Online auctions can help streamline the process of getting cash for returned or unsold products, supply-chain executives say.
David M. Katz – CFO.com | US   [view article online]

December 2, 2010

The day after Christmas is still weeks away, but that’s close enough for finance and supply-chain executives to start worrying about merchandise returns and excess inventory. How will they get the best value for the unwanted goods?

One answer is to auction them off. By posting returned or overstocked items of interest to consumers (video games, baby clothing, televisions) or other businesses (computer parts, pallets of manufactured items) on an online auction, sellers can gain access to many more potential buyers than they would if they simply went straight to liquidators.

Further, auctions can help streamline the process of getting cash for returned, unsold, or excess products, supply-chain executives say. That process can be cumbersome and haphazard, as it used to be at SanDisk, a maker of memory storage cards used in consumer electronics products. That was before the company started to sell excess inventory via auction about two years ago, according to Doug Lampson, director of corporate financial planning and analysis at the company.

Previously, SanDisk executives would simply ask sales reps to “make some phone calls” to brokers if the pile of unsold items grew too high, says Lampson. That resulted in just one or two potential bidders per item or group of items (and tied up the sales reps’ time). Now, since setting up a regular arrangement with FreeFlow, a logistics and supply-chain company that provides auctions for consumer electronics companies, SanDisk typically has eight vetted bidders for a set of items.

Perhaps more important, the arrangement has turned a scattershot process into a swift and regular routine. Each month SanDisk identifies slow-selling or obsolete products, draws up a pricing proposal, and then puts the products up for bid. Given the volatile nature of the semiconductor storage business, where prices are known to drop as much as 20% in a month, “we try to move product very quickly,” says Lampson.

Of course, surplus goods can be a problem for any company, given the inherent difficulty of forecasting. “There is a level of inaccuracy in the forecasting process, which tends to mean that we have some level of excess inventory,” says David Warrick, general manager for Microsoft’s entertainment and devices operations in Europe, the Middle East, and the Asia/Pacific region, which also has an arrangement with FreeFlow. “And what we continually try to do is keep that to a minimum and make sure it flows as well through the supply chain.”

As a way of controlling their bidding audiences, companies with big sales staffs like Microsoft can auction off excess inventory in two stages. First, they can hold internally focused auctions, putting items up only for their sales staffs to see and offer to their clients. Then, if all the items aren’t sold that way, the auctioneer might provide a private, preselected set of bidders for the remaining goods.

Why would a company want to narrow the bidding audience? One reason might be that doing so could set a high bar among its potential creditors, by admitting only those buyers likely to pay their debts. Companies may also want to control the timing of the liquidation of their products, according to Alan Scroope, founder and chief executive officer of FreeFlow.

For example, a finance chief of a company selling its returned goods via a public auction might be irked to find that an individual or small firm has bought a batch of the products online and is undercutting the price at which the company’s favored retailers are selling it, says Scroope. That represents a risk to the brand that the CFO might not be willing to tolerate.

Such narrowly focused, niche-oriented auctions are not for every company with excess inventory, however. Wholesale bidders on such sites tend to require detailed grading of the products — and high-quality products at that.

And a company with products that have been handled roughly at Christmas before they’ve been returned might do better holding an auction elsewhere. “We handle broken and cracked consumer electronics,” says Bob Auray, chief executive of GENCO Marketplace, a logistics company that sells some goods through FreeFlow but auctions off a much broader array of excess inventory itself. “We find that parts-oriented scavengers may be best for that type of product.”

San Jose, California, October 4, 2010 – FreeFlow, the world’s leading provider of alternative channel solutions for at-risk inventory in consumer electronics companies, and Advanced MP Technology, Inc., the leading global full-service distributor of electronic components, announced this week the formation of a global strategic alliance to bring at-risk inventory solutions to their customers for the complete bill of material, from components to finished goods.  The program formally recognizes FreeFlow’s expertise in providing alternative finished goods channel solutions to global manufacturers and Advanced MP’s understanding of production challenges from factory shortages to surpluses and combines the strengths of both companies to provide significant added value to their customers.

The go-to-market strategy for the FreeFlow and Advanced MP alliance targets global consumer electronics OEM’s, identifying the stakeholders in sales, supply chain, and finance who are chartered with overall product lifecycle profitability.  For these executives the combined solution of FreeFlow and Advanced MP provides a single go-to solution for the disposition of excess and at-risk inventory, from components to finished goods, and the cumulative market expertise of the two companies ensures top margin retention in secondary markets.

“With the depth and breadth of our installed base in at-risk inventory solutions for consumer electronics companies we are thrilled to have the component expertise that Advanced MP Technology brings to our asset recovery solution,” remarked John Kenny, FreeFlow President.  “FreeFlow’s customers are Global 2000 manufacturers who desire the broadest service offering from the fewest number of suppliers.  Together FreeFlow and Advanced MP form a single-vendor solution addressing every manufacturer’s excess inventory problem from the top of the bill of material to the bottom.”

“Advanced MP Technology has received enormous positive response from our customers for the supply chain services that we offer.  We have been a pioneer in component asset recovery and strive to be forward thinking and proactive in responding to our customers’ needs,” stated Daniel Karatosic, Inventory Asset Management Director.  “We embrace our new partnership with FreeFlow as a compelling addition to our service offering and our strategic customers will appreciate the increased scope FreeFlow brings to our supply chain and procurement solutions.”

FreeFlow has proven to be a top Sales and Supply Chain partner by addressing its clients’ needs to build secure alternative channels for at-risk inventory.  Slow-moving, aging or end-of-life finished goods as well as consumer returns inventory sold as-is or refurbished is a multi-million dollar market for FreeFlow’s Global 2000 customers. The company’s branded and anonymous private marketplaces allow stock to be sold at auction, fixed price, or minimum price. Auction and ‘member privilege’ dynamics are deployed to improve bidding performance, resulting in higher financial recovery. With its private, detailed market analysis, integrated performance metrics and end-to-end business support services, FreeFlow provides low-cost, secure, high recovery alternative channel solutions for excess and at-risk inventory in all stages of the product lifecycle.

