Excess Inventory: What to do with your excess electronic components when you switch EMS partners?
When an OEM switches EMS partners there is usually inventory remaining at the EMS that the OEM will have to either purchase or transfer to their new EMS partner. Unfortunately, many EMS companies do not want to accept the transfer of inventory due to financial and/or liability concerns. In this situation the OEM has one of two options, 1) scrap the material or 2) have the excess inventory shipped to their facility.
The obvious issue with scrapping material is that there is no financial return on the investment. Why would any company want to throw away money? The reasoning is that many supply chain professionals do not have the time, resources, or experience to extract the value from this material.
Having the material shipped to their facility also has multiple drawbacks. These include not having the personnel needed to manage the inventory, a lack of system resources to receive/track the material, and accountability for ownership. What tends to happen in this situation is that material ends up sitting on pallets in the corner of their warehouse and more importantly on their financial books. This, like scrapping the material provides no financial return on investment and as a result, also has negative effects on the companies bottom line.
So, back to the question of what to do with your excess electronic components when you switch EMS partners? You should neither scrap the material, nor, should you let the material sit on pallets in the corner of your warehouse. As a manufacturer it is important to take responsibility for the excess material that you accumulate. The constant upgrading and improving of your products is putting a stain on our environment and resources. What you do with your excess material has a direct affect on both.
You should instead partner with a company that focuses on purchasing and disposing of electronic components using circular economy practices. E-waste and the need to mine for the precious metals and materials that are required to produce electronics can be reduced by engaging with companies such as Gerard EMG. Doing so will reduce your companies footprint on the environment, while simultaneously providing your company with a positive financial return on your material.
For more information on ways that participating in the circular economy can reduce the effects your supply chain is having on the environment, or if you have excess electronic components that you would like to sell, please email excess@GerardEMG.com