Feature: Components
the information so you can decide whether to sell [your surplus] at the offered rate,” says Tomas.
Classic Components may even opt to
purchase the inventory outright, to resell it later.
Protecting against disruptions Tomas argues that the cyclical nature of the market means manufacturers must prepare today for whatever might come next. “What happens in a year when the US
future disruptions. At the same time, they want to do so at reduced cost and capital outlay, aſter 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 Tomas. “We now see interest rates rising sharply, which is slowing the economy and so demand is dropping. However, the supply chain is still highly vulnerable to present and future disruptions.” In fact, change may be the only constant
in the industry. Even though it was an unparalleled event, Covid-related supply chain shortages are not the only disruption to affect global manufacturers in recent years. In 2018 there was a worldwide shortage of multi-layer ceramic capacitors (MLCC) when demand outpaced supply. At the time, 60% of the world’s production of MLCCs was controlled by three suppliers. Even now, there are components in short supply due to the limited number of suppliers, geopolitical trade tensions and ever-changing technology. 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 needed to make their products, says Tomas. He adds that many manufacturers are
sitting on excess inventory due to their stockpiling parts and ordering from multiple sources to ensure delivery. Aſter 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.
Some are looking to take advantage of financial services that some independent distributors provide to minimise cash outlay whilst ensuring access to inventory.
Reducing excess inventory When manufacturers faced tremendous lead times on parts, many double-, triple- or quadruple-ordered since they did not know who would deliver first, says Tomas. “Now that all these parts were delivered, some manufacturers have excess inventory and aren’t sure what to do with it.” 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 arrangements. Te company has provided this type of service since 1985, which can be initiated with a simple emailed list of surplus items with the original price paid. Classic Components 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. So, if a manufacturer has excess inventory, we hopefully can find an opportunity to sell it to one of our other customers,” says Tomas.
Classic Components can also list and sell
surplus inventory on consignment, with or without taking physical possession of the inventory. “Essentially, aſter 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
46 November 2023
www.electronicsworld.co.uk
Federal Reserve decides to lower interest rates?” he asks. “Tere is still an incredible amount of pent-up demand. When the economy begins to return to normal it may not be like it was during Covid, but a spike in demand will cause shortages again.” Another factor that could affect the
supply chain is the reshoring effort spurred by the passing of the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (the CHIPS Act). “Tey may not be saying it, but parts built in the United States are going to cost more than the same parts from Taiwan. At some point it will start to affect pricing structures.” To combat this and any other future
market volatility, Tomas advises partnering with a flexible independent distributor that can provide services authorised distributors can’t. “You want to have that relationship with a
partner that is flexible enough to shiſt gears in a moment’s notice,” explains Tomas. “You may be in shortage mode on Monday, and then Tuesday you have excess and want help selling it. Ten on Wednesday you decide you don’t want to sell any more and prefer we loan you money against it.” Flexibility also involves a level of
customisation, because no two deals are the same. “An independent distributor has to be flexible enough to adjust to whatever the manufacturer’s specific requirements are,” says Tomas. With the market seemingly in continual
flux, the only constant may be change. When manufacturers seek to successfully adapt to whatever comes their way in the market, partnering with a flexible independent distributor that can cater to their specific needs may be the best way to survive the next supply chain disruption.
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