Massive $20B Components Waste Haunts Supply Chain

The electronics industry urgently needs an energetic components exchange program to help address an inventory imbalance that is distorting the supply chain and resulting in the wastage of parts valued in excess of $20 billion annually, says a top industry executive. While some companies are implementing programs for helping customers individually address the problem it would be better resolved at an industry level, according to an executive with a leading electronics components distributor.
A large chunk of components that aren’t used annually by OEMs and contract manufacturers are proprietary parts that cannot be swapped into other devices but the majority are standard or commodity products that could be easily used but that are wasted simply because of inefficiencies in the supply chain, said Lindsley Ruth, senior VP at Future Electronics Inc. Oftentimes, component suppliers keep churning out new products unaware their inventories are piling up elsewhere unused. This development is contributing to the devastating impact of electronic components and equipment on the global environment, he said.
“Semiconductors have a significant impact on the environment,” Ruth said in an interview with Bolaji Ojo, editor-in-chief of Electronics Purchasing Strategies. “We’ve got to be careful that we only produce what’s needed and when there’s excess inventory that exists around the world, we move it to the right place where there is demand and not build more product and create environmental waste and landfills.”
Ruth said the industry as a body needs to develop a comprehensive strategy for raising the level of visibility managers have into the supply chain, especially with regard to the availability of components in certain areas where they might not be needed so as to facilitate the transfer of such parts to where they might be required. Future Electronics is implementing an internal program for its customers to facilitate this, Ruth said.

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