Feature


Once amaterials list is provided, the distributor should provide an immediate estimation of the currentmarket price


simply to be written off as ‘trial-and-error’ costs. Manufacturers often select complex components for very specific


designs. Shifting those parts outside the normal sales channels and processes is not generally part of amanufacturer’s everyday skill set. It should therefore come as no surprise thatmanufacturers generally fall flatwhen it comes to shifting their surpluses.


So what can OEMs do when they find themselves in the unlucky position of ending with a heap of unwanted stock?


Profit fromsurplus One way formanufacturers to get their parts back into the supply chain while guaranteeing the highest return on investment is by partnering with an independent distributor and entering an inventory solutions programme. Inventory solutions programmes take different forms, such as that offered by reputable distributor, America II.


The core principle of inventory solutions is that the distributor


holds on to excess inventory. It then utilises its expertise and contacts to sell the inventory and splits the revenue with the provider of the parts. At the heart of these programmes lies the aimto capitalise asmuch of the surplus as possible while forfeiting minimal product value.


The first rule of such partnershipsmust be trust and


transparency. In America II’s own consignment programme, for example, we offer partners full insight into the current status of sales figures and forecasts at any time in the sales process. In fact, all data is uploaded to our website in real-time, giving the customer private 100 per cent visibility of current stock, as well as providing real time sales and revenue split information.


Being up-front


about the value of the inventory product is also a key point and is should be the starting point of every


The distributor should performa series of inspections to ensure the quality of the stock


24 | November/December 2011


partner relationship. Once the OEMhas provided a full list of materials, the distributor should do his best to provide an immediate estimation of the current market price.


In any given inventory solutions programme, once thematerial


has been handed over to the independent distributor, the distributor should immediately performa series of inspections to ensure the quality of the stock. This provides themanufacturer with a full list of which components are to be put in inventory for sale and which components will be scrapped. It also ensures that both parties have insurance should the spectre of counterfeiting raise its ugly head.


This is themost efficientmethod of generating profit from


surplus parts, with the least risk. Despite the fact that the sale processmight take a while, the benefits far outweigh the alternative, which sees themajority ofmanufacturers still scrapping excess parts and taking the hit in the balance sheet.


Fluctuation is fact


In the present environment it ismore sensible than ever for electronics companies to consider alternative ways ofmoving their stock. Fluctuation is part of our industry: OEMs should deal with it intelligently.


As the global supply chain gets increasingly complex and


fragmented, augmented by an increasing number ofmade-to- order suppliers in the chain, order cycles are becomingmore and more extreme. A steep increase, followed by a sharp drop in order numbers, has been levelled out in a regular two-year succession. This requires the industry to rethink its production habits, yet the approach by supplier andmanufacture remains unchanged. The best forecast in the world is of no use when the supply chain is unable to react accordingly.


Furthermore, while the current global economic climate


aggravates excess inventory,many issues are unrelated to the financialmarkets. Rapidly expiring component life cycles is just one of various other reasons that leave OEMs with the sudden realisation of having to shift stock as quickly as possible.


Having an experienced, professional inventory solutions partner


at their sidewon’t prevent OEMs fromending upwith excess stock, but being in a position tomake a reasonable income fromthat excess stock, and keeping the business viable, is half the battle.


www.americaii.com www.electronics-sourcing.eu


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