If you’re a parts and assemblies supplier like us, and your customers are asking about how to trim the fat off their part costs while still keeping quality high, you’re not alone. Every month, I sit across the table from engineering and procurement leads at our client sites, and the same question comes up: “We need to bring assembly costs down without compromising what makes our product work.” It’s not just about slashing prices—it’s about building a smarter, more connected process that works for everyone. Over the last decade, we’ve fine-tuned how we approach this for our own operations and our customers’ assemblies, and today I want to share the practical, actionable steps we’ve tested and honed along the way. Parts and Assemblies
First and foremost, start with a design for manufacturing and assembly (DFMA) review before any part hits the production floor. I can’t tell you how many times we’ve walked into a customer’s facility only to find a part design that requires three separate custom stamped brackets, each with tight tolerance specs that add $0.75 to the unit cost, when a single bent sheet metal component could do the same job for half that. Last year, we worked with a medical device startup that was building a monitor mount requiring eight different fasteners, each ordered from a unique supplier. We sat down with their engineering team and mapped every fastener requirement, replacing six of them with standard, off-the-shelf hex bolts that we sourced in bulk, and consolidating the remaining two into a custom stainless steel fastener that we manufactured in our in-house turning shop. The result? They cut their fastener cost by 62% and reduced assembly time by 18 seconds per unit—something that adds up to tens of thousands of dollars a month when you’re making 10,000 units a quarter. The key here is to invite your parts supplier into the design phase early, not after the design is locked and tooling is already built. Too many companies treat suppliers as order-takers, not as design partners, and that’s where the biggest cost savings slip through the cracks.
Next, take a hard look at your supply base and part standardization. In our experience, most assembly operations are sitting on hidden waste from redundant parts. A industrial equipment client of ours was using 17 different types of rubber grommets across three product lines, each with slightly different dimensions, packaging requirements, and minimum order quantities. We did a full part rationalization audit, testing each grommet’s performance, temperature rating, and chemical resistance across all three lines. We found that seven of the grommets could be replaced with a single standard EPDM grommet that met every requirement, and we sourced it from a trusted regional supplier instead of three different overseas vendors. The impact was huge: we eliminated 10 part numbers, reduced inventory carrying costs by $120,000, and locked in a 22% lower unit cost for the grommets. Standardization doesn’t mean you have to use the cheapest part on the market—it means you use the smallest possible set of parts that meet all functional and regulatory needs. We recommend doing a full part rationalization every 12 to 18 months, because as new materials and manufacturing processes come online, there’s almost always a way to consolidate SKUs without sacrificing performance.
Then there’s the area of process optimization for assembly itself, not just part costs. A few months back, we worked with a HVAC manufacturer that was assembling air handler units by hand, with operators standing at stations doing sequential tasks: fitting the fan, installing the wiring harness, mounting the control board. They were paying $21 an hour for assembly labor, and the line was only running at 65% efficiency because of bottlenecks at the control board station. We didn’t just change the parts here—we redesigned the assembly process layout, splitting the control board installation into a pre-assembly step at a lower-cost satellite facility, and using our in-house kitting service to deliver pre-tested harnesses and boards directly to the line. We also replaced two custom metal fasteners on the fan mount with quick-release thumb screws that take half the time to install, and trained the line operators on the new process. After three months, their assembly labor cost per unit dropped by 19%, and line efficiency jumped to 88%. This is a common mistake we see: teams focus only on part costs, but assembly labor and time make up 30 to 40% of total production costs in many sectors. Small changes to how parts are handled, pre-assembled, and installed can add up to way more savings than cutting a few cents off a single part.
