Business Consultant, Angharad Storrie, interviews CEO of Component Sense, Kenny McGee, regarding selling excess electronic components.
AS: What are the basics you need to know about selling excess electronic components?
KM: Our clients are primarily focused on building electronic products. Selling excess is a by-product of what you do. When you are building a product there will always be excess or surplus components. There will be components that become obsolete or redundant for your purposes and that is just the natural order of things. Over time stock accumulates and it begins to harm your business.
There are many different reasons why selling your excess components will become a priority. Perhaps the finance department will highlight increasing stock holding or missed KPI's. Business is tough these days. If you want to be globally competitive you need to take care of your stock.
There are a number of ways to get rid of that stock and turn it into cash. It really depends what your requirements are from the stock. Is the stock written off? If it is, you have a lot more choices. You might need to discuss it with your finance department as if they have written it off then you pretty much have carte blanche to do what you like with it. We can buy it outright for cash and that is the simplest and fastest way to get rid of it. You identify the stock and give us a list. We will assess it and come back to you with a price. Many companies prefer a cash sale because they want the job done and off the desk. We can accommodate that no problem.
If you are looking for a better return then the next step up is our consignment programme. Once the stock has been written off we can bring it in-house therefore removing your storage problem. If the stock is not yet fully provisioned for, we can make an upfront payment to help facilitate write off. Once we have full access to your stock we can market it properly for you by correctly identifying the stock and photographing it so that any buying customer can see exactly what they are getting. We now have all the data we could ever need on that component. This adds a lot of value to that part.
I have seen companies try to sell their excess stock themselves by setting up a website: 1) the website does not have the traffic for that type of thing so it not going to get much leverage; and 2) it is not what you do. If you are a manufacturing company you are not set up to market this stock properly. Surplus and Excess is our specialty. Our primary concern is and has always been, to help OEM and EMS companies control and manage slow moving stock. We have perfected that art over the last 17 years.
In summary consignment gets the stock out of your warehouse quickly. There are no additional costs for you and we will manage the stock thereafter. You have removed the headache of storage and stock-taking. We can market it and push for the best price for that product. When an enquiry comes in we respond quickly, our goal to provide a quote within 20 minutes. If you have ever gone out hunting for prices you will be impressed by that. We often beat that goal as we try to quote things as they come in. 20 minutes is our worst case scenario. That is unheard of in our industry. If someone comes to buy that part then we can ship it same day typically right up until 5pm local time. We really focus on the service side for our buying customers to make sure they come back which in-turn helps you.
We then split what we get with you as the stock owner. You still own the stock it is just stored at our premises. We have overheads to cover with shipping and collecting stock and the stock take itself is quite laborious. We typically take 3 to 5 photos per part as well as collecting data sheets and lots of other information that helps sell that product. The split varies from 50%/50% to 60%/40% depending on the size, value and quality of the batch.
AS: Is the stock still available should a customer need it under consignment?
KM: It is still your stock. Therefore if something crops up and you need the stock back that's no problem at all. Again we can ship same day to most places in the world. Courier services are quite impressive these days. It is typically: 1-2 days to The States; next day delivery to anywhere in Europe; and Asia is no more than 2 to 3 days.
AS: Is there any difference between what ‘excess’ and ‘surplus’ means when it comes to electronic components?
KM: Basically excess and surplus are the same thing. We used to find in The States that they called it surplus rather than excess as it was here in the UK. Over the last 10 to 15 years the two terms have just merged together and I now hear people using both terms in all the countries that we visit.
AS: What are the risks of selling excess electronic components for clients?
KM: As a client of ours we protect you from any risk as it is our job to do counterfeit and quality testing for everything we buy and sell. After we bring stock in we give it a high level inspection but at the point of sale we thoroughly check it to the IDEA standards. We are taking the risk as we are selling the product. As far as you are concerned there is no risk. If there were any issues with that part it is our guarantee that covers it, not yours.
AS: What is Component Sense’s guarantee?
KM: We give a 12-month warranty on all parts for form, fit and function and assurance that the parts are new and original.
AS: What are the benefits of selling excess electronic components?
KM: The benefit to the client is to free up space and get cash back into the system. If the stock is accounted for properly in the manufacturing process then effectively anything you get for it is a bonus. Whether the books say that is another matter and that is down to your finance department. Some customers write stock off very quickly and others let it sit on the books forever. Ultimately if you hang on to it for another 10 years then it will end up as scrap and probably cost you money to get rid of. Therefore the quicker you identify the stock and get it up for sale the better. Also some parts depreciate heavily over time because of age and the advancement of technology. A high tech part depreciates very quickly as it is being superseded by new high tech parts. There is no point hanging on to stock.
Occasionally, a part can demand a really high price down the line because the part is obsolete and you cannot buy it anymore. But you cannot predict that. For example if you have a thousand parts you are never going to be able to predict which ones will be sought after in 5 years time. My advice, and certainly what we do with the stock we own, is to sell it at the best price you can on the day that someone enquires as it may be the only chance you have to sell it. We have some parts that regularly get enquiries and other parts that are obscure and sit on the shelf for years on end and then suddenly get interest. If you do not sell that product at the first opportunity, you are probably going to regret it.
AS: What are the global environmental benefits of selling excess electronic components?
KM: Excess resale, the way we do it, is the purest form of recycling. We are selling it to another customer who is going to use that product for its intended purpose therefore you are reducing the amount of product being scrapped, particularly as there are harmful substances in electronic components that shouldn't end up on a scrap heap. When we receive a batch of stock, it may contain all sorts of bizarre products that have been taking up space in a warehouse. As part of the assessment when we bring the stock in, we will identify the stock and come back to you with a list identifying any items that we believe have no resale value. With your approval, we will dispose, free of charge, any product that requires scrapping. This is done properly as covered by WEEE (Waste Electrical and Electronic Equipment) 2012/19/EU Directive for recycling. We can give you certificates to prove that the disposal of stock has been handled correctly.
If you have stock not written off, but it is of high value, we also have a bespoke InPlant™ solution. Click to read more on InPlant™ and watch our video explaining our tailored solution in just 3 minutes.
In summary, identify your excess stock as soon as possible and let us help you turn it back into cash.
Contact us at Component Sense today to start selling us your excess electronic components.