August 31, 2011

What to Look for in a Surplus Remarketing Partner

In our last blog post, we talked about the need to mitigate surplus risk by partnering with an independent distributor to remarket your excess electronics components inventory. But there are many different kinds of “remarketing partners” out there – and not all of them are reputable.

When looking for an independent distributor to help you remarket surplus inventory on the open market, there are several key qualities that you should check for:

Independent distributors come in many shapes and sizes. The bigger the company, the more “tribal knowledge” you will have working to your advantage. Size does matter when it comes to recovering the most value for your inventory.

Commodity managers.
Generally speaking, commodity managers go hand in hand with size. A small, independent distributor will probably not have experts who are solely dedicated to studying one particular commodity’s global activities; larger ones probably will. Commodity managers devote their time to assembling complete market intelligence around one or two specific commodities and can provide a wealth of in-depth market knowledge to the traders working on your behalf. 

Around-the-clock workforce. We operate in a global economy, not one that ends at 5 p.m. in the time zone that we happen to live in. When it is 5 p.m. here, the workday is just beginning somewhere else in the world. A global independent distributor will have commodity managers working around the clock in different regions of the world, which enables that distributor to find a solution for your surplus parts in as little time as possible. In addition, because an independent distributor with an around-the-clock workforce never stops working, it never misses a beat when it comes to knowing about world events that may affect the market.

The need to remarket surplus inventory will always exist, whether there is a surplus market or a stable market. Despite their own best-laid plans, manufacturers will end up with more parts than they need for the current demand of their products. It is simply the cost of doing business in an unpredictable world. The good news is that solutions do exist to help mitigate surplus inventory costs, no matter which market currently prevails. By partnering with an independent electronics distributor you trust, your company will be better prepared to handle any surplus market challenges that come along.        

August 16, 2011

Mitigating Risk in a Surplus Market

In the electronic components industry, there is no debate over the definition of “surplus” inventory. However, what kind of inventory should be classified as surplus has evolved a bit over the last ten years. Formerly, electronic components were considered surplus after they had been in inventory for at least six to twelve months. Now, due to the rapidly changing pace of modern technology, parts can be considered surplus the same day they arrive. At that point, the owner must rush to “move” the surplus inventory before the parts become obsolete electronics. With new technology continually being introduced, the velocity of turning surplus electronic components into recovered value is critical. It is more important than ever to move quickly to try to recapture value from the parts you no longer need.

There are substantial financial risks for any company that finds itself with surplus inventory in a surplus market. A manufacturer could lose millions of dollars, depending on the volume of surplus inventory it owns and the original purchase price, or established cost of the components. The majority of the time, the company will not be getting that entire established cost amount back.

It is possible to find a buyer for surplus parts - and someone to buy obsolete parts - in a saturated market with the help of an expert with vast market knowledge and global connections. A reputable independent electronics distributor mitigates risk and expense in a surplus market by helping manufacturers recover value from their surplus inventory. Of course, one must understand that the resale price may be less than the original price, but it is better to recover some of the loss on surplus inventory than to sit on it indefinitely. Timing is a vital part of the remarketing process. When it comes to surplus inventory, the company that goes to market with a specific type of component first is likely to see a better-value return than are the companies that remarket the same component in the days that follow.

So what qualities should you look for when choosing a surplus remarketing partner? Good question. We will give you some important tips in our next post. Stay tuned!

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