Processes used are dependant on volumes required, so that should be taken into account. Some manufacturers in Asia will do this work with the expectation of retaining ownership of IP, etc, as standard practice, therefore an agreement protects against this happening. In this case, you may need to hire an engineering team or work with a company like us Sofeast who can help with the product engineering, supply chain side of things, compliance and testing, etc.
Sourcing work, qualification of suppliers, DFM review, certifications, tooling design and fabrication, testing, and more, are still to be done. Suppliers will often allow NRE to be broken into multiple payments — a down payment to get started and then separate payments upon the completion of certain milestones.
There are a lot of factors that can go into this so speaking with them about it is the best route. In this type of arrangement, the manufacturer is taking on a larger risk, as they will only recoup their NRE costs if you successfully sell 1, units. In addition, they are investing their resources ahead of time, but only receiving payment for them later on. Thus, this type of arrangement will only be available in situations where the buyer has a lot of leverage on the supplier e.
You will have a few options here but you should also make sure to check your documentation and designs to verify if there are any inconsistencies. If there are manufacturing issues, and any of those above design, tooling, coding, or other actions need to be re-done or repeated in order to fix the problem, the solution should be outlined in your contract with the manufacturer.
The contract you sign can be referred to as reference to the final payment and delivering contents to avoid risk. This will help avoid most of the tough conversations that could come up and also paints a clear picture of who owns the risk. In certain instances, particularly with newer technologies, suppliers may not be willing to contractually guarantee successful delivery of all features of your product. In these cases, if you are unable to find an alternate supplier who is willing, you will need to bear the risk.
Find more Electronics Manufacturing Services articles. Your email address will not be published. What is it for? Tooling Each of the items listed below can be considered an NRE cost, because they are specially made for a specific product and for a specific customer. Break out or Amortize? Can you waive NRE? Amortize means that you pay for the NRE in increments by adding the non-recurring engineering to the per-piece price.
There are upsides and downsides of these two ways of payments. Whenever you have any question regarding the cost, in this case, the non-recurring engineering cost, of your project, just ask. Cost analysis and reduction is too important to be ignore in a project, and non-recurring engineering cost is only one of the costs. Should you have any question regarding non-recurring cost, feel free to leave us a comment, or reach out. Here is an example for you to understand.
What is NRE non-recurring engineering cost for? What is NRE non-recurring engineering cost not for?
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