October 12, 2011

Three Ways to Recover Value from Surplus Inventory III

Part Three of Series: Demand Opportunity

Converge offers three valuable ways for manufacturers to recover value from surplus inventory of excess electronic components. In this blog series, we have already learned about the outright buy and consignment options. Now we will take a closer look at the third option, which is taking advantage of our leverage program, also known as “demand” opportunity.

The demand opportunity option is very similar to consignment in that the seller receives the full benefits and expertise of Converge’s market intelligence, operational expertise, and extensive global network. In both arrangements, your company sends its surplus list to Converge and then we work to match the inventory to the demand that exists throughout our network. However, unlike the consignment program, Converge does not take physical possession of the inventory being sold. The products stay with their owners until Converge finds a potential buyer for them. If proposed terms and conditions of a sale are accepted, the products must come to Converge to undergo quality electronic component inspections before sales are finalized and the items are shipped to the buyers. All financial reconciliation and reporting are managed by Converge.

The demand opportunity is ideal for a company that has not previously worked with Converge. Perhaps you would like to evaluate our capabilities and performance on a smaller scale before you consider consignment? We completely understand, which is why we offer this program. Quite frequently, companies who start down this road will switch to the full consignment program as time goes by.

However, there are a few drawbacks to the demand opportunity option that companies should be aware of. Since Converge does not actually have electronics component inventory in our possession, we rely on the accurate descriptions that the sellers provide. Products received by Converge must be in the exact condition expected; otherwise, the status of a pending sale could be compromised. The seller may also be required to provide additional company resources to facilitate the flow of information and approvals during the negotiation phase.

In addition, valuable time (and potentially, money) can be lost in a leveraged transaction, because it takes longer for the product to get from the seller to the buyer. The consignment and electronic parts procurement program does not face these challenges, since Converge has the chance to inspect, sanitize, and prepare inventory for shipping before it is ever remarketed. When consignment products are sold, they can be shipped out the same day, which maximizes value for the seller.

There is no one “best” option for recovering value from surplus inventory. The one you should choose depends on your company’s specific situation. The important thing to remember is that there likely IS value in your surplus parts, even if you can’t use them. So before you scrap your surplus, give Converge a call. We will help you find a solution to recover the most value in the right amount of time.

If you missed Part One: The Outright Buy or Part Two: Consignment of this series, you can read them now.

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