raw material costs

Lower Raw Material Costs in Electronic Manufacturing

Lowering raw material costs while producing a high quality product has always been a challenge among manufacturers in various fields. While technological advances and high degrees of miniaturization has greatly helped the electronics industry, it remains a challenge to lower raw material costs. Prices are challenging in electronic manufacturing thanks to the fluctuating prices of raw materials.

Just how does one reduce raw material costs in the electronics manufacturing setting?

To lower raw material costs, here are a few suggestions:

Diligently search for alternative vendors

Try seeking discounts for bulk orders. This basic aspect of purchasing is where manufacturers look to gain more profit by seeking out lower cost materials and tools from the lowest bidder. The key is to widen the search for a vendor that can give more for less. Enticing vendors with bulk orders, as well as the promise of future orders, often results in larger discounts.

Optimize the design of the product

You’ll notice that a particular electronic device varies in model numbers even though the device looks and functions the same. Internally, the numbers differ as manufacturers fix internal design flaws. Or perhaps they are optimizing the components within. They can reduce the number of components internally or externally while maintaining overall function. This lowers raw material costs.

raw material costs

Seek a better logistics partner

This option may or may not have a direct relation to raw material costs. It may if your vendor has a closer proximity to your manufacturing facility. Thereby reducing logistics costs on your raw materials. In addition, if the vendor delivers their own product itself. However, if the raw materials come from overseas, you will have to seek a separate logistics partner for material delivery. There are times when raw materials could cost more with that delivery fee even if the originating country is close. Occasionally, this is due to other factors such as labor and other overhead.

raw material costs

Reduce Waste

Waste is a non-avoidable by-product of any manufacturing process. Waste can be attributed to time, labor and process, not just to raw materials. All companies need to continue making efforts to reduce raw material waste. Reducing waste is a major key in reducing raw material costs. To reduce waste, processes can be streamlined or re-designed to reduce the number of steps involved in preparation of the product. As earlier suggested, the product design can also be changed in order to minimize certain materials or use them to their fullest.

Recycling and Repurposing

Some manufacturing processes will value time and optimal manufacturing over raw material usage. For example, it’s much faster to cut circular pieces of material using a machine that requires large sheet templates. The remaining material therefore becomes scrapped unless the facility has a recycling capability. Depending on the raw material, the manufacturer can setup or source a recycling facility. There are also occasions where there is an over-production of product components. The surplus can be used for other products thus reducing the need to order more raw materials.