ProcurementPro: The practical guide to excess inventory

This e-book has been compiled to help procurement professionals better understand the complex landscape of excess inventory. Excess inventory is not a new phenomenon, but its impact has grown in a market that continues to fluctuate between shortage and oversupply.

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THE PRACTICAL GUIDE TO EXCESS INVENTORY

EDITOR’S NOTE CONTENTS EDITOR’S NOTE

Managing Editor: Paige Hookway paige.hookway@starmediaservices.co.uk Ad Sales: Charlotte Morgan charlotte.morgan@starmediaservices.co.uk Production Manager: Sherilee Holliday sherilee.holliday@starmediaservices.co.uk Publishing Director: Steve Regnier steve.regnier@starmediaservices.co.uk

Head Office: Tythe Barn,

Carriers Road, Cranbrook, UK TN17 3JU Tel: 01622 871944

THE HIDDEN COST OF KEEPING EXCESS STOCK

The manufacturing and technology industries are constantly evolving. Characterised by fast-paced tech evolutions and decreasing component lifecycles, companies often end up with surplus electronic components that are no longer needed for production. Holding surplus stock has several cost implications on a business.

SOS ELECTRONIC: 30 YEARS OF RELIABILITY AND INNOVATION

As global supply chains recalibrate from a period of over-ordering and volatility, procurement leaders are facing the challenge of surplus electronic components. Inventory that once symbolised preparedness during the shortage era has become a hidden drag on balance sheets, warehouse efficiency, and sustainability goals. COLLABORATIVE RECOVERY: REDEFINING PARTNERSHIPS IN SURPLUS MANAGEMENT In 2025, SOS electronic, a member of the Conrad Group, is celebrating its 30th anniversary. Founded in Košice, Slovakia, a city of 250,000 people, the company has grown into a respected international leader in electronic component distribution. SOS electronic is trusted not only by customers around the world, but also by a network of global component manufacturers with renowned names.

WHAT TO LOOK FOR IN A TRUSTED DISTRIBUTOR

Trusted distributors share one thing in common: the ability to combine product availability, transparent pricing, and dependable logistics into a seamless customer experience – qualities that TME (Transfer Multisort Elektronik) consistently delivers worldwide. There’s a very quick answer to what to do about excess inventory: plan better to avoid amassing it. Excess inventory often ends up on the grey market. There are plenty of brokers who are willing to buy it for a knock down price then sell it, often without any provenance or proper paperwork. Some of these brokers are genuine and are relied upon to help customers during shortage periods; others are much less professional. BUYING FROM SURPLUS INVENTORY SUPPLIERS IS A RISKY BUSINESS

I n the electronics supply chain, few topics spark as much debate among buyers as excess inventory. For some, it represents a valuable source of affordable, readily available components; for others, it signals risk – raising questions about traceability, reliability, and long-term support. For procurement professionals navigating today’s uncertain market, understanding what excess inventory is and when it can (or should) be used is essential to making informed, responsible sourcing decisions. Excess inventory typically refers to electronic components or finished goods that remain unsold after production requirements or customer demand have shifted. These parts might originate from manufacturers, contract assemblers, or distributors that ordered more than required, or EDITOR’S NOTE

from design changes that rendered older components redundant. In a fast- moving industry where obsolescence cycles are short and forecasts are often volatile, excess stock can build up quickly. For buyers, sourcing from excess inventory channels offers clear potential benefits. Chief among these is cost. Surplus components are often available at lower prices than those in traditional franchised channels, making them attractive when budgets are tight or when buyers are seeking value in non-critical applications. Availability is another advantage: during periods of allocation or extended lead times, surplus markets can provide access to components that may otherwise be difficult – or impossible – to secure through authorised distribution.

