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When designing a new product, BOM optimization can save money and production time

Bill of Materials

Creating the right kit for a new product is a difficult task. In some instances, it’s harder than making the original prototype. Performing bill-of-materials (BOM) optimization can provide significant savings in component costs, manufacturing and for the designer, time spent figuring out what went wrong.

As product design moves from ideation to prototype, and then to build and analyze, BOM optimization can help on every phase to automate, reduce cost, improve form factor and functionality, and make a better, marketable product.

Every engineer has his/her design system, and every team its own pace. In many cases, especially on cutting-edge product prototyping, engineers work in a vacuum. Engineering needs to work with other departments to make sure product launches hit set goals on quality and functionality, especially with sales, planning, procurement, and shopfloor teams as early as possible and throughout the product launch.

From lab to production, not all things are equal. When designing a new product or system, the most important thing is to come out with a solution within the allocated time and have it ready for the assembly line.

Once the product has been tested in the lab and considered ready, time to production is critical. A working prototype, however, might not have the most suitable components for large production runs.

At the same time, last-minute changes can delay production for weeks, if not months. That is why, during the final phases of prototyping, engineers need to be aware of component availability, pricing, and production requirements.

Ensuring the supply of critical components needs to be secured even if design changes are not required

There is nothing more frustrating or disastrous than engineering the perfect product or subsystem and then not being able to manufacture it in quantity for lack of components, expensive BOM or inability to sell in some markets.

The supply chain should be an integral part of the product design. Preventing end-of-life parts being built into the product, ensuring parts from qualified suppliers are being used, securing that lead times are known up front, as well as the same form, fit, function alternative/substitute parts/suppliers have been identified for full-scale production.

Engineers working on product design or making lab adjustments to existing products need to understand basic supply chain concepts and issues such as end-of-life (EOL) and alternative parts.

Additionally, small changes in design while keeping the same features can affect pricing and deliveries. That happens quite often in the final stages just before the product is ready for the first production run. That is why many OEMs schedule the production of a small batch of the final product in simulated manufacturing scenarios to find out any problems and possible changes before sending the final design to their main assembly lines.

Product packaging and design also need to be considered when making product changes. Some components, even if they have the same electronic specifications, might not be suitable to place on the PCB for cosmetic or packaging reasons. In some cases, materials used are not compatible with the placement of certain components, i.e., wireless modems or antennas.

Another critical factor to consider when specifying components during product design is the total cost of ownership (TCO) of the product. Saving a few cents using a component with a shorter operating lifespan or higher failure rate can cost much more if the product fails in the field.

International trade also needs to be factored in. Sourcing some components internationally or using some that are restricted or banned in specific regions can increase the cost of the product or require different versions for different markets.

The European Union, for example, bans the import of any product that uses substances such as lead, cadmium and other pollutants[1] in addition to components with minerals from certain war regions, i.e., the Democratic Republic of the Congo (DRC).

The United States also bans components from certain countries either because of conflict minerals or economic sanctions and has recently increased tariffs on products and materials from several regions, including Europe and Asia.

In addition to the problems mentioned above, managing the supply chain is challenging during all stages of production, testing and delivering.

When securing the right components, it is necessary to make sure that they are original—as the market is plagued with counterfeit units—and of good quality, especially if purchased secondhand.

Also, new standards and regulations are pushing electronic vendors to consider sustainability when making decisions on materials and manufacturing. This is no longer a world where companies’ profits are above the concerns of the environment.[2]

Design for the Circular Economy

It is essential to consider the Circular Economy principles (reuse, refurbish, recycle, maintain, and collect) when designing a new product or optimizing the supply chain.[3]

Pollution caused by electrical and electronic devices is a growing problem that needs to be addressed right from the design stage. The European Union estimates that by 2020, 12 million metric tons of electrical and electronic equipment (WEEE) will be generated every year by discarded products in the member states.[4]

Most products and components can be designed for end-of-life recycling. Batteries used on electric vehicles, for example, can have a second life as power storage for renewable energy, and many metals can be extracted from used devices and PCBs for reuse in new products.

Arrow can help design the right kit and manage the supply chain

As the largest distributor of electronic components, Arrow has many years of experience working with OEMs during all phases of product design and manufacture from conception to market.

Arrow can help to define the right kit for your product or PCB. Its BOM optimization service can identify the most suitable components for your design, taking into account product availability, end-of-life of components, logistics, international regulations, and other requirements.

Additionally, when an engineering change order (ECO) is issued for an existing design, Arrow can recalculate the entire BOM and optimize logistics to minimize the impact on production.

Arrow’s procurement services can verify suppliers and components to ensure quality, origin, and compliance even when it is necessary to use secondary market units due to availability. OEMs can rest assured that purchases made with Arrow are shipped with full certificates of compliance, which remove the risk of counterfeit parts entering the supply chain.

Arrow can also help with process analysis, helping to optimize assembly lines and procedures. Its inventory of billions of parts ensures that, in most cases, the piece or component that the OEM needs is available and ready to ship, and Arrow’s supply chain intelligence[5] helps to ensure timely deliveries.

Having expertise closer to its customers is one of Arrow’s primary goals. That’s why it has engineering teams all over the world that can support customers on any technology right there in their time zone.

Interested in learning more?

For more information on this topic, or to get in touch with engineering specialist who can help answer any questions you might have, head to arrow.com

References

[1] “Restriction of Hazardous Substances Directive – Wikipedia.” https://en.wikipedia.org/wiki/Restriction_of_Hazardous_Substances_Directive.

[2] “Sustainable Electronics Initiative – Wikipedia.” https://en.wikipedia.org/wiki/Sustainable_Electronics_Initiative.

[3] https://www.ellenmacarthurfoundation.org/circular-economy/infographic

[4] http://ec.europa.eu/environment/waste/weee/index_en.htm

[5] “Arrow Intelligent Systems – Services: Supply Chain Management.” https://www.arrow.com/intelligentsystems/na/en/services/business-solutions/supply-chain-management/.

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