Ways to Reduce Manufacturing Costs

Cost plays such an important role in the design process, so here are a few introductory concepts and simple rules. However, keep in mind that nothing can be stated in an absolute sense concerning costs. Material and labor usually show increasing costs from year to year. But the cost of manufacturing will usually decrease from year to year due to improved efficiencies from machines and personnel. Costs such as labor, taxes, freight and overhead will vary from company to company due to their geographic location.

Material Sizing

The use of stock size is the first principle of cost reduction. Allowing suppliers to use readily available stock material will dramatically reduce costs incurred by suppliers, and those savings will be passed onto the end customer. Always check what is readily available as some nominal sizes are not usually carried in stock and may require a special order. In addition many designers call out for purchases that require hardware such as bearings, fasteners and pins. Make sure that the required hardware is readily available otherwise custom-made hardware will have to be manufactured or ordered.

Large Tolerances

Tolerance is perhaps the most important factor in cost reduction strategies. Tolerance, manufacturing process and surface finish are all intertwined and influence the cost. Tighter tolerances may require pre-manufacturing processes to be performed to get the material ready for the supplier. Likewise post manufacturing processes may also be required to achieve the desired level of tolerances called out. Since parts having large tolerances can often be produced by multiple machines and automated to some extent, costs will be significantly less. Please refer to the diagram below which further explaining how costs and tolerance are directly correlated.

Breakeven Points

During the manufacturing process there is a certain amount of fixed time required for every job. Automation and many different types of advanced manufacturing strategies can be used, but they all require initial time and money to be invested in fixtures, tooling, testing and programming. At some point there is a breakeven point to where automation beats out manual equipment. However, if the quantity is not there to justify the fixed costs of automation then the unit price will remain high. Every product has a different breakeven point and factors such as weight, area, volume, material type and various other performance ratios affect where the breakeven point is. Do some research about how your product or device is manufactured and figure out where the breakeven point is. Talking to suppliers and figuring out how a product can be made more effectively is a great place to start.