However, purchasing from excess inventory sources is not without risk. One of the primary concerns is traceability. Components that move through secondary or unauthorised channels may lack full documentation of their origin, storage conditions, or handling. This raises the risk of receiving parts that do not meet specification, have been improperly stored, or, in the worst cases, are counterfeit. Quality assurance processes in the secondary market vary widely, and without rigorous testing and verification, there is no guarantee that components will perform as expected. Another challenge lies in warranty and liability. Components purchased outside authorised channels are unlikely to carry manufacturer warranties or after-sales support. If a problem arises later in production or field operation, the buyer – not the supplier – may bear full responsibility for the cost of replacement and rework. For industries with stringent regulatory or reliability requirements – such as aerospace, medical, or automotive – this can make surplus purchases especially risky. That said, not all surplus suppliers operate the same way. Many reputable companies specialise in managing, testing, and redistributing excess stock responsibly. These suppliers invest in advanced inspection equipment, maintain traceability documentation, and comply with industry standards such as AS6081 or ISO 9001. Working with such partners can mitigate much of the risk traditionally associated with the secondary market. Understanding what defines a trusted distributor is therefore critical. A reliable partner should be transparent about the source and condition of its inventory, offer full component traceability, and maintain stringent quality assurance procedures, including electrical testing and visual inspection. It should also provide certification and maintain industry-recognised quality accreditations. Communication is key: trusted distributors work closely with

customers to understand their needs, assess risk, and propose appropriate sourcing strategies – particularly when alternative components or cross-referenced parts may be a better solution. The current market remains influenced by the after-effects of the pandemic, rapid technological change, and ongoing geopolitical tensions. After years of shortages, many suppliers are now holding higher-than-usual levels of stock. This imbalance is driving growth in secondary trading but also prompting renewed scrutiny of where components come from and how they are managed. Buyers are increasingly cautious, demanding more transparency, better testing, and stronger assurances of authenticity from all sources. This e-book has been compiled to help procurement professionals better understand this complex landscape. Excess inventory is not a new phenomenon, but its impact has grown in a market that continues to fluctuate between shortage and oversupply. Through the perspectives of manufacturers, distributors, and supply chain specialists, this collection aims to give readers a clearer picture of what excess inventory means for sourcing strategies, supplier relationships, and long-term business resilience. Whether you are exploring surplus markets for the first time, seeking to mitigate risk, or evaluating how excess stock might be leveraged more effectively, this e-book provides practical insight and guidance grounded in real-world experience.

Paige Hookway Managing Editor, Procurement Pro Paige Hookway

THE HIDDEN COST OF KEEPING EXCESS STOCK

during these periods will see a greater depreciation than other inventory. Some of the stock will only sell for a fraction of the original purchase price, and with no immediate signs of a market recovery, this number may only depreciate further. As time goes on the parts may reach end of life (EOL) or become obsolete, or – if demand is low enough – even face

Holding surplus stock has several cost implications on a business. DEPRECIATION AND OBSOLESCENCE All electronic stock will face depreciation as time goes on, but due to the inflated costs during allocation markets, components purchased

far beyond just the purchase price. Inventory carrying costs can quietly add up, impacting profitability over time. INCLUDED IN THE INVENTORY CARRYING COSTS ARE: • The cost of the capital • The inventory service cost • The inventory risk cost • The storage space cost The capital costs are made up of the money invested in the inventory and the interest added. The risk cost of inventory is the shrinkage of inventory, theft, administrative errors, and, most importantly in this case, value depletion. Storage space cost encompasses the rent paid for your warehouse space,

instant obsolescence in favour of more profitable components. While in some cases obsolete stock may increase in value, it is risky to keep it. It would be a gamble to hold the stock, hoping for a shortage to boost the price, which is rarely the case. It is also likely that newer designs may replace the parts altogether, meaning these parts never regain any value. INVENTORY CARRYING COSTS The cost of holding onto stock goes As time goes on the parts may reach end of life (EOL) or become obsolete, or – if demand is low enough – even face instant obsolescence in favour of more profitable components.

Helping You Unlock the Value of Your Surplus Inventory

Variety of selling options, offering cash purchase or consignment choices.

International network and global reach, finding an appropriate buyer for your surplus stock.

Tailored services to meet your business and warehouse needs.

Cyclops Group is an established industry leader in the sourcing, management and delivery of obsolete and hard-to-find electronic components.

