April 18, 2012

An Inside Look at Electronics Commodity Management

When technology manufacturers and service providers need to procure hard-to-find electronic components or recover value from excess electronics components inventory, they often work with an independent distributor like Converge. In addition to these solutions, some independents also offer a valuable resource that few other sources can provide: in-depth market intelligence. 

Converge has a team of dedicated global commodity managers who are solely focused on knowing everything about their specific electronic parts procurement commodities – who makes the parts, who uses the parts, what they’re selling for, and how those price points are affected by world events. This knowledge makes them an invaluable resource to buyers and sellers. 

To offer more insight on what makes a commodity expert, this post is structured in a question-and-answer format with Mike Gately, director of commodity management at Converge.

Q. First of all, do all independent electronic component distributors have commodity managers?

A. Most of the larger independent electronics distributors have some form of commodity management. At Converge, we divide our commodity management team into major commodity categories – such as memory, CPUs, ICs, LCDs, and storage – with each having an assigned manager in all three global regions. Of course, we have buyers and sellers who specialize in non-commodity electronic products as well. Franchised distributors also have commodity managers. They might refer to them by different titles, such as product managers or product specialists.

Q. What makes someone a commodity “expert”?

A. You have to know products, and you have to fully understand the market of the commodity that you’re managing. Understanding the market includes pricing, availability, demand, liquidity, and so on. And the commodity manager has to constantly watch what’s happening in the global marketplace. They have to be able to spot trends, know when supply is tightening, and recognize when demand is ramping up or slowing down.

Q. How do you become a commodity expert?

A. Do you take a class and study to become a commodity expert? No. Most of the commodity experts at Converge advanced into the role through years of experience in the electronic components industry. Everyone takes different paths – some as buyers, some as sellers, and some as both. I was initially hired in sales and then moved quickly into a position in purchasing. I also held key roles as group leader, purchasing manager, and commodity manager before becoming director. All members of the team have worked in different roles where we became accustomed to a certain product or commodity type we were buying or selling, and we dedicated ourselves to learning the intricacies of that market. Like anything else, the more experience and insight you have, the more of an “expert” you become.

Q. Do most of Converge’s customers have commodity managers of their own?

A. OEMs and CMs have some form of a commodity manager. However, their focus can be limited more to the parts they use, their internal demand, and what their suppliers are telling them about the marketplace. Converge commodity managers have a broader scope of market knowledge because we are looking out into the global marketplace 24-7-365 and managing components that many different customers are using or selling.

Q. So why is it beneficial for OEMs and CMs to work with an independent distributor that has commodity experts?

A. Because we look at the market from a different perspective than they do and therefore can offer our customers a wider view of what’s going on in the world that could affect supply and demand. Companies can really benefit from our market intelligence, especially in exception-based scenarios. They can use our expertise when they need to know what their inventory is worth, what’s marketable, what’s liquid, and what needs to be scrapped – no matter which commodity they’re dealing with. They can also trust that finding parts from a reliable source during a shortage electronics issue is part of our unique selling proposition. And when customers need to remarket excess electronic components, they know that our commodity experts have the insight and connections to identify a buyer.

Q. What is the most satisfying aspect of your job as commodity director?

A. Putting a deal together that fulfills the needs of both the supplier and the buyer. At the end of the day, we’re a service-based company, so if our team can help customers alleviate supply chain problems on both ends of a transaction, that’s a good feeling and a win-win for everyone. 

Mike Gately
Director of Commodity Management

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