Cost-efficiency matters – but is it always the most important factor?
In high volume markets with tight margins, it’s inevitable that unit costs of electronic assembly come under close scrutiny. For these types of products there’s a highly competitive global marketplace.
But unit production costs are at one end of a set of scales. At the other end, balancing this overt and easily quantifiable cost, there are risks. Exactly where the balance sits, is unique to every sector, market and product.
Quality Risks
The most obvious risk with low-cost manufacturing is quality. This isn’t just a question of poorly assembled products that fail in service, it can also be products that haven’t been fully adapted to suit particular operating conditions.
There is a long list of manufacturing flaws that cause products to fail, which can be as basic as residual solder flux or delaminating gold contact pads. It could be circuit boards or components that aren’t sufficiently rugged.
Whichever way electronic assemblies fail, the costs of handling product returns can be dwarfed by the damage to reputations. There can also be safety risks if products catch fire or fail in critical applications.
Supply Continuity
Beyond quality there are potential risks with supply continuity or securing the production capacity needed to meet the all-important peaks in demand that follow new product launches. Multi-tiered supply chains can easily become fragmented. This makes it difficult to maintain complete visibility of supply and other important issues like quality and sustainability. And what you can’t easily see, you can’t easily measure.
Supply flexibility is increasingly important as markets become more volatile and product life cycles shorten. The capability to pull demand through the supply chain helps to reduce inventory costs and limit the risk of being left with obsolete products on the shelf. Lowest cost assembly is usually built around a demand-forecast approach that doesn’t offer the agility many modern businesses rely on.
Risk management is as much a part of effective procurement as cost control. Trizo works closely with our customers to ensure that cost reduction, risks and quality assurance maintain a healthy balance.
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