+44 (0)1904 415 415 info@cyclopsxs.com www.cyclopsxs.com

THE HIDDEN COST OF KEEPING EXCESS STOCK

decisive action. In tight markets, being able to move quickly can be the difference between staying ahead or falling behind. OPPORTUNITY COST The longer you hold onto excess stock, the more you lose in terms of what that money could be doing elsewhere. The opportunity cost is the unseen loss of alternative investments. For example, capital tied up in ageing components could instead be used to purchase in-demand parts, upgrade equipment, fund product development, or take advantage of supplier discounts. Beyond financial investments, there’s also a strategic cost: delayed decisions, missed partnerships, or foregone market opportunities. These losses may not be visible on a balance sheet but can significantly impact long-term growth. CONCLUSION Holding onto excess electronic inventory might seem like a low-risk move, but as shown in this article, it can come with a range of hidden costs, from financial strain to missed opportunities. While selling depreciated stock may feel like admitting defeat, delaying that decision often leads to greater losses. When you consider the cumulative impact on your cash flow, operations, and strategic agility, selling your surplus inventory could save you more than you realise. At Cyclops, we’ve been helping our customers unlock the value of their excess inventory for the past 30 years. Contact us today to learn more about our excess management and selling options.

Storage space cost encompasses the rent

paid for your warehouse space, heating, lighting, transportation, and any other costs for maintaining the physical facilities.

heating, lighting, transportation, and any other costs for maintaining the physical facilities. Handling and maintenance will be variable depending on the volume and type of stock held. WAREHOUSE SPACE AND STOCK MANAGEMENT Aside from financial costs, the physical impact of keeping excess stock can also have a negative effect on your business. If storage space is taken up by unnecessary inventory, it means there is less space available for the stock you actually need. It also means that there is less flexibility when it comes to manoeuvring stock, more time spent rotating inventory, and less space to allocate to production. It will take staff longer to locate the stock they need, and there will be more management overhead when it comes to admin and stock audits. IMPACTED CASH FLOW Free cash flow is crucial for the smooth running of any business. Whether it’s covering unexpected expenses, responding to a sudden spike in demand, or investing in urgent repairs or equipment, having liquid assets available is essential. When capital is tied up in slow moving stock, it reduces your financial flexibility. This can leave your business vulnerable to external pressures or internal demands that require quick,

Author: Dionne Pentland, Manager, Cyclops Excess

SOS ELECTRONIC: 30 YEARS OF RELIABILITY AND INNOVATION IN THE WORLD OF ELECTRONICS In 2025, SOS electronic, a member of the Conrad Group, is celebrating its 30th anniversary. Founded in Košice, Slovakia, a city of 250,000 people, the company has grown into a respected international leader in electronic component distribution. SOS electronic is trusted not only by customers around the world, but also by a network of global component manufacturers with renowned names such as Quectel, Sensirion, 2J Antennas, Wago, and Traco Power. The company supplies components to production facilities in virtually every European country and in a total of 110 countries worldwide.

T hanks to its broad product portfolio, the components supplied by SOS electronic are found in applications such as transport and automotive technologies, medical devices, retail, and agriculture. They are also integral to solutions in smart cities, smart buildings, communication, and security systems. “We started out as a group of electronics enthusiasts with big dreams and a single brick-and-mortar branch. Today, we are part of one of the largest distribution platforms in Europe, with branches in five countries and communication in eight languages. But we’ve never lost our enthusiasm or the friendly relationships that help us build trust with our customers,” said Ján Seszták, Managing Director of SOS electronic. DIGITALISATION AS THE FOUNDATION OF EFFICIENT DISTRIBUTION Digitalisation and innovative e-commerce solutions are key elements of SOS electronic’s business model. The company prefers a strategic approach that combines technological advancement with a strong emphasis on personal contact and technical expertise. It deliberately avoids blindly adopting new technologies. “We see technology as a tool, not a goal. That’s why we continue to deliver value to our business partners based on the principles our company was built on. The result is faster decision-making, easier purchasing, and support from a real person when the customer needs it,” explained Seszták. The electronic component market faces significant fluctuations in material availability and pricing. Despite this, SOS electronic has managed to maintain stable supply chains. “Stability is a luxury today. We consider it our commitment. Customers rely on us even when the market is

