Modern Design For Cost is More Than Just Component Prices
It is well known that the electronics supply chain has become highly globalized over the past two decades. There are areas of geographic concentration in the supply chain, where certain fabrication capabilities and components are predominantly available at volume. Examples include:
- Concentrated manufacturing of passive components in Southeast Asia
- Highly concentrated PCB fabrication in China
- Single points of failure in the supply chain for certain copper foils, resins, and glass yarns
As time has evolved, so have regulations, import tariffs, worldwide component availability, and access to production capacity.
In talks of supply chain management, we in the electronics industry almost always focus on things like component availability and where to fabricate PCBs. But there are many other aspects of cost management in design and procurement. PCB designers can play an important role in determining and managing costs for a new product by understanding the broader cost factors that arise in a highly globalized supply chain.
New Dimensions of Design to Cost
Design to cost involves several dimensions, some of which PCB designers are very familiar with. Typically amateur designers or prototypers simply take the approach of fabrication in Chinese factories at rock-bottom prices and assembly at home. For this group, the priority is typically the lowest possible price for manufacturing.
That approach is the polar opposite of the approach taken by professional firms looking to scale a new product into high volume. The cost dimensions involved span well beyond fabrication costs and parts costs, and they even involve intangible costs that arise due to the global nature of the supply chain.
These constraints have always existed in the current globalized electronics production landscape. But in the current environment, there are four broad areas where companies can implement a design for cost strategy in product design:
Shipping, Import, and Logistics Costs
For a short prototyping run, shipping costs are usually an afterthought as long as customs and tariffs are accounted for in the quoted shipping costs.
- Logistics management costs internally, where employees need to trace and track components and finished products
- Inventory holding costs, either in the OEM’s warehouse or a contracted facility
- Import tariffs, local and foreign taxes, and customs duties, which can vary for raw materials vs. finished products
Once you start looking at the costs involved in tariffs, logistics management from overseas facilities, and back-and-forth shipping costs for some products, it might make sense to bring production local rather than go overseas. In some cases, sourcing some portions of a product overseas can help with optimization of the overall product cost. For example, ordering PCB fabrication services overseas, followed by assembly and packaging locally, can be a viable path that balances quality, production cost, lead times, and import fees.
In this area, the design and procurement team for a new product need to determine which external partners, if any, they will be working with to produce and assemble a new product. Just like real estate, it’s all about location: producing closer to the end customer and the holding facility can reduce those costs. The PCB design team’s role is to evaluate the capabilities of candidate production partners, determine which will be the best option for volume manufacturing, and implement the manufacturer’s DFM requirements in the board designs.
Quality control procedures are a basic requirement in any manufacturing operation, and especially in an industry standards-compliant PCB fab and assembly operation. Quality control procedures for bare boards are relatively standardized with the exception of certain classes of products (Class 3/3A, mil-aero, medical, telecom, automotive, etc.). A rigorous set of quality control standards is mandatory for any product that will scale to volume with a manufacturing partner, and this can be a big cost saver over time.
Another factor in design for cost is not necessarily the cost of the fabrication/assembly quality control regimen with a manufacturing partner, but rather it is the time and effort involved in setting up a test and inspection process. There is another DFX discipline, known as design for test,
First, there is the quality control, testing, and inspection process for a particular
- What can be done on the board to provide connections to a test fixture?
- Does the board need on-the-line flashing and configuration of firmware before testing?
- What special equipment does testing require?
- Does the testing equipment need periodic maintenance and calibration?
- Is on-the-line comparison with a reference standard simple, or does it involve further automated analysis?
- If a defective unit is found, what is the process for debugging or identifying the root cause of failure?
- Can the above process be automated, or does it require manual work by the assembler?
- If a certain test procedure is performed, will it be perfectly repeatable so that false positives are avoided?
Thinking about this early in the design phase can help ensure a board is designed so that testing is more easily implemented. In some cases, it will become apparent that fully automated testing is the best path forward for a new product. While some manufacturers can develop fully automated testing programs, this may be best left to a design team. Keeping test development in-house reduces overhead, reduces time required to qualify assemblies, and can help ensure higher quality products are brought to market.
Overcome Limited Inventories With Variants
Component suppliers have been operating in conditions of limited capacity and rolling shortages. This means designers sometimes have to make a difficult decision: either use multiple suppliers, build variants with alternatives, or both.
Companies may not be used to seeing the words “hold inventory” as of late, but the vulnerability of just-in-case supply chain management is forcing companies to consider holding and storing components. This may last longer than a company would normally prefer, but it allows a company to address the potential need for multiple manufacturing runs over time.
In certain industries in developed markets, there are regulatory compliance challenges that can be persistent, and these challenges will drive costs. Compliance measures that need to be considered by designers include qualification against industry standards, procurement and sourcing restrictions, auditing requirements, and export restrictions. Considering the latest rounds of export restrictions being put into effect by some governments, this can constrain where companies can produce their end product.
The simple cost-control strategy here is for designers to understand testing and regulatory requirements early. Waiting until the end of a design round to pass any kind of regulatory qualification and testing can force a redesign of a product, which is not a good thing if you want to stick to a go-to-market timeline. Some simple steps a design team can take could include:
- Use components that have been pre-qualified against industry standards
- Start from reference designs or earlier revisions that have been qualified
- Consult with a compliance expert early in the design phase
As component companies have become more focused on compliance with industry and regulatory standards, they have gotten much better at labeling components for compliance purposes. For example, the major connector manufacturers can supply a range of compliance metrics, such as conformance to UL standards, IEC standards, and PFAS content limits.
Example compliance specifications for an automotive-grade component.
The costs outlined above have always existed, even before the coronavirus pandemic and the subsequent supply chain shocks. Recent events have only brought these dimensions of cost to light, and the result is greater focus on design for cost and sustainable manufacturing by US and European companies. The responsibility of designing products to manage these costs is shared by both the PCB design team and the procurement team, but designers are in a more unique position to affect outcomes given their role in engineering a final product.
To summarize, some courses of action designers can take for cost control include:
- Identify regulatory constraints and required testing early
- Weigh shipping and import costs against bare board costs and components
- Prioritize suitable components by cost and supplier availability
- If multiple components are found that are suitable in designs, create variants early
A bit of planning up-front during the design phase can significantly reduce risk later, when the board is being put into high-volume production and assembly. This can also speed up prototyping runs before optimizing a design for manufacturing.
No matter what component selections or manufacturing decisions you need to make, you can create the highest quality PCB designs with the industry’s best CAD tools in OrCAD from Cadence. OrCAD is the industry’s best PCB design and analysis software with utilities covering schematic capture, PCB layout and routing, and manufacturing. OrCAD users can access a complete set of schematic capture features, mixed-signal simulations in PSpice, and powerful CAD features, and much more.
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