7 Steps To Achieve The Ideal LCD Display Cost

Source: Pixabay

LCD display cost is always the “go to” problem as it is usually the most expensive component in a particular assembly, but cost is also difficult to both quantify and properly understand.

In most cases the ideal option is a custom or semi-custom display perfectly designed for its application.

There are different kinds of cost:

As the purchasing manager, you need to work with engineering and marketing in order to know what the cost should be. Engineers view cost as the results of what they need the product to be, whereas marketers looks at what the market is willing to pay for the product. You need to find that perfect balance between the two.

In this document you will learn 6 tips and actionable steps to take in order to obtain the ideal LCD display cost.

Direct

● Negotiated supplier cost

● Lower BOM cost due to product integration

Indirect

● Cost of quality

● Manufacturing Assembly cost

● Operational Overhead

Source: Pixabay

Source: Pixabay

Mapping out the “must haves” of your product will help you identify what you actually need and avoid getting distracted by shiny objects. This will help you cut down on costs by only paying for the attributes that are truly valued.

When developing your LCD display, the first question is: what job will your LCD need to perform? As the purchasing manager you need to work with engineering and marketing to define up front what the purpose of the product is to make sure you have the right pieces in your product.

If a performance attribute of your product is not going to increase sales,

then by definition it is not valued by the market - so don’t add it!

1. Correctly Define the Purpose of your Product

1. Correctly Define the Purpose of your Product

Ask marketing and engineering if the following items are truly needed and will impact sales:

● Color or Monochrome?

● Graphic, Character or Segmented?

● Extreme environmental requirements?

● Outdoor, Indoor, No ambient light or a combination?

Once you answer the questions above about the purpose of your product, here are the next set of variables to consider:

● EOL (end-of-life) - How long does this LCD need to be produced?

● Do you need the ability to customize?● Do you need strict configuration control?

Source: Pixabay

2. Select Supplier’s based on your Volume Needs

There are no one size fits all suppliers. Each manufacturer has a niche.

First, define what level of volume you need for your product.

1. Low volume stocking distributor (a few thousand parts or less per year)

2. Mid volume manufacturer (a few thousand to 200,000 parts per year)

3. High volume for high-end consumer market (over 200,000 parts per year)

Within each category is a supplier that closely matches your industry needs with your business’s volume needs. The key is to position yourself correctly within this supply chain so that you aren't paying too much on either scale, nor are you outside of your supplier’s core manufacturing capabilities.

Source: Flickr CC

2. Select Supplier’s based on your Volume NeedsOn one end of supplier scale are companies that can support high mix/low volume projects very well. But try running a high volume product through this channel and it will result in a lack of technical support, a much higher price, and a lack of configuration control. On the extreme opposite end of the scale are suppliers focused on low mix/high volume. Conversely, forcing a low volume project through this channel results in longer lead times and unpractical minimum order quantities. You have to be aware of the differences in suppliers depending on the product they provide you.

Decide where you fit:

Define how much volume you produce each year to know if

you fit in the low, mid, or high volume

market

Ask the supplier what their typical

customers’ volumes are

Source: Google Images

Match the appropriate quality level of your product with the product and industry.

Consider the following:

3. Carefully consider the true Cost of Quality

Source: Pixabay

Defects cost money

● Manufacturing rework

● Customer returns

● Product reputation

Over-designing for quality increases unit price

● Find the right mix for quality and the supplier, not every part needs to be a Cadillac, unless you are designing a Cadillac

4. Lower your System-Level Costs

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System-level costs are lowered by integrating potential components onto the display. For the lowest system level costs, investigate if there are additional components, buttons, LEDs, PCB boards, and connectors that can be integrated on the LCD display, rather than a separate assembled component. In this case, the total assembly BOM cost goes downs, there are fewer part numbers to manage, and the assembly costs are reduced as a result.

Work with engineering or your supplier to integrate any of the following:

ButtonsMechanical

Attachments Connectors

Touch panels LED indicators Bezels

Overlays IC’s Cable Assemblies

4. Lower your System-Level Costs

Source: Flickr CC

Define the right content on the display to lower the system-level cost:

● Reduction in material costs - Integrating the right components onto the LCD display lowers the overall BOM cost

● Reduction in Assembly costs - Fewer parts reduces the amount of assembly time which saves money

● Reduction in Overhead costs - Integrating components onto the LCD display reduces the total number of unique components to manage. This directly results in a in a cost savings by reducing the operational overheads

5. Negotiate with Multiple Suppliers

Source: Flickr CC

After defining the exact product and the annual volumes:

1. Get Competitive Quotes

As the purchasing manager, you should get several quotes from suppliers to compare different prices and options. Ask the suppliers if they can match the same display (whether it is still in design or is a current display).

Questions to ask the supplier when trying to match the current display:

● Mechanical compatibility● Performance- “As Good or Better”● Electrical compatibility

See detailed crossmatch process: http://www.phoenixdisplay.com/crossmatch/

2. Negotiate price based on volume discounts

● Will they negotiate if you give them higher minimum order quantities?

3. Stocking

● Can you pass the burden of stocking materials onto the supplier?

6. Negotiate Terms

Source: Pixabay

The overall display price isn’t the only expense that is negotiable.

Negotiate with your supplier the following terms:

Payment terms to consider● Deposit required● Immediate, Net 30, Net 45, Net 60● Negotiate discount points

INCO terms - consider where your location is and what the shipping costs will be from your supplier’s location● FOB Asia - only ideal when you are manufacturing your product

overseas● FOB domestic location - the most standard term● FOB customer location - cheapest option

Will your supplier pick up these costs● Prototype● Tooling costs

●

Source: Pixabay

Volume permitting, many of your display costs and needs could be better assessed if you are open to a custom or semi-custom display option.

Customization leads to a lower system-level cost because it impacts the LCD design, product integration, what supplier you can choose from, and the quality of the display.

Being open to a custom display allows you the supply chain flexibility in order to partner with the ideal supplier.

Disadvantages of Standard:

● Won’t allow additional component integration

● Limits volume-based supplier selection

● Won’t allow for performance enhancements

7. Be open to custom LCD displays

Source: Pixabay

The steps to the ideal cost of your LCD display:

1. Define the purpose of your product by discussing the functionality needed with engineering and marketing based on what the end customer is looking for. Only add the items that will impact sales.

2. Select your supplier based on the volume market they specialize in.

3. Determine the cost of quality by matching the appropriate quality level of your product with the product and industry.

4. Lower the system-level costs by integrating components on the display.

5. Negotiate with multiple suppliers to compare all options.

6. Negotiate the final terms with your supplier.

7. Be open to a custom LCD option

Want to learn more?

Contact us and let Phoenix Display be your guide!