The Challenge
To bring our own packing to the closing site overseas, list, pack, and ship the material at no expense to the client. CCL needed to be sensitive to the emotions involved with a site closure while also handling the marketing and reselling of the excess components.
Our Solution
CCL’s “Consignment Partnership Agreement” was signed by both parties, legally securing the client and the excess material. Due to a lack of staff at the client’s site, CCL sent two team members to the warehouse in Germany to complete the inventory listing. The team spent four days sorting and packing the components, and the pallets were shipped to CCL’s warehouse at CCL’s expense, covering both freight and insurance.
- The material was booked into the warehouse under CCL’s strict QC procedures, which included checking for damage to the parts, quantities, original labels, date codes, and photography. The consignment was safely stored and fully insured at CCL’s expense in accordance with industry standards.
- CCL sent a report to the OEM detailing adjustments in quantities, which the client accepted. CCL began marketing and selling the excess components through a combination of proactive sales (inviting other OEM/EMS clients to re-buy part numbers and direct-description-crosses previously sold) and reactive sales (responding to new OEM/EMS BOMs and distributor RFQs for the client’s excess). High-demand parts sold quickly, while others required more effort. The client was paid 70% of total sales monthly, with ongoing communication to ensure their needs and expectations were met.
- At the end of the first 12-month period, the client and CCL reviewed the sales and remaining inventory. Approximately 60% of the list had been sold at around 50% of the original cost. CCL offered to continue the consignment cooperation or make a speculative bid for the remaining stock. The client chose to give the remaining 40% another 12 months under consignment, resulting in the sale of a further 12% of the components.
- At the end of the 24-month period, CCL conducted a second review with the client. This time, the client opted for the speculative purchase, selling the remaining stock to CCL, but continued the consignment partnership for newer lots.
The Benefits
- The client cleared their warehouse without needing additional staff. One week after shipping the parts to CCL, they began receiving returns on the redundant stock, followed by monthly sales reports.
- During the first 24 months, two additional OEM sites (not at risk of closure) also partnered with CCL to sell their excess components under the same seamless agreement, saving even more OEM work hours.
- Approximately 7% of the material from the first lot was recalled for the client’s other productions, free of charge and with CCL covering the freight expense.
- CCL still meets with the supplier and continues to buy, and it has a long-term consignment partnership with the client.