Cost Management While Choosing Electronic Component Supplier

The suppliers you choose in electronics manufacturing decides the success and profitability of your product. The reliability and quality of a product depends upon the electronic components suppliers. The important factors to keep in mind while choosing the supplier are reliability and high-quality of the products while managing operating costs are as follows:

Factors Influencing Cost 

A host of factors drive your cost up or down depending on how well you structure your agreement with your supplier. Depending on the period of time your products  are being covered and the scope of supplier’s warranty, the cost structure can vary. Tariffs, transportation, duties, engineering services, prototyping costs, and authorization services for returning materials are among critical cost factors that are mostly overlooked.

Lack of Visibility in Price Structure

Some manufacturers are hesitant in providing breakdown of price in a detailed way that specifies test, labour, manufacturing overhead, material cost, labour, cost of acquisition, and profit or gross margin. But without clarity in cost breakdown, how can you know about the cost improvement opportunities you could get in the future or the kind of assumptions used in product quoting.

Ambiguity in Details Regarding Supply Chain Model

It is always better to have discussion beforehand whether all transportation costs such as duties,  taxes, and freight, taxes included, or will they be separately invoiced? All of these can have a perceptible impact on your product cost.

Lack of Attention to Non-price Issues

The cost structure for repairing products that are not in warranty, the inventory for warranty repairs under different cost structure and different locality and how do quality associated metrics like per part million failure rates and yield play into the total price.

If you are looking for electronic component suppliers then classify the supplier based on your specific requirements and supplier ratings to ensure that you get certifiable, high quality and OEM-traceable products.