unpredictable. The current turbulence in sourcing affordable materials only reinforces how vital distribution is in the supply chain,” added Seszták. As part of its distribution services, SOS electronic offers full technical support, logistics solutions, and smart e-commerce tools. According to Seszták, clients are not only looking for better prices but also support in finding the best and most feasible solutions for their production. CERTIFICATION MEANS MORE THAN QUALITY – IT MEANS STABILITY AND SECURITYURITY SOS electronic has long held the ISO 9001 quality certification. All internal processes, from procurement and warehousing to customer service, are systematically managed and regularly audited. This internationally recognised

30 YEARS OF RELIABILITY AND INNOVATION IN THE WORLD OF ELECTRONICS

CONRAD GROUP MEMBERSHIP – AN OPEN GATEWAY TO THE WORLD As a member of the Conrad Group, SOS electronic brings specialisation in industrial customers, technical know- how, and a personal approach that complements the group’s extensive portfolio. Conrad Electronics was founded in 1923 as a family business headquartered in Germany. From its humble beginnings as a small mail- order company for components, it has grown into one of Europe’s most important electronics distributors. “Being part of the Conrad Group has opened new doors for us. At trade fairs and exhibitions, we’re not just exhibitors, we’re partners. Being a member of the group and having 30 years of successful operations behind us is also a great responsibility for the future. That’s why we are prioritising investments in process digitalisation and innovation in our distribution network,” concluded Seszták.

standard guarantees long-term service quality. Equally important is the AEO (Authorised Economic Operator) certification, which SOS electronic obtained from the customs authorities of the European Union. This certification signifies that the company is a trusted and secure partner in the international supply chain. It also enables faster customs processing, fewer inspections, and smoother deliveries, advantages that directly translate into more reliable and efficient logistics for customers. The company’s economic stability is also regularly confirmed by independent assessments from the renowned agency Dun & Bradstreet, which monitors creditworthiness, payment discipline, and financial reliability. “For us, certifications are not just a formality. They reflect how we think, how we work, and the overall direction of our company. They represent our culture of quality, transparency, and responsibility,” added Seszták.

Author: Jana Lukáč Krajná

COLLABORATIVE RECOVERY: REDEFINING PARTNERSHIPS IN SURPLUS MANAGEMENT As global supply chains recalibrate from a period of over-ordering and volatility, procurement leaders are facing the challenge of surplus electronic components. Inventory that once symbolised preparedness during the shortage era has become a hidden drag on balance sheets, warehouse efficiency, and sustainability goals. In today’s market – defined by geopolitical tension, technology shifts, and rising capital costs – the companies that thrive are not those with the least surplus, but those that know how to extract value from it through collaboration.

T raditional liquidation or auction- based methods of mitigating surplus provide quick relief but deliver diminishing returns. They often sacrifice visibility, create traceability gaps, and risk exposing products to unauthorised resale channels. The outcome is transactional efficiency at the expense of strategic control. Forward-looking organisations are instead embracing collaborative recovery: a structured, partnership- driven model that transforms static inventory into a managed, traceable, and revenue-generating asset.

THE SHORTCOMINGS OF TRANSACTIONAL LIQUIDATION When surplus inventory is treated as an afterthought, organisations lose more than financial value – they risk reputational and operational exposure. Quick liquidation may appear to free up capital, but it frequently leads to several hidden risks: • Loss of visibility and control: once parts leave a facility through secondary channels, chain-of- custody is often broken. This lack of traceability can create downstream

reframes inventory optimisation as an integrated partnership among original equipment manufacturers (OEMs), electronic manufacturing services (EMS) companies, and trusted distributors. At its core, this model is about alignment. Instead of pushing surplus into opaque secondary markets, organisations work with vetted partners which operate under defined governance frameworks, shared KPIs, and mutual accountability. The focus shifts from liquidation to lifecycle management, ensuring that every component, whether active or obsolete, is handled with visibility, traceability, and purpose.

