Sit and think about this ancient Chinese proverb for a minute. There are probably many areas of your personal life where this saying holds weight. At Component Sense, we believe this profound Chinese proverb also has implications for our electronic manufacturing industry.
Over the last few years, we have been experiencing very high demand for electronic components but low supply. We admit that the best time to sell your excess and obsolete (E&O) component stock was before our market levelled, but the second best time is now. This blog will explain why.
Learning from the past
The year was 1999. Oversized flannel shirts were popular and The Matrix was released in cinemas. While this movie focused on a dystopian world where technology wreaked havoc, the public feared a similar future at the turn of the millennium.
Y2K (Year 2000) was the collective fear that computer programs would interpret 2000 as 1900, given it only read the last two digits of each year. People thought this glitch would cause planes to fall out of the sky and power plants to collapse. While none of this happened, it did create consumer panic that drove demand for electronic components as people upgraded their computers.
“I remember while working at a previous company, we were all instructed to replace our laptops before the year 2000. Our clients wouldn’t trust us if we didn’t,” said Kenny McGee, Managing Director/ CEO.
The late 1990’s also saw the normality of mobile phones. Companies like Nokia began producing devices at a very accessible price point.
All in all, this created the perfect storm of high demand and low supply for computer chips. Sound familiar? Like recent times, the late 90’s were a great time to sell computer chips. But, just as we are experiencing now, 2001 saw a levelling in the market.
You may consider holding on to your E&O component stock until the next perfect storm of high demand. But ask yourself, do you really want to wait another 22 years?
Why now is a good time to sell excess stock
You may have missed the small window to make a large profit from selling your overstock inventory, but there is no benefit in looking back. While the best time to sell your E&O stock was a few years ago, the second best time is now. Here are just a few reasons why.
The race against obsoletion
When was the last time you watched a VCR? Or better yet, when did you last watch a DVD? To say technology is moving fast is an understatement. In fact, the rate of technological advancements is only gaining momentum. Moore’s Law is a hypothesis that suggests electronic devices double in capability and speed every two years.
Technological advancements are fueled by smaller and more powerful microprocessors, which rely on even smaller transistors. Some transistors are only 15 nanometers in width (barely 15 times the size of a DNA molecule). The smallest ever functional transistor was a tiny one-nanometer gate transistor.
The velocity of obsolescence is palpable. Sitting on E&O stock for years, hoping for a better market, may render the components unwanted, yielding nothing.
Minimising climate change
Component Sense leads electronic manufacturers toward zero waste. We firmly believe a sustainable supply chain benefits people, the planet, and creates profit. The effects of climate change mean that major action must be taken to stop pollution, or our industry and global society face dire consequences. Some numbers worth knowing:
- Earth is 1.1°C hotter than it was in the 1800s
- Two-thirds of dangerous and extreme weather events over the last two decades were influenced by people
- As of 2022, Arctic sea ice cover is decreasing at 12.3% per decade
The effect of climate change on the global electronic supply chain is negative, and we are already experiencing many of these disruptions. Despite all of this, the generation of e-waste and pollution is still commonplace in our industry. We must urgently prioritise circularity and sustainable practices before it is too late.
Component Sense is proud of our efforts to promote a sustainable electronic manufacturing industry. Recently, we reached the milestone of planting 10,000 trees with a reforestation partner, One Tree Planted. We plant not one but two native trees for every order.
Electronic components depreciate over time, so redistributing excess stock sooner rather than later maximises potential returns. Over the last few years, you may have been able to return double the price you originally paid for components. In the current market, you should recuperate the cost price. Next year, depreciation may mean you garner even less.
If there is one thing a global pandemic taught the electronic manufacturing industry, it is how fragile our supply chains are. Ultimately, this leaves profit margins vulnerable as well. Financial planning is vital for supply chain management and controlling costs for better resilience.
Excess inventory management plays an essential part in planning and overall financial preparedness. Holding on to E&O stock for too long can lead to financial losses due to underutilised warehouse storage space and labour. You will also bring in revenue to better prepare for the future.
Component Sense’s excess stock solutions
When redistributing your excess, there is no time like the present. Component Sense’s global purchasing network is ready to buy you E&O stock for what it is worth. We understand that every OEM and EMS is different. So, we have several excess inventory solutions to make your electronic manufacturing more simple and profitable.
InPlant™ is our premium option. This complete excess and obsolete electronic component solution best suits our largest companies as it is entirely bespoke for your specific goal. Sales performance KPIs are updated in real-time.
With our revolutionary InPlant™ system, we can guarantee a minimum 100% return on your cost prices plus PPV. One of the main benefits of this approach is that stock remains under your ownership and is kept within your manufacturing plant. We then take care of the rest from afar without you needing to lift a finger. We can either utilise our team or train a member of yours within your manufacturing site.
Component Sense’s consignment option is market-leading, as we can uplift your E&O component stock for local storage within 24 hours while we market the parts. That way, you can take back your E&O components should you need them.
Component Sense partners with logistics company DSV, which has warehouse locations across the globe. DSV understands the needs of our customers and can act on behalf of us if necessary.
As soon as your inventory is processed and in our system, we can advertise it to our network of over 4500 brokers and excess stock buyers as ‘in stock’ rather than just ‘available’. Consignment means work for us, but effortless cash flow for you.
3. Outright purchase
Our outright purchase option benefits electronic manufacturers who need to sell E&O component stock quickly. If our financial offer for your parts is accepted, we can uplift and pay for it within 48 hours. The only thing you need to do is ship your stock to us.
Outright purchase also means you do not need to worry about stock checks. Component Sense takes excess off your hands with our efficient processes. This option is easy money, especially for smaller OEMs and EMSs.
Book a free consultation with Component Sense
We can not change the past, but we can change the present. Yes, the best time to redistribute E&O component stock was roughly two years ago, but the second best time is now.
By redistributing your E&O stock with Component Sense, you are reducing the harmful effects of e-waste and generating effortless revenue. Email to book a free consultation with one of our expert team members to discuss an option best suited to your company.