There is increasing interest from Sustainability Consultants and internal sustainability leaders in ways they can help electronic manufacturers reduce e-waste.
Redistributing excess and obsolete (E&O) component stock is sometimes an often-overlooked solution.
E&O stock is simply inventory that is now surplus to requirements, whether due to production changes or over-forecasting. Often, these parts end up as e-waste and are dumped in landfills, contaminating the surrounding environment.
Redistributing E&O stock means taking this surplus inventory, listing it on the secondary market, and selling it to another manufacturer to ensure components are used for their intended purpose.
Keep reading for advice for sustainability leaders on the best approach to component redistribution and promoting a circular supply chain.
1. Make a business case for redistribution
Many companies speak in dollars and cents. One of the best ways to get buy-in from company leaders to try E&O redistribution is to explore the financial potential. There are plenty of ways redistributing surplus components can impact your bottom line.
Generally, an electronic manufacturer is sitting on 10% of their overall revenue in E&O inventory. Being able to recoup even some of this money that would otherwise be written off is a major advantage. Solutions like Component Sense’s InPlant™ model recover 100% of your stock’s cost price, if not more.
Another less obvious financial benefit of redistributing E&O is freeing up warehouse space. By removing the unwanted inventory from your warehouse, you make room for higher-value stock and avoid paying for insurance and storage costs for components you do not need.
Thanks to Component Sense’s partnership with DSV, we can uplift your E&O inventory from your warehouse within 48 hours.
2. Partner with trusted redistributors
The secondary market, sometimes called the grey market, is where E&O components are redistributed to reduce e-waste. Historically, the secondary market has sometimes faced criticism for unreliable sellers and counterfeit components.
Thankfully, these negative examples are exceptions to the norm. Partnering with trusted redistributors like Component Sense safeguards your brand’s reputation. We have over 23 years in business and have forged a reputation for being a trusted distributor committed to minimising e-waste, not just a ‘flash in the pan’.
Another benefit of partnering with a long-serving E&O redistributor is that we have built an extensive network of component brokers and buyers (over 4,500). An extensive network in the electronics sector helps sell your E&O quicker and often for a higher price. We also have insights and connections in niche market segments with demand for particular parts.
3. Tackle excess Stock Early
At Component Sense, it is common to hear from sustainability leaders and electronic manufacturers a month, or even weeks, before the financial year end, trying to sell E&O stock in a hurry to balance the books. While we could organise an on-the-spot purchase of the inventory, this is not the most cost-effective way to manage E&O.
As the image below shows, the E&O iceberg goes deep, beyond what is generally an immediate concern for inventory managers. ‘Very slow-moving’ stock often sits unused for over eight months. This means it is seen as tomorrow’s obsolete stock. While these components can still be redistributed, they generally recoup a lower return than parts with a younger date code.
Active excess, or component stock that has just been identified as excess is the most profitable and sustainable stock to redistribute. Not only will manufacturers recoup a higher percentage as there is more demand, but all parts are more likely to move, reducing potential e-waste.
To identify excess stock at the earliest possible stage, we recommend conducting regular inventory reviews or opting for an automated E&O solution like Component Sense’s InPlant™ model, which identifies excess at the earliest possible stage and communicates with your MRP (Material Requirements Planning) system.
4.Track and communicate progress
Transparency is a crucial factor in practising sustainability. Initiatives like the CSRD (Corporate Sustainability Reporting Directive), enforced in early 2023, highlight the importance or reporting. Large listed companies in the EU must now publish regular reports on their social and environmental impact. Thankfully, 100% of the world’s largest 250 companies (G250) now claim to report on sustainability.
Redistributing E&O stock can and should also be transparent and reported on in a manner that contributes to a company's wider sustainability reporting. Sustainability Consultants and other leaders will be pleased to know that Component Sense provides inventory tracking and reports through our 24/7 online sales portal. Manufacturers can access real-time metrics like stock levels and sales.
As with any sustainability effort, sharing updates and setting goals is essential when redistributing surplus inventory. This approach helps the wider business and shareholders understand and measure the impact of E&O redistribution.
5. Set up a pilot before expanding
Redistributing E&O inventory requires trust. To make the first step into redistributing through the secondary market easier, it can be a good idea to conduct a trial first. Conducting a trial may help to secure stakeholder buy-in for E&O redistribution as it acts as a proof of concept.
For global companies, piloting E&O redistribution in one location demonstrates the secondary market's value. Once successful, the E&O redistribution solution can be implemented in other warehouses across a company’s supply chain. At Component Sense, we are more than confident that anyone redistributing their E&O will be beyond happy with the result.
Shift to a more sustainable supply chain with Component Sense
As sustainability leaders would know, there are plenty of ways an electronic manufacturer can drive sustainability. Promoting a circular supply chain, where materials remain in use, is vital for reducing e-waste.
Component redistribution enables circularity by moving usable components between manufacturers. As with many new ideas and processes, securing buy-in from business leaders to make a change can be difficult. We hope this blog provides sustainability leaders with actionable methods to optimise secondary market redistribution.
At Component Sense, we are proud that this method has saved over 30 million components from landfills to date.