcing team makes a mistake and doesn’t order enough materials, the production lines will be stopped and waiting for it to come in. This means that costs are piling up while you are not selling the product, and this is a scenario you want to avoid by planning carefully, controlling the teams, and designing the product to be as manufacturable as possible in order to avoid such delays.
Planning for product repairability, recycling, what happens at the end of its life, etc, can also be taken into account as they’re related to the product lifecycle. All of these elements are probably influenced by things like product durability, material and component choice, etc, which go into the product’s design and have been covered earlier. (33:24)