Excess electronic component inventory will soon enter its peak season. After consumer demand dropped off in late 2022, production capacity remained high despite attempts to cut semiconductor manufacturing before it spun out of control. Unfortunately, these attempts are far easier said than done.
A common trend during the 2020-2022 chip shortage was double ordering. In simple terms, double ordering is making the same order with different suppliers in an attempt to circumvent long lead times. If one order fell behind, the other would arrive on time. The most significant risk of double ordering for original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing services (EMS) providers is gaining excess electronic component inventory.
That unwanted possibility has become a shared challenge amongst many OEMs, CMs, and EMS providers now that consumer demand has evaporated.
Excess electronic component inventory can be a big problem. Electronic components have a limited shelf life, require specific storage conditions, and decay in performance over time. Owning excess inventory is a considerable drain on a company’s capital spending, as costs to own specific warehouses, upkeep their storage conditions, and employ staff to run the facility. These additional costs are added to the already high price of the initial order.
Likewise, there are only a few methods to mitigate excess stock challenges once it occurs. For most organizations, the prevention of excess electronic component inventory is prioritized, with no formal strategy for offloading excess once it happens efficiently.
An often-recommended strategy is to utilize excess components in other products where they act as a form-fit-function (FFF) alternate or drop-in replacement (DIR). This option is very limited as there might not be any components where the excess inventory acts as a sufficient replacement that doesn’t require a costly redesign, or the excess owner is in a high-reliability industry such as healthcare or aerospace. Even if the excess is a DIR for a component, it would have to go through a stringent approval process to be used for high-reliability organizations.
Other prevention and mitigation methods include canceling orders if an original component manufacturer (OCM) allows it or using excess stock where possible as a company waits for demand to recover. These options are hardly as cost-effective as many OCMs in 2023, like TSMC, only offered to cancel existing orders for a price or renegotiate existing contracts. Others refused to cancel orders entirely. Secondly, demand may not recover fast enough to digest the rest of an organization's surplus stock.
The more advanced a chip is, the shorter its shelf life can be.
The best way to mitigate excess electronic component inventory efficiently and cost-effectively is through selling it.
Why You Should Sell Your Excess Inventory Online
For most organizations, selling excess inventory can be daunting, especially for small or mid-sized OEMs, CMs, and EMS providers. Large manufacturers are not without their struggles, and these companies can also benefit from selling their surplus inventory. However, in comparison, they often have a more extensive selection of options such as redesigns, trading inventory with others, or canceling orders with suppliers.
Small organizations might not have the same market presence to effectively sell their excess inventory fast enough on their own. Likewise, many buyers can be hesitant to buy excess from OEMs and CMs as important information, such as technical datasheets, might be less readily available. Small and mid-sized manufacturers may also lack the same large buyer audience as large e-commerce sites or top tier OEMs.
One of the most common options for manufacturers of all sizes that want to sell their excess electronic component inventory is by selling through a broker. Unfortunately, for many, the option of a broker isn’t an appealing one. Brokers come in all shapes and sizes, and while a broker possesses a more extensive toolset than an OEM or CM when it comes to selling excess, such as a network of buyers, the cut they take from a sale can be expensive.
After years of high costs and inflation, an OEM or CM might not be able afford a sales cut.
The best option for OEMs, CMs, and EMS providers of all shapes and sizes is to sell their excess inventory online through a digital marketplace among other vendors. A digital marketplace usually has the tools to aid in the successful sale of your excess stock alongside a team of experts that can help sellers along the way if they need it.
A large digital marketplace with thousands of verified and traceable vendors also assures buyers they buy genuine and authentic parts. The counterfeit electronic component risk rises when purchasing excess or through a third party, which can understandably make buyers wary. When partnering with a digital marketplace, the supplier is more often than not certified in 1SO 9001 standards with a strict quality management system (QMS) in place.
So, where can an organization sell its excess inventory that is 1SO 9001 certified, has thousands of buyers visiting daily, has a strong market presence within the industry, and can help sellers recoup the maximum return on their surplus stock?
Selling on Sourcengine
Sourcengine is the leading digital marketplace for electronic components and is now helping companies sell their unwanted excess stock and recoup their maximum return without hassle. As a global marketplace, over 100,000 professional buyers use Sourcengine for all their component needs. This lets you quickly expand your digital presence with Sourcengine’s existing market status through our indexed and discoverable product detail pages (PDPs). Your excess can be found on popular search engines like Google, Bing, and Baidu.
With millions of offers from over 3,500 vendors, you can find your much-needed parts and sell the ones you don’t simultaneously. Our analytic tools and RFQ capabilities use historical data, market trends, and supplier feedback from our global marketplace to ensure you receive the best return on your excess electronic component inventory. All you need to do to get started is give our international experts the manufacturer's name and the type of part you want to sell.
The pièce de résistance for companies looking to sell their excess on Sourcengine is the built-in Excess Estimator. A part of Sourcengine’s integrated bill of materials (BOM) management tool, Quotengine, the Excess Estimator allows users to quickly estimate the maximum return they can gain through selling their excess based on current market value. No more spending time determining the best price to sell your parts for. The Estimator can quickly give you a price to help you start selling.
Sourcengine is also ISO 9001 certified, meaning all components shipped through our warehouses undergo strict vetting and compliance mitigation process assures as part of our quality management system. Sourceability, Sourcengine’s parent company, maintains documentation of its adherence to all BIS/Federal standards, no matter how you choose to sell with Sourcengine. All documentation will be sent to you, the seller, or kept in our files.
To get started selling your excess electronic component inventory, all you have to do is visit Sourcengine’s Sell Your Excess feature. Once there, you can sell your excess in four ways depending on your company’s needs.
The first is through a focused bid feature for excess material liquidation. Your excess stock will be uploaded to Sourcengine among similar offers directly in front of the buyer. When buyers see your offer and want in, they can bid directly on your excess stock.
As the excess owner, you will decide the final sales price from the bid. Once the sale goes through, Sourceability handles the logistics, quality control, billing, and shipping while you maximize your resale price.
If you don’t want to utilize Sourcengine’s bidding model, there are three other participation models based on your needs.
Model 1: You get to feed the price and availability, which Sourceability then buys at your set price, which we then sell without markup. Sourceability only receives the excess stock when a transaction occurs.
Model 2: Sourceability purchases excess stock from you, the seller, at your set price, which is then marked up and sold. Sourceability only receives the parts when a transaction occurs.
Model 3: You ship and consign your excess stock to our Sourceability warehouse. You will continue to own the excess inventory on the books until it is sold, while Sourceability sets the price.
Excess electronic component inventory is expected to peak over Q3 and Q4 of 2023. However, prices are already beginning to consolidate for components hit the worst by excess electronic component inventory, such as DRAM. Industry experts and chip giants, including SK Hynix and Samsung Electronics, see the beginnings of recovery coming for the semiconductor industry. Artificial intelligence demand is fueling demand recovery, and as it arrives, excess inventory for a discounted price might be the first offer buyers search for.
Ready to get started selling on Sourcengine? Get an estimate for your excess or kick off your sales journey here.