When we talk about excess or obsolete inventory, we are
of course referring to inventory of which the quantity you are
holding in stock is surplus to requirements. Maybe production
operations which originally were intended to use that stock have
slowed or even stopped. Perhaps there is new hazardous materials
legislation which leaves the stock obsolete and unusable to you.
Either way the cost of long term storage for this stock will have to
be eventually taken into account as a business expense and it can
result in potentially large losses. Companies are constantly fighting
to reduce costs and improve sales. If you are an OEM or CEM then
managing your excess and obsolete electronic component inventory can
be just as important.
When
auditing your business, one step that should be considered is
identifying your excess and obsolete stock. This can be a challenging
task that needs to take into account possible future production
schedules and ever changing legislation regarding the health and
safety issues of certain substances. For instance, manufacturers of
medical equipment (previously exempt from the RoHS directive) now
have to start making plans to comply with the updates to the law.
Like what happened when the original RoHS directive came into affect,
it is likely that many companies will fail to get the most out of
their non-compliant components while they still can. Many will be
left with unusable component lines in storage. Click here for more information
regarding the RoHS legislation.
By using the best estimates you can for future
production volume you can plan ahead more effectively when component
lines are going obsolete. It will enable you to see how long your
current inventory will last and what replacement parts you need to
source first.
Of
course if a component line is sat in your inventory and the
productions which utilized it have already ceased then the stock is
already excess and possibly obsolete. This is what many businesses
are finding when they audit their own warehouses. Excess stock with
no possible chance of it being utilized in any of their production
schedules and because of the RoHS directive, it may be impossible for
it to ever be used by your industry.
However, it is not all doom and gloom. There are 6
important steps you should take in order to maximise the return on
this obsolete stock.
Identify Your Obsolete, Excess & EOL Electronic
Component Inventory
Firstly you need to recognise which component lines in
your warehouse are excess, EOL or obsolete. Component lines go
obsolete all the time and as yet there is no industry wide
notification system to inform you of obsolescence. You should
maintain communication with your suppliers in order to help you
identify when a particular line is going obsolete.
Create Your Inventory List
Once you have identified the inventory, you must then
develop a list of the items you wish to dispose of and include all
the relevant information so that the potential buyer can make a bid.
Details you will need to include are; Manufacturers Part Number,
Quantities, Date Code, Manufacturer & RoHS Status.
Send Electronic Component Disposal Partners the List
Select several electronic component disposal partners
and send your list to them. This will allow you to take your pick of
the quotes they send back and give you more choice.
Review the Offers Received
Quotes you receive for this stock will be based on the
current market value of the stock. Excess buyers typically offer
between 10 and 30 percent of the market value. This can depend on
factors such as the age of the stock, RoHS compliance and previous
sales history. Usually initial offers may be open to some
negotiation.
Consider the Disposal Options
There are three main disposal options the excess buyer
may provide you with.
Immediate Payment
Quite simply, once a price is agreed and the stock has
been appraised, the stock will be quickly removed with the minimum of
disruption and at no extra cost. With this option there should be no
removal charges and no future liability on any parts.
Full Consignment
This option involves the removal of your stock to the
disposal partners warehouse, who will market it globally on your
behalf via a network of global distributors. The disposal partner
should pay full transportation costs and provide insurance cover. You
retain full title over the stock until it sells, this gives you the
best chance of maximising your return whilst also allowing you to
recall any unsold goods at any time.
Part Payment and Part Consignment
This is the best option when you are in need of an
initial up front payment from the disposal partner, but also want to
maximise your revenue.
Set Up a Collection Time & Date
Once you have agreed a deal with your buyer, they will then make arrangements for the
removal of stock from your warehouse. They will need to know the
weight and dimensions of the packages in order to arrange the most
cost effective and speedy transportation method.
In the electronics sector, obsolete means obsolete.
There is no chance that a component line, once identified as
obsolete, is ever going to have its original market value and the
longer it sits in your warehouse the more value it loses and the more
it costs you in the long run. After a component line goes obsolete
there may be a surge in its value as other companies try and secure
what remaining stock there is left. However, as the companies who
used the component move away from its usage in their product and
source an alternative, its value will decrease rapidly and your
warehousing costs will be growing year on year.
Working with a company who specialise in excess inventory management is the best way to mitigate the risks involved
with obsolete and excess components. At Trading Specialists we
appreciate the dynamic nature of the market we are in and by working
with us we can help you prepare for component obsolescence and get
the most out of your excess inventory while you can. We have a global
network of electronic component distributors lined up to market your inventory to the rest
of the world, increasing the chances of it selling. We will even take
on the responsibility of unburdening you of your excess stock and
removing it to our purpose built, anti-static warehouse where we will
cover the costs of storage until it sells. Don't tolerate excess
inventory wasting your company resources. In business we take
immediate action if anything else is costing us money unnecessarily.
Your excess inventory should be no different.