quality or compliance issues, particularly in regulated industries like aerospace, defence, and medical • Reputational and brand risk: components sold into uncontrolled markets may reappear in substandard or non-conforming assemblies, undermining the integrity of original manufacturers • Minimal financial recovery: compressed liquidation timelines usually lead to below-market returns. Without demand-matching intelligence, companies miss opportunities to connect surplus with verified buyers who genuinely need those components In short, traditional clearance models solve the short-term problem of freeing up space and reducing immediate carrying costs, but at the expense of long-term resilience and governance. THE RISE OF COLLABORATIVE RECOVERY The modern supply chain requires a more sophisticated approach – one that recognises that surplus management is not a disposal process but a continuous, value-driven operation. Collaborative recovery

A collaborative recovery ecosystem connects three strategic objectives:

• Financial optimisation through revenue-sharing or consignment programmes that turn idle stock into a recurring return • Risk mitigation through certified handling, testing, and resale that preserve brand integrity and compliance • Sustainability alignment by supporting circular-economy goals and reducing e-waste through reuse and redeployment

COLLABORATIVE RECOVERY: REDEFINING PARTNERSHIPS IN SURPLUS MANAGEMENT

BUILDING THE FRAMEWORK FOR COLLABORATION

Establishing a partnership-based surplus model requires both operational discipline and digital maturity. Leading organisations apply the same rigor to recovery processes that they use for sourcing and supplier management.

1. ESTABLISH LONG-TERM AGREEMENTS WITH ACCOUNTABILITY Strategic surplus-recovery partnerships are built on

3. IMPLEMENT MULTI-LAYER QUALITY ASSURANCE Surplus recovery should never compromise reliability. Certified testing protocols – such as AS6171, AS9120, and ISO/IEC 17025 – ensure that components reintroduced into the market meet the same quality standards as new parts. This process protects both buyer and seller while upholding industry compliance requirements. 4. DESIGN PERFORMANCE- BASED KPIS Procurement leaders should measure the success of recovery programmes not only in financial terms but also in environmental and operational impact. Metrics such as recovery rate, resale cycle time, carbon reduction, and traceability compliance provide a comprehensive view of performance and encourage continuous improvement.

continuity. Instead of one-time transactions, long-term contracts define service-level expectations, ownership models, and audit rights. These agreements create consistency in pricing, handling, and performance reporting, which are essential for governance and compliance. 2. INTEGRATE DIGITAL COLLABORATION PLATFORMS Modern recovery depends on data transparency. Digital tools provide real-time tracking of component movement, demand matching, and ownership validation. Integrated dashboards allow procurement, finance, and quality teams to monitor recovery progress simultaneously, creating a single source of truth.

THE FUTURE OF PROCUREMENT PARTNERSHIPS The next generation of supply chain performance will be measured not only by cost savings or supplier diversification but by how effectively companies manage and monetise what they already own. Collaborative recovery embodies that evolution – an approach where data, partnership, and accountability converge to drive measurable business value. As global supply networks grow more fragmented and regulatory oversight intensifies, procurement leaders must think beyond traditional efficiency metrics. The ability to convert

surplus into a strategic advantage will increasingly define operational maturity. By replacing transactional clearance with structured collaboration, organisations create a transparent, financially sound, and sustainable model for managing excess. Tomorrow’s most resilient supply chains won’t just move components efficiently – they’ll recover their value intelligently.

Frank Cavallaro , CEO, A2 Global Electronics

WHAT TO LOOK FOR IN A TRUSTED DISTRIBUTOR

In today’s volatile supply chain landscape, the role of a trusted distributor has never been more critical. The second half of 2025 brings a complex mix of geopolitical and economic pressures. New regulatory requirements are reshaping manufacturing practices, while demand for AI, IoT, 5G, and EV components continues to surge. In this environment, distributors must go beyond standard service, balancing supply chain resilience, sustainability compliance, and secure, ethical sourcing.

