Component Sense has had a busy and exciting year.
Although 2024 has been a relatively flat year for the electronics sector in general, it brought significant wins and several firsts for the business.
We spoke with Component Sense CEO and Founder Kenny McGee to learn his key takeaways as the end of 2024 draws near.
1. Companies are still sitting on a lot of stock
Following the chip shortages during and after the COVID-19 pandemic, many electronic manufacturers over-forecasted component stock to protect their supply chain. This left many OEMs (original equipment manufacturers), in particular, with high amounts of excess and obsolete (E&O) inventory.
The effects of over-forecasting continue to linger even years later. However, even if the best time to sell E&O was several years ago, the second best time is now.
“Despite a perceived abundance of stock, there is still a lot of money to be made for those looking to redistribute their E&O. Generally, the top 5% of a list of surplus parts accounts for 95% of the overall value,” explained Kenny.
A long-term solution that redistributes stock over time is the most effective way to maximise returns. With an option like InPlant™, even in a flat market, we can return close to if not 100% of cost price.
2. Electronica is the electronics event of the year
Electronica in Munich is the world’s leading electronics trade fair, with 80,000 visitors from over 100 countries attending. While Component Sense has attended Electronica before, 2024 marked our debut with a dedicated stand. Our team was busy with back-to-back meetings discussing the sustainable and financial benefits of zero-waste manufacturing with attendees.
At Electronica 2024, Kenny delivered his first talk on the opportunities for improved inventory management. He highlighted to those listening that visible E&O often represents just 1% of revenue; however, this is just the tip of the iceberg. The actual scope of E&O generally accounts for 10% of overall revenue.
For Kenny, Electronica underscored the scale of the global supply chain and the shared passion for sustainable practices.
3. Visiting Accra proved how complex e-waste management
A documentary exposing how discarded Western electronics ended up at Agbogbloshie, one of the world’s largest e-waste dumpsites, inspired Component Sense’s sustainability mission.
Nearly a decade later, Kenny travelled to Accra alongside award-winning photojournalist Carolina Rapezzi to assess the impact of e-waste on the local community and environment. While Agbogbloshie was officially demolished by the local government in 2021, informal e-waste recycling remains across the river, in pockets closer to people’s homes, and further afield.
One particular lesson from Kenny’s visit was how complex the local supply chain is, and how it is built around e-waste recycling. Despite its environmental and health risks, e-waste remains vital to the local economy in Accra. It is a multilayered challenge.
4. My original predictions are proving accurate
After the pandemic and key supply chain disruptions, there were favourable conditions for redistributing E&O on the secondary market, more often than not yielding positive PPV (purchase price variance) for many parts. However, Kenny knew this type of market would not last forever.
Several years ago, Kenny and the Component Sense leadership team predicted that a market downturn would soon come as supply-demand discrepancies would equalise. They initially estimated that this flattening would last 18 to 24 months. The predictions were made based on comparisons with similar market conditions following the turn of the millennium and Y2K.
“My original prediction seems to be correct, and I am anticipating a positive 2025 based on market projections. We are already seeing improvements,” Kenny explains.
5. The supply chain reaches every part of the world
In 2024, Kenny and Operations Manager Ben Dent travelled to key electronic manufacturing markets like the U.S.A., Vietnam, Mexico, and Hungary to name a few. These visits focused on implementing bespoke E&O solutions for local OEMs and EMSs (electronic manufacturing services).
2024 highlighted to Kenny just how wide-reaching and global the electronics supply chain is. Visits like the one to Ho Chi Minh City underpin Component Sense’s commitment to 24/7 service. With customers spanning multiple time zones, our 24/7 redistribution portal, the sales team’s 97% RFQ response rate, and same-day shipping play a crucial role in meeting global needs.
6. Companies prefer a personal approach
Component Sense is one of the few companies in our sector with its own developers. We extensively use and integrate technology to achieve optimal results and experiences for our partners. However, in the age of artificial intelligence, automation, and chatbots, 2024 showed Kenny that a personal approach is still also vital to providing top customer service.
Component Sense has built a reputation for having an approachable and dedicated E&O sales team. This continues to be a strong point of difference for us in the market. We will continue expanding our team in 2025.
Investing in the right people is essential for building a unified team capable of rapid scaling. From starting as a one-person business 23 years ago, Kenny reflects on his pride for the team today.
“The growth in our excess and obsolete team shows that companies need our help. We are preparing for even more growth in 2025,” explains Kenny.
Bring on 2025!
While entrepreneurial spirit and long-term thinking are critical, planning in three months or even 90 days is equally important. 2024 was a big year, as Component Sense continued helping electronic manufacturers redistribute E&O stock.
“For me, a positive mindset is important to business success. My favourite song to listen to when I have a challenging day ahead is ‘Walking on Sunshine’ by Katrina and the Waves. 2025 is projected to be a big year for the electronics sector, and I am very optimistic,” says Kenny.