In order to make electronic products in Australia at a good profit, it is necessary to understand the factors that contribute to the total cost of a manufactured product. Here are the top 5:
- The cost of the engineering and tooling effort – sometimes referred to a NREs (Non Recoverable Expenditure)
- The cost of the parts that must be purchased in order to make and assemble the product
- The cost of the labour and energy required to make the product
- The cost of production rework for product that doesn’t work first time on the production line
- The cost of warranty returns and loss of reputation and loss of customer confidence when the product doesn’t work correctly
So when we look at the real cost of a product, the production labour can turn out to be a small component. The key to low cost electronics manufacture is to design the product to be efficiently, flawlessly made and to continue to work correctly for well past the warranty period.
This sounds really simple and basic to me. What do you think? Is this really readily achievable if you set out to do it? We believe so and routinely do it.
So now you have it, the secret to our success and the strategy we have used to ensure electronics products manufactured in Australia by our clients are indeed competitive and profitable when compared to Asian imports.
This isn’t the end of the story of course. The simplest things seem often to be the hardest to get right. So next we will look at a few specific case studies.
Some of these will be very surprising.
Ray Keefe has been developing high quality and market leading electronics products in Australia for nearly 30 years. For more information go to his LinkedIn profile. This post is Copyright © Successful Endeavours Pty Ltd.