When you’re sourcing electronics manufacturing services, it’s very easy to focus on one number:
Unit price.
It’s understandable, especially for high-volume consumer products.
After all, the lower the unit cost, the more potential profit there is available.
That’s the theory. But the reality is often different.
Because for many industrial, medical, aerospace, defence, scientific and specialist electronic products, the lowest unit price won’t result in the lowest overall cost to the business.
Instead, flexibility can often deliver you far more value than shaving a little bit off the cost of a unit, especially in low-to-medium volume electronics.
The Reality of Modern Electronics Manufacturing
Electronic products are becoming increasingly specialised, with shorter product lifecycles, more complex customer requirements, and regular technological evolutions.
With things moving so quickly, many organisations just don’t need hundreds of thousands of units. Instead, they need:
• Pilot production runs
• Small batch manufacturing
• Regular engineering updates
• Product variants
• On-demand production
In those sorts of environments, flexibility becomes a genuine competitive advantage.
Engineering Changes Happen
Ask pretty much any product designer or engineer, and they’ll tell you the same thing:
The design you start with is rarely the design you finish with.
During the design process, all sorts of things can crop up that change the end product, from component obsolescence to performance improvements, from customer feedback to regulatory requirements.
Which means that change is inevitable, and having a flexible manufacturing partner allows you to:
• Implement engineering change orders quickly
• Manage multiple product revisions simultaneously
• Source alternative components during shortages
• Adapt production schedules without major disruption
On the flipside, an inflexible, volume-focused manufacturer will likely find it much harder to respond at speed, which can lead to delays, excess stock or costly rework.
Inventory Can Be More Expensive Than Production
A lot of businesses focus heavily on reducing assembly costs by increasing order quantities.
Once again, on the face of it, it makes sense. In theory.
In practice, bigger production runs also mean higher inventory levels, and holding higher excess stock, which ties up:
• Warehouse space
• Working capital
• Management resources
Plus, it hits your cash flow.
Higher excess stock also increases the risk of falling foul of:
• Design revisions making stock unusable
• Changes in customer demand
A flexible low-to-medium volume manufacturer allows businesses to order what they need, when they need it, helping reduce the overall financial risk.
Supply Chain Disruptions Require Agility
The electronics industry has experienced unprecedented supply chain challenges in the last few years.
Component shortages, extended lead times and geopolitical uncertainty have all contributed to a really turbulent market, and highlighted just how important a responsive manufacturing partner can be.
Manufacturers that specialise in low-to-medium volume production are often better positioned to adapt because they:
• Work closely with customers on sourcing strategies
• Manage approved alternate parts
• Maintain strong relationships with distributors
• Respond quickly when supply constraints arise
In plenty of cases, that speed and adaptability is worth far more than saving a few pence on a PCB assembly.
Quality Is Easier to Maintain
Smaller production volumes can also allow for greater attention to detail.
At a low-to-medium volume contract manufacturer, teams will typically become highly familiar with individual products and the specific requirements of each customer.
That can lead to:
• Faster identification of potential issues
• Better process control
• More effective communication
• Improved customer support
The result?
A genuine manufacturing partnership, not just a production transaction.
Responsiveness Creates Competitive Advantage
Customers increasingly expect quick responses and short lead times, and businesses that can:
• Launch products faster
• Modify designs rapidly
• Meet changing customer demand
• Deliver consistently
…are often in a much stronger position than competitors focused solely on driving production costs down.
The right manufacturing partner should help you achieve those objectives, rather than restrict them.
Looking Beyond Unit Price
When you’re evaluating an electronics manufacturing partner, it’s important to look at the total cost of ownership, rather than simply the cost per unit.
Some useful questions to ask when you’re considering an electronics manufacturing partner:
• How quickly can design changes be implemented?
• How flexible are production schedules?
• Can they support prototypes and production under one roof?
• How do they manage component shortages?
• What level of engineering support is available?
• Will they work collaboratively to solve problems?
The answers to those questions can have a far greater impact on overall business performance than a small difference in assembly costs.
Final Thoughts
For organisations operating in low-to-medium volume markets, manufacturing flexibility is often one of the most valuable things a supplier can provide.
The lowest unit price looks attractive on a spreadsheet, but as we’ve seen, theory isn’t reality, and it’s how your partner performs in the real world that actually matters.
A partner that can adapt quickly, support engineering changes, reduce inventory risk and respond to changing market demands may well be able to add enough value to counteract an higher unit cost, so it’s well worth thinking this through when you’re considering the way forward for your organisation.
At Intercole, we work with customers who recognise that successful manufacturing is about more than cost alone, and if you’d like to explore how we could add value to your operation, just drop us a message.
