In conversations with our clients, the same scenario keeps recurring: the product performs excellently, the market has embraced it, but its manufacturing cost is slowly becoming unacceptable. Margins are shrinking, competition is intensifying, and there are no longer any line items left in the spreadsheet where you could “cut something else” without compromising quality.

That is when it is worth digging deeper – applying VAVE (Value Analysis and Value Engineering). This enables a methodical, objective approach to identifying what actually drives costs in a product.

It is worth clarifying this: VAVE is often confused with traditional cost cutting, i.e. pressuring suppliers to lower prices or desperately searching for the cheapest substitutes. Such an approach is short-lived – it usually results in quality issues or disrupted supply chains.

VAVE works completely differently. The starting point is not the price of a specific capacitor or connector, but the function that a given component performs in the device. The question, therefore, is not: “how can we buy this more cheaply?”, but: “are we implementing this functionality in the most effective way?”.

In practice, this means we do not start by analysing the BOM. We start by understanding what is essential in the product, and what merely results from design conventions, the device’s development history, or decisions made under entirely different market conditions.

If we take an honest look at most electronic projects, high costs rarely result solely from market conditions. Much more often, they are the outcome of specific engineering decisions:

• Oversizing: Using components with specifications significantly higher than required by the device’s actual operating environment.
• Lack of standardisation: Situations where a single project includes several almost identical components from different manufacturers, fragmenting purchasing volume.
• Legacy design decisions: PCBs that are electrically sound but complex and expensive to assemble (e.g. requiring additional manual operations).
• Processes: Solutions that worked well at the prototype stage but become problematic at a scale of 10,000 units, generating unnecessary labour hours.

These are not mistakes – they are a natural stage in every product’s evolution. The problem arises when no one revisits these decisions to reassess their business case a year or two after the product’s launch.

In a partnership with an EMS provider, the role of the factory does not end with assembly alone. As an EMS provider, we have access to data from many markets, experience from hundreds of projects and – most importantly – we view your product from a different perspective than the R&D team.

The real value of VAVE lies at the intersection of three areas:

1. BOM analysis: Knowledge of component availability and lifecycle.
2. DFM/DFA (Design for Manufacturing/Assembly): Verifying whether the design is suitable for machines and automated processes.
3. Process optimization: Understanding how a minor design change can eliminate a costly manual operation on the production line.

The VAVE process rarely involves a major overhaul. It is more a series of small, logical steps.

Sometimes we start by replacing a component with one that is cheaper and more readily available while maintaining the same specifications. On other occasions, the greatest benefit comes from simplifying the layout, enabling the use of a smaller, less expensive PCB. It also happens that changing the assembly technology for a single component allows us to reduce the product’s throughput time on the production line by 15%.

Individually, these changes may seem cosmetic. Taken together, however, they can reduce the product’s cost by several percent – while maintaining (or even improving) its reliability.

The biggest mistake is treating VAVE as a last resort, something to reach for only when the product ceases to be profitable. It works, but it is too little, too late.

VAVE should be a cyclical process. A product has a lifecycle: prices, technology availability and user requirements change. What was optimal two years ago may now require adjustment. Companies that permanently schedule VAVE reviews in their collaboration calendar with EMS providers have a significant advantage. Their products are continuously fine-tuned to the market, rather than only being improved when the problem has already become critical.

Ultimately, it all comes down to the numbers. VAVE delivers measurable results: lower cost of goods sold (COGS), greater flexibility in procurement and reduced risk of downtime.

But control is just as important. Knowing exactly what makes up your product’s cost and where its reserves lie changes the way you make business decisions. It allows you to react more quickly to competitors’ moves and pursue a more informed pricing strategy.

In a well-managed production process, cost is not accidental. It is the result of informed choices. VAVE is simply a tool that helps you make those choices better.