Due to unpredictable fluctuations in customer demand from the marketplace and the early termination of manufacturing projects most manufacturing companies typically have Excess and Obsolete stock at around 10% of their annual spend or 1% of PCB Assembly revenues. This drives additional cost through working capital and stock holding charges which negatively impact both profit margin and warehouse space availability.
Selling Excess and Obsolete stock is often a task that fills Materials Professionals with dread. Many broker companies are prepared to “relieve” you of this burden with a derisory cash offer or “cherry pick” the best items.
- Cash offers are usually around 5 – 10%.
- The cherry pick option typically returns only 10% – 30% of the original parts value and leaves 90% of the stock clogging your warehouse.
Component Sense recognise this issue and have developed a solution for our customers’ which allows the exclusive marketing of all excess and obsolete electronic component stock before it has time to depreciate.
Some OEM and EMS companies try to market their stock through multiple re-sellers thinking that it gives them better exposure in the market place. This strategy is rarely effective as one supplier is played off against another driving the price and your return, down.
Marketing your stock exclusively for you allows us to control the market on your behalf and demand the highest price possible.
Although there are exceptions to the rule, as components become older, the value of your E&O stock reduces over time so speed is of the essence. It is also the case that very recent stock can often be moved more quickly as it has a recent date code and will meet with all current regulatory requirements.
In true partnership with our clients Component Sense has many examples where we have delivered not only 100% cost recovery on some parts but also significant PPV.