Shortage markets often throw a company's supply chain balance into havoc. Having excess inventory of electronic components is a common problem. It takes up warehouse space, drags down the books, and ties up capital that can be used to procure your current BOM.
Faced with shortages that can lead to Line Down and other production stoppage scenarios, many supply chain pros are forced to overindulge when their problem parts pop up and that can lead to an excess "hangover". What starts out as a huge allocation and a series of countermeasures designed to keep production moving with calculated overbuys, safety stock, and "padded" orders to ensure coverage can really backfire when that allocation tide turns abruptly.
Even in non-shortage markets there can be changes in what’s trending, cancelled orders, and reality not matching demand forecasts. Builds get cancelled, orders get pushed out, and OCM and the big franchised distributors typically won't take back your left-over parts. Of course, there are brokers who will pay .02 - .03 on the dollar in the hopes they will be able to re-sell it down the line at a huge profit. That can be a tough pill to swallow and it can lead to some "creative" ideas.
Most EMS, OEMs, and CMs don't have a dedicated team to sell excess electronic components. Selling surplus inventory usually falls back onto the buyer who initially purchased the parts to begin with. And even though you are a seasoned pro at procurement, not reselling 2nd surplus electronic components, you are still the one it falls back on. Here is a list of risks to avoid so you can maximize your return and avoid the 5 most crucial mistakes!
Surplus Electronic Components Inventory
1. Waiting for the Situation to Get Better.
Doing nothing and letting your inventory collect dust allows the value of your excess electronic components to decrease with every passing day. In rare instances obsolete electronic components can increase in value but that is the exception and not the rule. Over time, newer, more compliant, and efficient products enter the picture and reduce the user base of your aging inventory. Also, most manufacturers have date code restrictions due to concerns about oxidation and other storage-related issues. You can see why time is not on your side. Unattended excess becomes a bigger problem over time.
2. Putting it on eBay or Amazon.
Or Craigslist or some other surplus site. It may sound like an easy opportunity to reach an enormous market, but you have to worry about scammers, who are a large part of that market. Anyone who has ever sold an item of value on one of these sites must always be on high alert for scammers. Google search “eBay scam” and you’ll see what we're talking about. Seller scams, buyer scams, many counterfeiting operations make a living from their online stores, and you do not want your surplus electronic inventory to be associated with that.
3. Selling it to a Broker or Electronic Parts Suppliers.
Actually, this one can work, if you don't mind a $2K return on a $100K original cost. If you only need to get .02 - .03 on the dollar this method might work. If you need to get a higher return for your surplus electronic components you'll need to work with a smarter excess liquidator that has a value building system in place. One where they can actually find similar OEM, like yours, to place your excess where it's more highly valued.
4. Scrap it and Take the Loss
Some buyers think that it's just not worth it to try and resell the stock. While crushing your parts and getting a Certificate of Destruction can yield you some tax benefits, they are only in the form of a loss you can write against profits. In the current climate this option rarely makes sense, especially considering that you can structure your agreement with your excess vendor in such a way that you take the benefits of the loss with the potential of getting a good portion of the value back over time.
5. Blast it to the World. (Or give it to one wrong company)
The more the merrier, right? Not in the excess value-building world. When you keep your inventory and share the list with multiple brokers, the first broker posts it on multiple sites, many of whom sell memberships to anyone. Brokers who troll those sites will copy the listings and repost them. Then they may email broadcast your inventory. After all is said and done, your 1,000 pieces of a valuable part in short supply begins to look like multiple availabilities of tens of thousands in the marketplace. Any chance you had to uniquely present your excess that was in an advantageous supply/demand position is lost immediately.
By avoiding these five costly mistakes, you are off to a good start. But how can you gain the highest return from your excess electronic components? The best practice for maximizing your return on your surplus inventory is to pick one Global Excess Specialist who can physically hold the stock and strategically market the individual products to the end-users who actually use them.
By putting that product in front of those who value it the most you are able to maximize the return.
Classic Components utilizes an industry-first Inbound Marketing Group which has had amazing success placing consigned excess with similar OEMs 64% of the time. This results in a much higher return to the OEM and EMS excess seller. Classic can offer this higher consignment-based return, the traditional outright buy, or even a hybrid of the two. Simply click the blue button below to get a free initial appraisal and we will contact you on the best strategy for your situation.
Click the button below to upload your Excess Inventory list for a free appraisal:
About Classic Components
Classic Components was established in 1985 and is headquartered in Torrance, California. We have a global footprint with locations throughout North and South America, Europe, and Asia. Classic is a top 5 unlimited franchised distributor of electronic components and provides unmatched supply chain solutions and unsurpassed quality. Classic has set the industry standard through our tireless commitment to customer service, quality conformance and industry-leading counterfeit detection methods.