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How to Select an Independent Distributor to Sell your Excess Inventory
The most important thing you will do once you've decided to sell your excess inventory is to select an Independent Distributor. To untrained eyes and ears many distributors will sound alike, although nothing is further from the truth. The distributor you select will determine the return on your investment.
Interview any Independent Distributor that you consider and ask a lot of questions. Visit the facility and take a good look around. Many companies in this industry come and go so be sure to find one that you believe will be around long enough to sell your parts. The majority of companies in the Independent Distribution industry are very small, often consisting of only two or three employees. Will they close up operations and leaving with your money after making a big sale?
The staff of the Independent Distributor business, like any business, is extremely important. You'll want to evaluate whether the company hires intelligent, educated, and innovative employees who can develop and use the tools they will need to sell your parts. Ask questions about the people in charge. Make sure that the Independent Distributor has at least one Engineer on staff as this individual will be needed to resolve technical questions that would otherwise lead to lost sales.
The software the the Independent Distributor business uses is extremely important. You'll see everything from 3-ring loose-leaf binders to sophisticated custom software. The company with the best software will have a competitive advantage. The best software is software developed in-house, especially when the company has a good programmer on staff. Companies who use commercially available software have very little advantage over other companies that use the same software. When you visit the companies facility be sure to ask for a demonstration of the software they will use and pay close attention to how they monitor supply and demand and how they determine market price.
When interviewing an Independent Distributor the questions below will allow you to identify the discriminators that separate companies like PCC from the rest of the pack.
Are you ISO certified?
Are you ANSI/ESD S20.20 certified?
Do you have a moisture sensitivity program in place?
Is IDEA-STD-1010 incorporated into your inspection process?
Are your inspectors IDEA-ICE-3000 certified?
Are you members of the ERAI?
How do you determine the value of a component?
What do other companies in the industry say about your company?
What other things does your company do to generate revenue besides sell inventory from stock?
Where and how often do you advertise inventory?
How will you report sales and do you have an open file policy?
How many unique customers do you sell to each year?
What is your minimum order?
What payment terms do you offer to their customers?
Once an order is placed how long does it take you to ship?
Do you provide same day shipping and what is your cut-off time?
Are you ISO certified
ISO certification tells you that the company has a Quality Management System in place and that the system has been reviewed by the company's own management team as well as an outside auditor. Many buyers will not add a supplier to their Approved Supplier List (AVL) unless the supplier is ISO certified. PCC is certified to ISO 9000:2008 which is the current ISO Certification.
Don't be fooled by companies who use words like "compliant" or who use auditors who are not recognized by the International Standards Organization (ISO). PCC is audited by KEMA and certified by ANAB, which is the only organization recognized by ISO in the United States.
Are you ANSI/ESD S20.20 certified?
Proper handling of electronic components to avoid damage from electrostatic discharge has always been important but it is more important today than ever as component geometries are continually shrinking. ANSI/ESD S20.20 is a program developed by the ESD Association to provide objective evidence that a company not only has the knowledge and systems in place to safely handle electronic components but that they are using them.
Do you have a moisture sensitivity program in place?
The RoHS directive has resulted in manufacturing process changes due to the use of lead-free materials. These RoHS compliant materials require higher temperatures during the soldering processes. Moisture trapped inside components can cause a problem known as pop corning, which essentially is internal rupturing of the component due to moisture expanding during rapid temperature increase in the soldering process. This problem results in higher component failure rates and lower reliability. Many companies will not purchase from a distributor who doesn't have a satisfactory moisture sensitivity program in place.
Is IDEA-STD-1010 incorporated into your inspection process?
The counterfeit and substandard part problem has become such an issue that IDEA-STD-1010 has now been incorporated into AS9120 and has been adopted by NASA. As a result, all we are seeing this requirement filter down to NASA prime contractors and subcontractors. This means many companies including Boeing, Honeywell, Lockhead Martin and Northrop Grumman have made this a prerequisite to procurement. This requirement can be expected to filter down to the commercial marketplace during the next few years. Click here for a list of NASA prime contractors.
Are your inspectors IDEA-ICE-3000 certified?
