Taking Control of Excess Component Inventory

Taking Control of Excess Component Inventory

Alleviating excess inventory can often be a time consuming task. Generally most companies do not clear their excess out right away, this is when it becomes a problem. The excess inventory management approach seems to be evolving with technology, thus, it is important to make sure you are aware of your options when it comes to managing excess inventory.

Previously, telecommunications included just network switches and phones. Many components that were used could be interchangeable in different product lines. Due to the Internet of Things (IoT) and sensor technology, everything is becoming connected. End products with complex structure and advanced capabilities are introducing new chips into the supply chain. Often times, they are designed specifically for one or a few products. As components’ life cycle become shorter, excess inventory is becoming a consistent issue for the supply chain. Thus, it is important to stay up-to-date with your excess inventory, so that you are not stuck with scraps once the technology becomes obsolete.

Advanced MP Technology (AMPT) emphasizes on maximizing the asset value of at-risk components through our customized programs for buying outright line item or lot purchases, consigning components, EMS inventory transfer and our 3 R Services (Reuse, Remarket and Recycle). As Stephanie Han, Global Excess Manager at AMPT states, “Our services in excess, many times are customized. Because each customer might want different basic key objectives for excess inventory, either it is recovering cash or using it in their own inventory. Therefore, we always tweak our excess program since each customer is a little different.”

When an OEM or EMS is looking for some fast cash for their excess components, selling outright either a whole lot or specific line items is the best approach to take. The advantages of selling a selected line item is that they generate better margins and have a competitive repurchasing value. Selling a whole lot immediately frees up space in storage facilities while requiring less time and effort than selling a specific line item.

Consigning components let our customers have cash recovery by allowing AMPT to sell to brokers, OEMs or EMSs that has no relation to the customer. After acquiring an excess list, we then house them in our facility to do quality control testing. When the parts are sold, our customer is given a check at the end of the month. Consignment can also help companies find solutions to shortage in a timely fashion. If AMPT keeps all of the OEM’s excess inventory, as shortages occur with their EMS the OEM would be able to have the components delivered within 24 hours, JIT (Just In Time).

When an OEM switches EMS, they don’t usually have the capability of taking all of the parts from the EMS, counting them, qualifying them and then shipping them to the new EMS. AMPT’s EMS inventory transfer program will help OEMs reduce the liability of losing product, while keeping the quality of the product intact.

(Reuse, Remarket and Recycle) is different than the programs above because AMPT is involved as one of the supply chain hubs for our OEM partners. In this way, AMPT can stock and sell, or ‘Reuse’, OEM’s entire excess inventory within the OEM’s supply chain to maximize the value of the inventory. Remarket occurs when OEMs can’t use the components within their own supply chain, then it is sold to the open market. As an expert in the open market, AMPT’s global network monitors the price of components on a real time basis to ensure the highest recover value. Recycle is the last resort for excess components when no one can use the parts. A certified 3rd party grinds the product to the basic component and cash value is given back to the customers on the raw material. The recyclers will provide videos of the components being ground to make sure that the parts don’t return to the market.

“Every component is different. Every component has a different market. Is that component used regularly? As in, is there going to be another customer that is willing to buy that? If a lot of people are supplying, you aren’t going to get the value that you are looking for.” Stephanie Han states. Inventory management is the key for P&L (Profit & Loss). Through these programs AMPT is able to minimize challenges caused by outsourcing, lean manufacturing, the Sarbox disclosure and obsolete issues. With our global sales, purchasing and warehouse facilities in the Americas, Europe and Asia, we have the ability to serve all qualified partners globally.