RELIABILITY IN THE FACE OF SUPPLY CHAIN CHALLENGES

Global supply chain disruptions have highlighted a simple truth: a promise is only as good as the ability to keep it. For B2B customers, reliability means orders that ship on time and stock levels that match what’s displayed online.

Trusted distributors share one thing in common: the ability to combine product

logistics centres and an always up- to-date online catalogue that reflects real inventory levels. In categories under heavy demand pressure, such as microprocessors, power modules, and AI-optimised chips, where lead times can reach 40 weeks, such reliability directly safeguards production schedules.

availability, transparent pricing, and dependable logistics into a seamless customer experience

BREADTH OF OFFER AND AVAILABILITY A broad product range reduces

With trade policies shifting and regional instability affecting production, TME mitigates risk through diversified sourcing and strong supplier relationships across multiple continents. The company ships over 5,000 parcels daily to more than 150 countries, with many orders dispatched within 24 hours. This capability is backed by two advanced

vulnerability to shortages. With over one million products in its catalogue, TME gives procurement teams the flexibility to source both standard and specialised components from a single, trusted partner.

High availability is supported by strategically located logistics hubs,

WHAT TO LOOK FOR IN A TRUSTED DISTRIBUTOR

knowledgeable support can be a differentiator. TME’s office in Atlanta, opened in 2019, provides a dedicated point of contact for North American customers, delivering technical guidance and responsive service. This local presence ensures that when customers face regulatory changes, supply uncertainty, or design challenges, they can speak directly to experts. QUALITY ASSURANCE AND SECURITY Quality control is non-negotiable in professional procurement. TME holds recognised quality certifications and guarantees zero counterfeit products in its supply chain. Every shipment is vetted for compliance with international sanctions and ethical trade rules, ensuring components are not supplied to prohibited industries or entities. TME also places strong emphasis on data protection, safeguarding both transactional and technical information throughout the procurement process. COMMITMENT TO SUSTAINABILITY AND EDUCATION A trusted distributor looks beyond immediate sales to long-term impact. TME invests in sustainable operations, maintaining green spaces and beehives at its logistics centres, and reducing its environmental footprint through energy-efficient infrastructure. Through its TME Education programme, the company supports the next generation of engineers and technicians, aligning with the industry- wide push toward low-emission technologies and renewable energy adoption. ADDED VALUE FOR REGISTERED CUSTOMERS Beyond products and logistics, TME enhances customer experience through purchasing tools such as EDI, API,

ensuring smooth and consistent order fulfilment. Many products come with no minimum order quantity, and where minimums exist, they remain manageable – a critical advantage in a market still digesting surplus inventory from previous demand peaks. This agility allows customers to fine-tune procurement strategies in response to trends like reshoring and nearshoring, which are gaining traction as companies seek to reduce geopolitical risk. TRANSPARENT AND FAIR PRICING In an era of stagnant growth and aggressive price competition, transparency in pricing is essential. TME provides up-to-date prices directly on its website, always reflecting current market conditions and available stock. Prices are shown in multiple currencies, and any volume-based conditions are clearly indicated. This approach ensures clarity and predictability for procurement teams, without hidden fees or complex negotiations. For larger projects or high-volume orders, TME remains open to individual arrangements, encouraging customers to reach out for tailored advice and price negotiations.

The ability to trade and invoice in multiple currencies reduces

administrative friction for global teams. For registered customers, TME supports advanced purchasing integrations such as EDI, API, and PunchOut catalogue solutions, which streamline procurement workflows, minimise paperwork, and enable automation of routine tasks. In addition, TME is also present on leading procurement platforms such as Luminovo and CalcuQuote, making it easier for clients to integrate sourcing directly into their design and purchasing processes. TECHNICAL SUPPORT AND LOCAL PRESENCE In high-pressure procurement environments, timely and

and PunchOut integrations. These solutions are complemented by personalised service and preferential pricing, helping companies save time, reduce administrative overhead, and integrate procurement seamlessly into their own systems. In a market shaped by geopolitical tensions, price pressures, evolving regulations, and accelerating

technological demand, a trusted distributor is more than a supplier – it is a strategic partner. TME exemplifies how these qualities can be integrated into one organisation – offering customers not just components, but the confidence to move forward in a complex and competitive world.

