Costs of setting up electronics production (Non-Recurring Engineering Costs)

Non-Recurring Engineering (NRE) is a broad concept, referring to the once-off cost of developing, designing, testing, or production of a new product.

It may mean different things in different industries, depending on the type of product, process, or even the delivery chain strategy. In the PCB industry, especially in contracted production, NRE refers to specific set-up costs associated with producing a newly introduced PCB module or device.

Other terms for NRE used in the industry include: start up costs, E-test costs, setup costs, or costs associated with making a stencil or a template.

A client only pays once for NRE, in contrast to assembly costs (which depend on production technology, number of tiles, estimated assembly time, etc.), which are incurred continuously in order to sustain the production. When a printed circuit is already designed and the list of elements and the scope of needed technology are defined, it is possible to produce any number of tiles without increasing NRE costs.

 

NRE - costs of setting up electronics production

 

The following actions are taken in order to set up the production of a new device:

  • Designing and making a template (the so-called stencil)
  • Programming the pick-and-place machine, selective soldering machines, wave soldering machines, and optical machines for quality control
  • Profiling of the oven for the SMT process
  • Preparation of assembly documentation
  • Organisation of the production process
  • Preparation of production fixtures
  • Preparation of the solder paste printer and the design template
  • Designing and making testers

 

It is worth emphasizing that setting up a machine may sometimes take longer than the actual production. This is why it is not economical to produce in small batches. Instead of contracting the production of several dozen tiles a month, a better solution would be to order a higher number each quarter.

 

As mentioned above, some NRE costs are unavoidable in every project. It is necessary to produce a template and a tester for a PCB, as well as to devote sufficient time to programming the machines for production and assembly according to guidelines.

 

However, there are a number of factors which may influence the overall NRE cost, and knowing these factors, even though they may often seem arbitrary, can help lower costs. The parameters which have the greatest influence on NRE costs are: physical dimensions, number of assembly pads for SMT elements, size of the production panel, batch size, number of layers for a given PCB project, and the scope of technology needed to produce a given electronic module (the simpler and less controlled the process, the lower such once-off costs).

 

In summary, the cost of setting up production (NRE) is a once-off cost for a given PCBA, and is incurred only on the first production batch. Introducing changes to the PCB or material list in future batches will thus mean changing the version of a design, which would make it necessary for the client to pay again for setting up production. The cost of this depends on the scope of the modifications introduced, and so there are cases when the full set-up cost is not incurred.

 

For each project, at the client’s request, a dedicated project supervisor from Elhurt is able to explain in detail what influenced the NRE cost and identify which solutions should be avoided in future, while the product is still in the design phase, so that the NRE cost can be kept relatively low.