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Sourcing electronic components post-pandemic
Independent distributors are stepping in to assist manufacturers after several years of market volatility by finding buyers for surplus inventory and identifying ways to reduce electronic component costs
W
ith the unprecedented, once-in-a-lifetime disruption of the supply chain for electronic components in the
rear-view mirror, the market is finally beginning to stabilize. For the past three years, manufacturers found many critical electronic components hard to come by, watched as prices skyrocketed and lead times extend to almost a year in traditional distribution channels.
Thankfully, much of the dust has settled, but the work has only begun. With hard- earned lessons from the pandemic, many manufacturers are looking to secure their supply chain and prepare for what will be inevitable disruptions in the future. At the same time, they want to do so at reduced cost and capital outlay after paying a premium for electronic parts over the past several years.
“We just went through one of the biggest supply chain disruptions in history outside of a world war,” says Mike Thomas, who is vice president and global general manager at Classic Components, an independent distributor based in California, USA. “Now, things are starting to settle down. Interest rates have risen sharply, which is having the expected result of slowing the economy and so demand is down. However, the supply chain is still highly vulnerable to present and future disruptions.”
As a result, manufacturers are taking steps to secure the supply chain over the long run. One of the key strategies is to be less dependent on China and more diversified in sourcing the electronic components they will need to manufacture their products, says Thomas. There will also be a continued role for independent distributors. During the pandemic, independent distributors played a critical role in helping keep many manufacturers’ production lines
20 September2023
running, according to Thomas. He says that independent distributors can leverage their extensive expertise and decades of strategic relationship building to find alternate sources through regional authorised/ franchised distribution, manufacturer direct, or surplus/excess inventories.
Many manufacturers are sitting on excess inventory due to stockpiling parts and ordering from multiple sources to ensure delivery. After having to pay exorbitant prices over the past three years to secure parts, many manufacturers are also looking for ways to reduce costs further, even as prices drop. Fortunately, Thomas says these are traditional services that independent distributors like Classic Components have been offering for almost four decades.
Reducing excess inventory When manufacturers faced tremendous
Components in Electronics
lead times on parts, many double, triple, or quadruple ordered since they did not know who was going to deliver first, according to Thomas. “Now that all these parts were delivered, some manufacturers have excess inventory and aren’t sure what to do with it,” he says.
If it is true dead stock, an independent distributor like Classic Components can help liquidate the electronic components and get them off the books through various types of arrangements. The company has provided this type of service since 1985, and it can be initiated with a simple email list of surplus items with the original price paid. Classic Components then searches its extensive database to see if any other customers use those parts and can broker a deal between the parties.
“We have a global customer base and lots of information about the materials they
use,” says Thomas. “So, if a manufacturer has excess inventory, we hopefully can find an opportunity to sell it to one of our other customers.”
Classic Components can also list and sell surplus inventory on consignment with, or without, taking physical possession of the inventory.
“Essentially, after coming to a consignment agreement, the list of items is uploaded to our website. We offer complete transparency throughout the consignment process. As we receive inquiries, we share the information so you can decide whether to sell [your surplus] at the offered rate,” says Thomas.
According to Thomas, Classic Components may even opt to purchase the inventory outright to resell it later. “We buy excess inventory every day and can make purchases on a line-item basis,” he says.
www.cieonline.co.uk.uk
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