6 Ways to Reduce Expediting Costs in Manufacturing

Expediting costs—those extra charges incurred by rush materials, components, or production—are a persistent challenge in manufacturing. Whether it’s last-minute air freight, premium payments to brokers, or overtime for engineering services, these costs can erode margins and disrupt budgets. But what really drives these costs, and how can organizations better manage or even avoid them? Drawing from my experience in contract manufacturing, I’ll share the most common scenarios that lead to expediting and best practices for mitigation.

What Triggers Expediting Expenses?

Expediting charges often stem from a mix of predictable and unforeseen circumstances, including:

• Late Design Changes: Introducing design modifications late in the development cycle may derail established timelines and require urgent sourcing of new components.
• Prolonged Decision-Making and Change Implementations: Lagging design decisions or ECO cycles can lead to last-minute procurement.
• Material Shortages: Unexpected component shortages might force teams to pay premiums for limited stock or to fast-track alternative purchases.
• Single-Sourced Items and Demand Surges: Items sourced from a single vendor are especially vulnerable to demand spikes, which drive up costs and urgency.
• Surprise Product Change Notices (PCNs) and End-of-Life (EOL) Notices: Unanticipated product change notifications (PCNs) may require re-validation or first article reviews, while missed EOL notices result in costly expedited replacements.
• Quality Issues: Extensive rework due to quality problems may warrant rush shipments to stay on schedule.
• Manufacturing Line Prioritization: When production lines must be reprioritized to accommodate tight deadlines, expediting charges often follow.

The True Cost of Expediting

Expediting expenses dramatically impact manufacturing budgets. Air freight, for example, can be 5-10 times more expensive than ground or sea shipping. Same-day courier service is even pricier. Companies might also pay high premiums (10-30% or more) to source components from brokers. And when contract manufacturers charge 10-25% to reprioritize production lines, the hit to margins is immediate and substantial. Redesign, validation, and testing under tight deadlines can also add significant overtime labor expenses.

But the costs don’t stop there. Indirect impacts include increased quality risks from rushing processes and opportunity costs when resources are diverted from innovation to firefighting.

Strategies to Reduce Expediting Charges

While expediting fees are unavoidable, they can be controlled through strategic planning. Consider taking these steps to help reduce costs:

1. Increase Safety Stock.

Compiling extra parts and raw materials safeguards your operations from shortages and other supply chain disruptions. Still, this comes with trade-offs: increased carrying costs (e.g., storage and insurance) and the possibility of overstocking and obsolescence.

2. Dual Source Your Components.

By spreading procurement across two suppliers, you avoid single points of failure for long-lead components. Ultimately, you can ensure continuous supply during disruptions and avoid rush orders.

3. Design for Supply Chain.

Integrating supply chain considerations like lead time into your design will help minimize the need to expedite. However, this approach is less suitable for new parts which lack performance history and often demand more testing and iteration early on.

4. Employ Lifecycle Risk Management.

With an estimated 3% to 5% of electronic components going EOL each year, ongoing vigilance is essential. Implement a comprehensive system to continually monitor PCNs and EOL notices. This will allow for faster last time buys or alternative sourcing decisions that prevent costly emergencies.

5. Ensure Cross-Functional Visibility.

Expediting isn’t just a supply chain problem. Engineering, manufacturing, quality, and procurement teams all need access to risk information to make informed decisions and act quickly.

6. Adopt Modern Technology.

Implement advanced software to automate component risk monitoring and provide actionable insights.

How Cloud PLM and Supply Chain Intelligence Transform the Game

Typically, companies hire a team of experts to regularly monitor supplier websites for various risk factors, but this is costly and not foolproof. They might also subscribe to third-party component content providers with sophisticated tools; however, their systems are not connected to the product record. Manual exports and periodic updates still lead to missed notices and expediting charges.

Ultimately, you need a single source of truth to maintain visibility and ensure things don’t slip through the cracks.

Proactive Risk Monitoring With Arena Supply Chain Intelligence (SCI)

Today, we’re seeing more companies adopt cloud product lifecycle management (PLM) solutions like Arena to get that instant visibility. Arena SCI monitors your bills of materials (BOMs) for risk factors like EOL, low inventory, and noncompliance issues. Teams define what constitutes risk for their products and receive immediate alerts when thresholds are crossed. If a risk is detected, users can immediately see alternatives, review PCNs, and start the change process—all within their PLM system.

By reducing manual effort and catching risks early, companies see better ROI and protect their margins from erosion due to expediting. And everyone working on the product—from engineers to supply chain partners—has full visibility, enabling faster, smarter decisions.

Act Fast, Spend Less, Get Ahead

Expediting costs are a fact of life in manufacturing, but they don’t have to be a constant drain on your resources. By understanding the root causes, implementing smart strategies, and adopting the right technology, you can reduce expenses, increase profitability, and build more resilient supply chains.

In today’s volatile environment, actionable insight and rapid response are not just nice-to-haves; they’re essential for survival. The companies that embrace these solutions will be better equipped to avoid costly emergencies and thrive in the face of disruption.