Don’t sleep on material selection, either—this is where we see the biggest tradeoff between upfront cost and long-term total cost of ownership. A automotive client came to us a year ago asking about replacing their aluminum heat exchanger with a lower-cost steel alternative, to cut part cost by $2.50 per unit. We ran a full lifecycle analysis for them: steel would have a lower upfront material cost, but it’s 30% heavier, so shipping costs per container would go up, it’s more prone to corrosion, so warranty replacement costs would jump by $1.20 per unit, and it’s harder to machine, so assembly time per unit would increase by 12 seconds. When we added it all up, the total cost of ownership (TCO) for steel was actually $1.10 higher per unit than the aluminum option. We worked with their engineering team to identify a mid-grade aluminum alloy that was 15% cheaper than the alloy they were using, still met all pressure and temperature specs, and was available from a local supplier. The result was a $1.20 per unit part cost reduction, with no hit to warranty, shipping, or assembly costs. That’s the kind of data-driven material selection that beats just chasing the cheapest price. We always run TCO analysis for every material change, including raw material cost, shipping, tooling, assembly time, warranty, and end-of-life disposal, because a $0.10 per part savings now can turn into a $1 per unit cost later.
Another area we prioritize is inventory and order strategy. Holding inventory is a huge hidden cost for parts and assemblies, and most teams don’t account for that. We have a customer that was ordering 5,000 units of a custom plastic injection molded part every three months, because that was the supplier’s MOQ, even though their production line only needed 1,200 units a month. That left them with 1,500 extra parts in inventory every quarter, tying up $45,000 in working capital, and risking obsolescence when they updated their product design. We worked with our injection molding partners to implement a quarterly volume tiering program, where they could adjust order quantities between 800 and 1,800 units without a MOQ penalty, as long as the total volume for the quarter matched our customer’s projected need. We also set up a JIT (just-in-time) delivery schedule, with parts arriving two days before they were needed on the assembly line, instead of two weeks early. This cut their inventory carrying cost for that single part by 78%, and freed up warehouse space for higher-turn parts. The key here is to align order quantities with actual production demand, not just supplier MOQs. For parts that have stable demand, JIT delivery and tiered pricing can save more than 15% on inventory-related costs, which often makes up a larger share of part costs than the material price itself.
And finally, build a collaborative, long-term relationship with your parts supplier, not a transactional one. Too many procurement teams treat suppliers like they’re competing against each other, putting projects out to bid every six months to get the lowest possible price. What we’ve found is that when you work with a single trusted supplier for 3 to 5 years, sharing production forecasts, design plans, and even your own cost structure (within reason), you unlock way more savings than you can get from constant bidding. We have a customer in the agricultural equipment space that’s worked with us for 7 years. We share their 12-month production forecast every quarter, so we can plan tooling, material purchases, and production schedules in advance. Last year, when a new steel supplier launched a high-strength, low-cost alloy that was perfect for their hitch assembly, we were the first to test it and pass the savings along to our customer, who was able to switch the part without any retooling or design changes, cutting their part cost by 11% immediately. This kind of collaboration only works if you’re transparent: if you hide your production plans or only care about the lowest upfront price, your supplier will only give you the basics, not the custom solutions that drive real cost optimization.
High-pressure Pump At the end of the day, optimizing part and assembly costs isn’t about cutting corners or sacrificing quality. It’s about looking at the entire value stream, from design to delivery, and making small, smart changes that add up to big savings. We’ve helped hundreds of clients across medical, automotive, industrial, and consumer goods sectors cut their part and assembly costs by 15 to 30% without dropping any performance or quality standards. If you’re looking to work through a specific part or assembly cost challenge, we’d be happy to walk through your project and share more about how we’ve helped other suppliers and manufacturers in your space.
References
- Design for Manufacture and Assembly (DFMA) Handbook. Society of Manufacturing Engineers, 2021.
- Total Cost of Ownership Strategies for Parts Supply Chain. International Supply Chain Education Alliance, 2022.
- Part Standardization and Rationalization: Best Practices for Reducing Assembly Costs. Journal of Industrial Engineering and Operations Management, Volume 5, Issue 2, 2020.
Aobot (Qingdao) Marine Heavy Industry Co., Ltd.
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