Industry Spotlight: Managing Telecommunications Excess

In recent decades, the telecommunications industry has rapidly advanced. It is easy to forget how remarkable it is to connect with anyone in the world in seconds.Like other advancing sectors, electronic manufacturers in the telecoms industry face growing challenges with excess and obsolete (E&O) electronic component inventory. This industry spotlight will explore the common causes of surplus E&O, the financial risks of this stock, and simple solutions to inventory challenges.

Telecom technological advancements

The 1830s saw the birth of telegraphy, allowing messages to travel through electronic channels. Telephones were not invented until the 1870s. Back then, these primitive phones needed to be connected via wires. The first cellular phone call was not placed until 1973. The internet did not take hold of the general public until 1995.

Fast-forward to today and telecommunications equipment underpins nearly every aspect of modern life. About 67% of the global population is now online and using the internet.

Mobile networks are among the most notable advancements, with 5G currently being deployed worldwide. Previous generations have each brought significant improvements, transitioning from analogue to digital and reducing latency. Despite 5G only being on the scene for under a decade, discussions about 6G are already underway. Li-Fi is also being developed to challenge traditional Wi-Fi.

Excess and obsolete electronics in the telecommunications sector

New generations of mobile networks drive electronics manufacturers to innovate to support functionality. As a result, previous iterations of communication equipment quickly become obsolete. This rapid evolution leads to electronic waste (e-waste) both from consumers upgrading devices and manufacturers whose obsolete parts are no longer usable on production lines.

“Technological advancements in the telecommunications sector are forcing frequent design changes. I have heard some manufacturers implementing technical changes every three months,” explained Monika Simionescu, Account Manager.

With product lifecycles in the telecom sector shortening, electronics manufacturers face significant challenges. They must balance stockpiling enough parts for safety while still remaining agile enough for design pivots. These challenges can ultimately lead to large amounts of E&O.

Microchip shortages following the pandemic only fueled electronics manufacturers to adopt over-forecasting practices to safeguard against further supply chain disruptions. The complexity of the telecommunications supply chain, with its global participants and multiple subcontractor layers, only made matters worse.

“Unlike other industries like the automotive sector, components generally do not need to be held for servicing and repairs. This only adds to the pace of surplus electronic parts accumulation,” says Monika.

Solutions for managing inventory in the telecom sector

In recent years, many telecom electronics manufacturers have adopted a ‘just-in-case’ approach to forecasting component stock. Switching to a ‘just-in-time’ strategy, where supplier orders align directly with production schedules, can reduce the need to hold excess stock.

A more profitable option is to let Component Sense actively manage the redistribution of E&O stock. We have partnered with large telecom companies for years and understand who buys electronic components in this unique marketplace. This expertise allows us to maximise returns from your excess and redistribute inventory quickly.

Telecom manufacturers should consider themselves lucky as many components used in production are also utilised in other industries. The trick to selling off parts is understanding these specific markets and having strong connections.

“When 5G started being rolled out, the price of parts needed for 4G dropped significantly. However, what many do not realise is that these 4G parts still had demand in other sectors. For example, 4G components could still be used for weather sensors in agriculture,” asserts Monika.

Component Sense redistribution options

Most electronics manufacturers are sitting on 10% of their overall revenue in E&O inventory. So, redistributing this stock can be a highly profitable endeavour. Component Sense offers three core E&O redistribution models tailored to your business's size and goals:

• InPlant™ is our unique, automated solution for real-time tracking and management of your excess inventory. Designed for tier-one companies, this solution guarantees 100% cost recovery while predicting future excess.
• Consignment companies retain excess ownership, while Component Sense handles advertising and redistribution. If your priorities change, your excess stock can be quickly returned to you.
• Outright Purchase is another offering from Component Sense. We can provide a cash offer within 24 hours. If accepted, we can uplift your surplus electronic parts within 48 hours.

“Technology is moving at a rapid pace. Companies need to strike while the iron is hot for the optimal returns on their excess. In some cases, acting promptly is the only chance of moving stock at all,” explains Monika.

Looking ahead to the future of telecommunications

The telecommunications industry's future is dynamic. IoT devices are a rapidly growing subsection of telecoms, driving manufacturers to increase the production of sensors, gateways, and other hardware to meet demand. The number of IoT devices, ranging from smart TVs to connected vehicles, is expected to increase from 15.4 billion in 2022 to 25.1 billion by 2027.

The telecoms sector must also take significant steps toward sustainability. Component Sense supports companies in reducing e-waste and adopting circular practices. We keep parts in a circular economy by getting stock in front of surplus electronic component buyers through redistribution.

Our team has deep telecom industry expertise and understand the security concerns associated with excess parts. Speak to us today about crafting an E&O solution for your company.