Maximizing Cost Savings in an Oversupply Market
Date: June 12, 2023
Today, we explore how an excess market can benefit your business and make buyers look great during their next management review. In a down market, it is easy for a company to focus on their current excess and worry about taking losses on that inventory. Customer orders may slacken during soft market conditions, which creates additional pressure to drive down costs. In an oversupply market, a broker, or independent distributor, is your best friend.
The overage market refers to the surplus component inventory of semiconductors (integrated circuits or ICs), CPUs, memory modules, and storage units. Overage arises due to various factors, including production forecasts, changes in demand, and supply chain fluctuations. Capitalizing on the overage market can yield significant cost savings and enhanced product fulfillment for businesses.
Purchasing departments for contract manufacturers and OEMs can be the biggest winners in an overage market. Because product becomes more readily available, a drop in pricing often follows. Savvy purchasing organizations will keep close tabs with their broker partners to understand where pricing is moving and get ahead of the ODM pricing adjustments. By purchasing excess at a discounted price from other manufacturers, brokers can pass these savings through to proactive OEM and CEM buyers.
Spectrum Sourcing helps our purchasing contacts by providing them purchasing reports to demonstrate costs savings that the buyer is driving within their organization. Having this information handy during a quarterly or annual review can prove beneficial for a positive employee review.
The best way to get started in driving cost savings is to provide updated demand lists to our team. Our Omni (think omniscience!) database can match that demand with the large amount of excess lists that are hitting our desks daily. We will do the behind-the-scenes work for you to identify those opportunities, verify the supply availability and pricing, and bring you offers to consider. It is an easy, and often fun, way to help your organization.
The overage market presents a valuable opportunity for businesses to drive cost savings and optimize product fulfillment. Act now by reaching out to your sales contact and let us get to work for you.
Stay tuned for more insights and industry updates from SpectrumSourcing.com as we continue to explore the ever-evolving landscape of technology hardware sourcing and procurement.