element14 Community
element14 Community
    Register Log In
  • Site
  • Search
  • Log In Register
  • Community Hub
    Community Hub
    • What's New on element14
    • Feedback and Support
    • Benefits of Membership
    • Personal Blogs
    • Members Area
    • Achievement Levels
  • Learn
    Learn
    • Ask an Expert
    • eBooks
    • element14 presents
    • Learning Center
    • Tech Spotlight
    • STEM Academy
    • Webinars, Training and Events
    • Learning Groups
  • Technologies
    Technologies
    • 3D Printing
    • FPGA
    • Industrial Automation
    • Internet of Things
    • Power & Energy
    • Sensors
    • Technology Groups
  • Challenges & Projects
    Challenges & Projects
    • Design Challenges
    • element14 presents Projects
    • Project14
    • Arduino Projects
    • Raspberry Pi Projects
    • Project Groups
  • Products
    Products
    • Arduino
    • Avnet & Tria Boards Community
    • Dev Tools
    • Manufacturers
    • Multicomp Pro
    • Product Groups
    • Raspberry Pi
    • RoadTests & Reviews
  • About Us
    About the element14 Community
  • Store
    Store
    • Visit Your Store
    • Choose another store...
      • Europe
      •  Austria (German)
      •  Belgium (Dutch, French)
      •  Bulgaria (Bulgarian)
      •  Czech Republic (Czech)
      •  Denmark (Danish)
      •  Estonia (Estonian)
      •  Finland (Finnish)
      •  France (French)
      •  Germany (German)
      •  Hungary (Hungarian)
      •  Ireland
      •  Israel
      •  Italy (Italian)
      •  Latvia (Latvian)
      •  
      •  Lithuania (Lithuanian)
      •  Netherlands (Dutch)
      •  Norway (Norwegian)
      •  Poland (Polish)
      •  Portugal (Portuguese)
      •  Romania (Romanian)
      •  Russia (Russian)
      •  Slovakia (Slovak)
      •  Slovenia (Slovenian)
      •  Spain (Spanish)
      •  Sweden (Swedish)
      •  Switzerland(German, French)
      •  Turkey (Turkish)
      •  United Kingdom
      • Asia Pacific
      •  Australia
      •  China
      •  Hong Kong
      •  India
      •  Japan
      •  Korea (Korean)
      •  Malaysia
      •  New Zealand
      •  Philippines
      •  Singapore
      •  Taiwan
      •  Thailand (Thai)
      •  Vietnam
      • Americas
      •  Brazil (Portuguese)
      •  Canada
      •  Mexico (Spanish)
      •  United States
      Can't find the country/region you're looking for? Visit our export site or find a local distributor.
  • Translate
  • Profile
  • Settings
Publications
  • Learn
  • More
Publications
Blog OP-ED: An Engineer's Loss of Price Visibility
  • Blog
  • Documents
  • Events
  • Files
  • Members
  • Mentions
  • Sub-Groups
  • Tags
  • More
  • Cancel
  • New
Join Publications to participate - click to join for free!
  • Share
  • More
  • Cancel
Group Actions
  • Group RSS
  • More
  • Cancel
Engagement
  • Author Author: DaveYoung
  • Date Created: 9 Nov 2012 3:23 PM Date Created
  • Views 545 views
  • Likes 0 likes
  • Comments 3 comments
  • manufacturing
  • design_cost
  • globalization
  • dyoung
Related
Recommended

OP-ED: An Engineer's Loss of Price Visibility

DaveYoung
DaveYoung
9 Nov 2012

I'm currently in the midst of a challenging design problem that is new in my career.  One of my clients contracts their electronics assemblies overseas.  Ideally I would design the product, it would go to the manufacturer for quote, tweaks will be made for manufacturability and price, and the design will be finalized.  This allows for the majority of the design cycle to occur close to the company here in the US while gaining the benefits from low cost manufacturing of foreign suppliers. image

 

My problem surfaced on a recent design that was very sensitive to assembly cost. When designing, I used sites like Digikey and various chip manufacturers' websites to find the best part given performance and price.  The entire system architecture was defined, in a large part, based on the price estimates I was able to glean from my research.  However the prices that I was quoted from state-side suppliers were different from those the manufacturer was able to quote.

 

Instead of getting a price drop that one hopes for from off-shore manufacturer pricing, I saw a price increase of approximately 10% for some components.  I can think of a few things that could be going on here.

 

  1. There are additional tariffs or other transportation costs that the manufacturer sees that I do not.
  2. The supplier is using the BOM to pad their margins, or they are adding cost to account for the overhead of the procurement department.
  3. The manufacturer's supply chain may be more relationship-based and I am paying for my manufacturer's mediocre connections.
  4. Local demand is causing a price increase that I do not see from my US-based suppliers.

 

Regardless of the cause, the effect remains the same.  If the product cannot hit the cost goal, it will not be viable in the marketplace and will be canceled.  My next step is to determine if other lesser components can be used to lower cost without sacrificing too much performance.  I can only hope that the cheaper components I find will net cost advantages with my manufacturer.

 

Another supply chain road block is my inability to see price advantages the manufacturer may get from a preferred vendor.  Since the they almost certainly buy high volumes from supplier A over supplier B, they may be able to get better pricing on some parts but not others.  It's impossible for me to know which parts will be able to leverage their volumes without having intimate knowledge of their purchasing habbits.

 

I worry that I'm leaving money on the table from not being able to see all pertinent information related to the decision at hand.  Has anyone else confronted this issue on a price sensitive design?  I'd love to hear your thoughts, problems, and solutions!

  • Sign in to reply
Parents
  • Former Member
    Former Member over 13 years ago

    There was a recent EE Times article that supports the lack of visibility in the price chain; to the point that some OEMs are citing it as reasons to re-shore their manufacturing. Fine by me! As margins start to shrink due to rising labor costs, I think we'll see more of this scheisty behavior from CMs (assuming it was indeed devious in the first place).

     

    http://cdn.eetimes.com/electronics-news/4400769/OEMs-look-to-cut-number-of-contract-manufacturers?pageNumber=0

    • Cancel
    • Vote Up 0 Vote Down
    • Sign in to reply
    • More
    • Cancel
Comment
  • Former Member
    Former Member over 13 years ago

    There was a recent EE Times article that supports the lack of visibility in the price chain; to the point that some OEMs are citing it as reasons to re-shore their manufacturing. Fine by me! As margins start to shrink due to rising labor costs, I think we'll see more of this scheisty behavior from CMs (assuming it was indeed devious in the first place).

     

    http://cdn.eetimes.com/electronics-news/4400769/OEMs-look-to-cut-number-of-contract-manufacturers?pageNumber=0

    • Cancel
    • Vote Up 0 Vote Down
    • Sign in to reply
    • More
    • Cancel
Children
No Data
element14 Community

element14 is the first online community specifically for engineers. Connect with your peers and get expert answers to your questions.

  • Members
  • Learn
  • Technologies
  • Challenges & Projects
  • Products
  • Store
  • About Us
  • Feedback & Support
  • FAQs
  • Terms of Use
  • Privacy Policy
  • Legal and Copyright Notices
  • Sitemap
  • Cookies

An Avnet Company © 2026 Premier Farnell Limited. All Rights Reserved.

Premier Farnell Ltd, registered in England and Wales (no 00876412), registered office: Farnell House, Forge Lane, Leeds LS12 2NE.

ICP 备案号 10220084.

Follow element14

  • X
  • Facebook
  • linkedin
  • YouTube