Inventories Have Flipped to Excess, Here's How to Manage it

Remember when every electronic component seemed to be in a state of shortage? We don’t either…

It's near the end of 2023, and component manufacturer/distributor reports indicate that everyone is awash in excess component inventory. The semiconductor industry is cyclical and will eventually move back to shortage soon enough. But for the time being, companies need to find something to do with their excess inventory, or they should at least store it properly.

So if your company is sitting on batches of extra components, what can you do with all these extra parts? I think it depends on the size of your company and what exactly you need to build. That being said, here are some ideas and best practices for managing your company's excess component inventory.

Help, I'm Drowning in Extra Parts!

At some point along the way, all companies will accumulate extra parts and will need to do something with them. When you're a smaller company that just manages prototyping, you're probably accumulating extra batches of parts from attrition that were required in prototype runs. If you're an EMS or an OEM with your own warehousing operations, leftover parts lots can be rather large.

So if your company needs to find something to do with all those leftover parts, here are some ideas.

Store Parts For Future Designs or Builds

Applicability: small design firms, large companies

The simplest and most obvious route is to store these for a future design or build. This is best practice when you already have plans to complete another production run in the future, or you commonly use those parts in your inventory in new designs. If you're going to store parts, make sure to follow best practices and standards for packaging and storing your inventory. Typical office environments with ESD-safe packaging, vacuum packaging, and/or desiccants with temperature control are the best option.

Prioritize Parts in a New Design or Prototype

Applicability: engineering teams

If you have a new design coming up, or you have freedom to select parts when engineering a new product for a customer, you can prioritize your old parts in the new design. Prioritizing parts means you will need to keep track of what you have, so a bit of internal inventory management will be necessary.

If you can keep track of your parts and you know what you have, you can always select these first and build around your extra parts as you create a new prototype. This strategy usually works best with several categories of parts, such as:

• Popular microcontrollers, such as ESP8266 and STM32

• Mating connector assemblies (board-to-board or wire-to-board)

• FETs or discrete semiconductors in common packages

• Fixed or adjustable regulators in common packages

• Pin header sections

• Common power connectors, such as DC barrel jack connectors

Trade Parts With a Distributor

Applicability: designers with large parts batches, EMS companies

Large distributors will probably never trade parts with you because he's transactions are usually small potatoes for them. Smaller distributors, however, might be willing to trade a batch of parts with you. If you see that they have something in there inventory that you need, and you can do a fair trade across the table, it never hurts to give them a phone call and Pitch the idea. This usually works best when both companies are having trouble with a shortage.

If you go this route, you should make sure you have the documentation for where you procured the parts. Save the receipt from the distributor and make sure that you have everything packaged correctly before you trade in the parts.

Resell the Parts Yourself

Applicability: designers with large parts batches, EMS companies

We make a lot of noise about reselling parts on this blog. Some might find this a morally questionable route for getting rid of old components given the problems with counterfeiting in the supply chain, but one option is to sell your old parts to a reseller or to another designer. Some resellers will take whatever parts they can get, regardless of documentation. Some might require the documentation so that they can rightfully guarantee authenticity to their buyers.

If you're going to go this route, then do the right thing and dig up the documentation for your parts. Don't contribute to the questionable parts problems that already plague the PCB supply chain. Also make sure you use correct packaging materials and include your documentation to ensure authenticity.

Best Practices For Storing, Shipping, and Handling

All of the above options require some storage or shipping materials to prevent damage to parts. Every designer should keep some of these materials handy in their lab; EMS companies and assemblers typically keep these materials in stock to ship orders to customers. If you're unsure of what you need for proper storage and handling, read this article on Altium Resources.

The next time you need to find new parts to accompany your saved inventory, head over to Octopart and use the advanced search and filtration features to create your component orders. You will also find suggested alternates on Octopart’s component pages and up-to-date distributor pricing data, parts inventory, and parts specifications.

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