How to make the volatile currency market work for you

Recent swings in global currencies have brought the exchange rate conversation back to the forefront for electronics companies, whether an Electronics Manufacturing Service provider (EMS), or an Original Equipment Manufacturer (OEM) working with suppliers, production, or customers in different countries.

Volatile exchange rates can affect the value of a company’s assets, bringing into focus, their component stock level. Customers talk to CCL on an almost daily basis about how to limit their operating exposure. By understanding their risk, they can improve their operating decisions. CCL can help to evaluate the cost of their excess component stock, which at today’s strong dollar rate can often turn a weakness into a financial strength.

Focus on cash conversion, not loss
On the whole, component sourcing makes up for the largest portion of spend for EMS companies. This can equate to an investment of millions of dollars. In the fast turnaround market we operate in, where production cycles are shorter and manufacturing forecasts can fluctuate, this can often result in component parts being bought that may end up being surplus to requirements.

Specialising in a level of service
With an understanding that a flexible approach is required, CCL work with their EMS and OEM customers to quickly respond to forecast fluctuations and variations within their demand planning, to help them to reduce their excess stock and help offset costs. In a period where we are experiencing a strong dollar conversion, CCL can offer their customers a competitive component price, based on a comprehensive understanding of market value.

Take control
If customers have been negatively affected by currency conversion, CCL can convert their excess inventory into an asset. CCL will discuss their need to sell outright and whether it’s their entire lot of excess, or specific line items that may hold the highest value.

The advantages of selling a selected line item is that it will generate better margins and have a competitive repurchasing value.

Selling a whole lot immediately frees up space in storage facilities while requiring less time and effort than selling a specific line item.

The option of consigning your excess means you enter into a partnership with a company who has a wealth of experience and who will proactively market your stock and keep you updated on offers. The main benefit of Consignment is that you get the best possible return for your stock through a professionally managed solution, whilst retaining full control and ownership throughout.

If CCL retains all of an OEM’s excess inventory, as shortages occur with their EMS, the OEM will be able to have the components delivered within 24 hours. This helps to manage their Just in Time (JIT) Key performance indicators (KPIs).