production manufacturing and assembly and parts costs

Travis G wrote:

I wasn't sure if it's Ok to talk about this stuff here or not, so if

not, admins, feel free to remove it.

 

I've been doing most of my assembly using some locals, and they do a

good job, but I'm needing to lower my parts costs and assembly costs,

and get the purchasing job off my back without hiring someone new just

to handle inventory and purchasing. And purchasing is a big issue,

because parts are so expensive and we don't buy parts unless we have

cash in the bank to do so.

 

Our main product costs us a LOT in parts, and some of these parts are

$12 and $18 parts, which is way to much for us to be able to order

1000, or even sometimes 100 at a time to get good price breaks. So

I'm sort of at an impasse. Do I start making purchase contracts with

suppliers and risk not having the expected demand, which could really

hurt us, or do I look to overseas procurement and manufacturing, or

do I kludge through? And if I do look overseas, how do I make sure my

IP is safe?

There's just so much to consider, and we're such a small company with

way too much going on, and it's beginning to become hard for me to get

any development done because of having to deal with everything else.

 

Suggestions? Comments? Your $0.02 welcomed.

Don't know if my comments are worth $0.02 -- buyer beware.

Sounds to me like you're too busy, and you're looking to save money on

production costs without increasing production quantities.  I suspect you

can't get there from here....

I also run a very small business.  We typically build from 10 to 100 pieces

at a time, and even in those small production quantities we're usually

putting most of the product in stock in hopes of selling it in a reasonable

time frame.  To date that has worked well -- eventually almost everything

gets sold.

I have reduced my purchasing work by getting my local assembly house to

supply the parts.

Are you charging enough for your product?  That may seem like a dumb

question, but I often find it hard to convince myself that I can really

charge that much for a product.  However, if you can't make money in the

long run, you won't be in business, and your customers won't have a product

at all.

I don't have any experience with off-shore manufacturing.  I doubt your

workload will decrease by moving your assembly half way around the globe,

though -- that's a long way to go for a visit to solve a problem.

--

Bert Menkveld

P. Eng.

Greentronics

bert@greentronics.com

I also run a very small business.  We typically build from 10 to 100 pieces

at a time, and even in those small production quantities we're usually

putting most of the product in stock in hopes of selling it in a reasonable

time frame.  To date that has worked well -- eventually almost everything

gets sold.

That would work, but we still don't have the purchasing power to buy

enough of those more expensive parts at quantity, which is where the

real savings can come from.

 

I have reduced my purchasing work by getting my local assembly house to

supply the parts.

Problem is that my assembly guys aren't knowledgeable enough to

substitute parts when it will be cheaper or the suppliers don't have one

that's specified, which has been happening a lot lately (I think Mouser

and Digikey have been slimming their inventories).

Are you charging enough for your product?  That may seem like a dumb

question, but I often find it hard to convince myself that I can really

charge that much for a product.  However, if you can't make money in the

long run, you won't be in business, and your customers won't have a product

at all.

That's not the problem.

 

I don't have any experience with off-shore manufacturing.  I doubt your

workload will decrease by moving your assembly half way around the globe,

though -- that's a long way to go for a visit to solve a problem.

I talked with an American based assembly management company last night.

They look promising because they handle all aspects of the assembly, and

send it overseas. They charge a percentage, but it is pretty fast and

can cost much less. He said where you get your most savings are on the

PCBs, Connectors, and labor. The connectors we may pay $3 and $4 for,

they can get for something like $0.45.

Travis