The IDEA-ICE-3000 Professional Inspector Certification program is the only industry accepted certification program for quality inspectors. This certification requires that the inspector demonstrate that he has the training and skills needed to recognize and identify visual indicators of substandard and counterfeit product. Would you purchase parts from a company who did not have certified inspectors?
Are you members of the ERAI?
The Electronic Resellers Association International (ERAI) is the organization that helps to keep the industry reputable. The company provides a centralized point of information exchange concerning companies who ship substandard and counterfeit product. ERAI Membership means that the company has agreed to resolve any disputes that arise utilizing an objective party. Many customers will not purchase from a distributor who is not a member or who is on the ERAI's Reported Companies list, which often means they refused to resolve a reported problem in a satisfactory manner.
How do you determine the value of a component?
Determining market price for components is not an easy thing. Some companies simply check franchise web site pricing; while this may be a good start, open market pricing is based upon supply and demand. Our software tools, developed in house for our exclusive use, provide detailed information concerning supply, demand, and competitive pricing. PCC has a pricing tool developed in-house to help other distributors and customers alike monitor market value.
What do other companies in the industry say about your company?
There are many ways to determine the reputation of a company. You should Google the company in addition to verifying that they are members of the IDEA and ERAI. In addition, the search engines that all companies in our industry use employ "bulletin board style" feedback forums that allows companies to post feedback about experiences with other companies. PC Components Company has among the highest number of positive feedback items posted on these services with virtually no negative feedback. Check the Here's what the Industry is Saying section to read what other companies in the industry say about PCC.
What other things does your company do to generate revenue besides sell inventory from your stock.
Other companies will tell you that they are one of the world's top distributors but that doesn't mean the company will do a better job of selling your excess inventory than a company who only generates revenue by selling inventory from its stock. Companies like PCC devote 100% of its resources to selling parts for companies who have excess inventory. Companies who provide other services such as locating hard-to-find parts will often consider selling inventory from stock secondary in importance. PCC focuses on selling its customer owned inventory and being the best in the industry at what we do.
Where and how often do you advertise inventory?
PC Components uploads your inventory to every major Internet Part Search Engines (IPSE's) worldwide. In addition, our own web site provides a great deal of exposure. We also email your inventory to hundreds of other distributors and brokers every day who have added PCC to their approved suppliers list. Many of these companies in-turn will upload your inventory to their internal systems and to their own web sites. We will do all these things multiple times every day.
How will you report sales and do you have an open file policy?
The company that you select should welcome you to their facility, and should be happy to show you any and all the records that concern selling your parts. PCC has an open door and an open-file policy. We encourage you to come to our facility at any time, with or without notice. We're happy to show you tracking numbers, invoices, canceled checks, and everything else that you might desire that relates to selling your parts.
How many unique customers do you sell to each year?
The uncertainty and volatility of the open market make supplier relationships extremely important in today's market. People do business with other businesses that they trust. The best way to conduct a new business relationship is to already have an established history of satisfactory transactions with the company. PCC's customer base exceeds a thousand unique companies every year.
What is your minimum order?
Our minimum order is only $50, but we will ship a $25 order if the customer is taking all the parts that we have in stock, or taking other items on the same PO. Other companies have $100, $250, or even $500 minimums. We understand that small orders add up quickly while allowing us to sell more of your inventory. Over a period of time these small orders add up to produce substantial revenue. You might also wonder how companies with high minimum orders are able to build any customer loyalty.
What payment terms do you offer to your customers?
We extend net payment terms to qualified OEMs and CMs and even to other leading distributors. OEMs and CMs hate to do business with companies who require COD payment! Other companies can pay by Visa, MC, AMEX, or PayPal. Click to review our Ordering Information.
Once an order is placed how long does it take you to ship?
A company whose customers can depend upon them to ship the same day, even if the order arrives late in the afternoon, get more sales and therefore generates more revenue for you. PCC ships orders received before 5PM Eastern Time the same day and most companies know us so well that they know they don't even need to make a single phone call to ask whether its going out today.
Do you provide same day shipping and what is your cut-off time?
Most distributors in this industry who purchase from other distributors almost always expect the order to ship the same day. PCC automatically ships all orders received before 5PM the say day. Our customers don't even need to ask us to get it out the same day because they know we will.
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