The Problems with Excess Inventory (and how to solve them)

The Problems with Excess Inventory (and how to solve them)

No matter the size, scale or scope of your business, excess inventory is a problem that we all have to deal with at some point or another. Even after months of hard work and planning, inefficiencies can appear in the supply chain, especially if consumer or manufacturer demand fluctuates ever so slightly.

As a result, many OEMs opt to utilise a safety first approach in order to guard against disruption. A consequence of this is that many companies are left with an excess inventory of components. This is generally viewed rather negatively, due to the problems associated with managing leftover lines.

So, what are the typical disadvantages of an excess inventory?

 

  • Reduced Profits
  • Storage problems
  • Warehouse inefficiencies
  • Additional storage costs

Reduced Profits 

The most obvious problem is that your excess inventory erodes profit margins.

Many traditional retailers use clearance sales and other similar techniques in order to entice buyers to purchase end-of-line and slow-moving stock. This gives businesses the chance to recoup some money, albeit not as much as originally budgeted for.

Alternatively, some may decide to work with their affiliates and partners in a bid to circulate the stock and recoup revenue, although at a discounted rate.

However, this often isn’t feasible for companies and professionals working within the electronics industry.

Instead, many opt to liquidate their stock. This guarantees a certain level of income, although it is often at a much reduced price and causes the company’s finances to take a hit.

Storage Problems 
Excess inventories impact stock-holding and warehouse facilities in a number of ways.

Warehouse Inefficiencies 
Where do you keep your leftover inventories?

When excess stock lingers, it stops that shelf space from being used by a free-flowing part or component that is currently used in production. This causes inefficiencies, not just in the warehouse but all along the supply chain.

Additional Storage Costs 

One way to combat warehouse inefficiency is to rent or purchase additional storage space. However, this increases expenditure that could otherwise be saved, or used in other areas of the business. Also, there may be an additional cost when it comes to labour, as more people may be required to manage and control the stockpile of stock.

 

So, what are the solutions? 

 

Yes, surplus stock from obsolete production lines and end-of-life can be a drain on your resources. But, that same stock could hold significant value if dealt with in the correct manner.

With over twenty years’ experience in the asset management sector, we are specialists in releasing untapped equity in your excess and redundant components.

Monetising excess stock is our core business. The services and provisions that we provide are currently used by a large variety of companies based in the Asia Pacific, North American and European markets.

We offer a number of different options, each of which has its own benefits:

Full Consignment 

If your stock holds a high residual value, then full consignment represents the best way to maximise your income.

Your stock will be transferred to our IS9001:2008 certified storage facilities, from where our sales team will market your excess components to our worldwide contacts database that includes OEMs, CEMs and fellow deals and distributors.

You will retain full ownership of the stock until it is sold, enabling you to use the components on production lines etc.

Our specialists evaluate your stock list, attaching an estimated market price to each item of stock.
The components are relocated to our purpose-built, ISO 9001:2008 approved warehouse.

We sell your stock through our global network of companies, advertising it to over 16,000 OEMs, CEMs and Distributors.
You retain full ownership of the stock, allowing you to use the components on production lines

Part Payment & Part Consignment 

A unique alternative.

This part and part method is perfect for those business who wish to receive a payment up front but also want to see the long-term benefits associated with consignment.

After our team of analysts have appraised your stock, we will offer you an initial lump sum. Your stock is then transferred to our premises and either sold at a pre-arranged price, or at the current price as determined by the market.

Going forwards, you’ll receive a monthly percentage of all the stock that is sold.

Once we have appraised your stock, we pay an initial lump sum.

The stock is then transferred to our storage facilities, before being marketed through our global distribution network.
Revenue made on further sales (prices can either be pre-determined or sold at current market prices) is shared.

Immediate Payment 

We also offer an immediate payment method, which is perhaps the simplest and most straightforward solution.

Our team of expert analysts will pour over the details of your stock-list whilst also checking current marketing trends and demands. Because we are able to determine market values, we’re able to offer you the best and most realistic price for your stock.

Normally, this is much higher than the cost of liquidating the stock yourself.

Once a fee has been agreed, we move the stock to our own storage facilities and release payment to you as soon as is conveniently possible.

We assess your stock-list and agree a price.

Once the purchase is agreed, we remove your stock and transfer it to our warehouse.

You get an immediate cash injection, the complete removal of your excess and no ongoing liability.

So, if maximising the revenues from your outdated and obsolete components sounds like your cup of tea, then contact ourselves at Cyclops Excess.

If you want to, feel free to send us over your inventory list and we’ll get to work. Alternatively, call a member of our team on +44 (0)1904 436444.

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