TME’s office in Atlanta, opened in 2019, provides a dedicated point of contact for North American customers, delivering technical guidance and responsive service

BUYING FROM SURPLUS INVENTORY SUPPLIERS IS A RISKY BUSINESS There’s a very quick answer to what to do about excess inventory: plan better to avoid amassing it. Excess inventory often ends up on the grey market. There are plenty of brokers who are willing to buy it for a knock down price – the going rate is maybe 10% of the face value – then sell it, often without any provenance or proper paperwork. Some of these brokers are genuine and are relied upon to help customers during shortage periods; others are much less professional, resulting in components being stored poorly, and ultimately leading to counterfeit components entering the supply chain.

T here’s no doubt that a big say: “I’ll take it off your hands, and I’ll store it for you and I’ll upload it onto a website, and I’ll pay you as I sell it”. This ‘pay as you go’ approach is very popular, but the parts are often really old and have not been well looked after, so the quality is effectively junk. So, my number one message to purchasers is ‘buy correctly and buy from an approved source’. underground market of surplus dealers exists. Typically, they will In order to do that, companies must be much more diligent in their forecasting, but I know that is more easily said than done. A new product launch can go much better than expected … or much worse. At Anglia, we employ smart buying techniques based on analysing sales and demand very closely. We have AI crawling all over our large inventory to make sure that it comprises what our customers are most likely to require. Therefore, we have very little excess inventory. What we are left with, we usually manage to sell slowly over a period of time, complete with CoO

(Country of Origin) statements and date codes. What we can’t sell, we scrap, but because of our tight controls, last year, for example, we only had to scrap 0.5% of our total year’s stock. However, accepted practices, as well as necessary rules and regulations, can make things very difficult. For example, the big contract manufacturers have been advised by their customers – the huge consumer and automotive giants – that they don’t want inventory that is over two years old, despite the fact that because of long lead times, sometimes when an order is ready for shipment the parts will be more than two years old. This means that the banks won’t lend against inventory that is over two years old. We’re campaigning, with ECSN and others, to increase this period to three years. The date code is mostly an issue for semiconductors – resistors, for example can, counter-intuitively, get more stable as they age. Of course, what nobody wants is to be left with a lot of e-waste to dispose of. What little Anglia has to scrap, we do so responsibly and professionally

In order to do that, companies must be very much more diligent in their forecasting, but I know that is more easily said than done. A new product launch can go much better than expected … or much worse.

in accordance with WEEE legislation, wherever possible, using facilities that can reclaim the precious metals. You can trace a lot of the problem of surplus inventory back to the big contract manufacturers in Asia, who routinely buy 20% more than they need, relying on the grey market to offload any unwanted parts. This makes it difficult to determine what the market demand really is. It’s very easy to get trapped into going round and round in circles. Big disties need to pay quarterly dividends, so they run lean on inventory. This creates shortages, so customers are forced to buy from non-authorised sources. This means that there is always a ready market for brokers. Because they can always offload into the grey market, big contract manufacturers over-order. This leads to poor market visibility and over- production. On the other hand, customers want stock that’s less than two years old and often have an imperfect view of their real needs. This leads to oversupply, e-waste, and potential counterfeit issues. And the need to give the stock market good news can also contribute to the confusion. Anglia categorically does not deal in excess inventory. We don’t buy it, and we don’t sell it. We only buy through authorised agreements. We appreciate that there are some very reputable companies that are set up to deal in

excess inventory, and currently, it’s a service that industry needs. But it’s not what we do. However, we are very well equipped to track shortages and price fluctuations, and we like to work very closely with our customers so that we can get the clearest possible picture of their requirements going forward, thereby ensuring that they don’t fall foul of supply chain issues.

Steve Rawlins, CEO, Anglia

BUYING FROM SURPLUS INVENTORY SUPPLIERS IS A RISKY BUSINESS

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