Advanced MP Technology is a global leader in electronic component distribution and Inventory Asset Management Programs. Advanced MP Technology maximizes asset recovery through a suite of hands-on programs and services that address At-Risk Inventory issues and impact many areas of total acquisition costs within the supply chain.  The company purchases millions of dollars of At-Risk inventory outright as well as implements large scale Consignment and 3R Programs (Reuse/Remarket/Recycle).  With its “be global, act local’ philosophy, Advanced MP Technology has a worldwide footprint with operations in North America, Europe and Asia.  Recent expansions in Munich, Germany and Budapest, Hungary are in line with Advanced MP’s commitment towards superior customer service and the growing presence of contract manufacturing in EMEA. The Shenzhen, China, office marks their fourth and most recent location in Asia, a direct response to the demand of a growing number of regional companies that are increasingly paying more attention to quality while still watching over costs. With over 32 years of successful component trading experience, as well as essential resources, Advanced MP Technology fills the gap in the supply chain by offering quality products and services while providing the best value to its customers.

About Advanced MP Technology

Advanced MP Technology is a leading global distributor of electronic components and supply chain partner, offering customized inventory management solutions and serving OEM and EMS customers worldwide for over 32 years.   Founded in 1978, and headquartered in San Clemente, California, Advanced MP Technology has global offices and stocking warehouses in the Americas, Asia and Europe.

For more information regarding Advanced MP Technology please contact Kamran Malek, Vice President of Marketing, at kamranm@advancedmp.com or at 949-492-3113.

About FreeFlow

Founded in 2001, FreeFlow improves its customers’ profitability by helping them identify excess and at-risk inventory and dispositioning the inventory through the alternative channel best suited for that inventory. FreeFlow’s customers include Apple, Creative Labs, Microsoft and SanDisk. FreeFlow’s leadership in the supply chain arena has been recognized with numerous industry awards, including Deloitte Best-Managed Companies recognition in 2010 and the Supply & Demand Chain Executive 100 and the Ruban d’Honneur European Business Award for Information and Communication Technology Effectiveness in 2009.   Privately-held, FreeFlow has headquarters in Tralee, Ireland and US headquarters in San Jose, California.  For more information, visit www.FreeFlow.com.

Press Contact:

Anne Patterson

FreeFlow

860.705.0285

Anne_Patterson@FreeFlow.com

FREEFLOW WINS BEST MANAGED COMPANY HONORS

Innovative Alternative Channels Solution Earns Deloitte Recognition

Tralee, Ireland, March 29, 2010 – FreeFlow, the world’s leading provider of alternative channel solutions for at-risk inventory in consumer electronics companies, announced this week that it has been named as one of Ireland’s ‘Best Managed’ companies in the Deloitte Best Managed Companies Awards competition. In total, twenty companies who demonstrated superior business performance were recognized.

The Deloitte Best Managed Awards Program, in association with Bank of Scotland (Ireland), recognizes indigenous Irish companies that operate at the highest levels of business performance. The independent judging panel reviewed a broad range of criteria including strategy, capability, commitment, financials and growth potential across all key functions of the business.

Commenting on the award, Alan Scroope, CEO, FreeFlow said, “Every member of the FreeFlow team is committed to achieving operational excellence while serving our customers beyond their expectations.  This philosophy has driven our global success and it is gratifying to have our management philosophy recognized as best practice in such a prestigious competition.”

Commenting on the winners of the Deloitte Best Managed Companies Awards Program, Pat Cullen, Managing Partner, Deloitte said: “To be recognized as a Best Managed Company is a tremendous achievement, given the challenges that companies in all industries are currently experiencing. Our judging panel takes an in-depth look at each company – therefore to be chosen as a winner is testament to the sound management practices that are being implemented across the entire business. It is this thorough approach that will help these companies to take advantage of the upturn when it arrives.”

FreeFlow has proven to be a top Sales and Supply Chain partner by addressing its clients’ needs to build secure alternative channels for at-risk inventory.  Slow-moving, aging or end-of-life finished goods as well as consumer returns inventory sold as-is or refurbished is a multi-million dollar market for FreeFlow’s Global 1000 customers. The company’s branded and anonymous private marketplaces allow stock to be sold at auction, fixed price, or minimum price. Auction and ‘member privilege’ dynamics are deployed to improve bidding performance, resulting in higher financial recovery. With its private, detailed market analysis, integrated performance metrics and end-to-end business support services, FreeFlow provides low-cost, secure, high recovery alternative channel solutions for excess and at-risk inventory in all stages of the product lifecycle.

About Deloitte Best Managed Companies Awards

The Deloitte Best Managed Companies program, in association with Bank of Scotland (Ireland), promotes and recognises excellence in Irish owned and managed companies. It is the only awards scheme in Ireland that considers a business’ performance from every perspective. Entrants to the program compete for this designation in a rigorous and independent process that evaluates the calibre of their management abilities and practices.

Program sponsors include Bank of Scotland (Ireland), the Irish Management Institute and the Sunday Business Post.

For further information, visit www.deloittebestmanaged.ie.

About FreeFlow
Founded in 2001, FreeFlow improves its customers’ profitability by helping them identify excess and at-risk inventory and dispositioning the inventory through the alternative channel best suited for that inventory. FreeFlow’s customers include Apple, Creative Labs, Microsoft and SanDisk. FreeFlow’s leadership in the supply chain arena has been recognized with numerous industry awards, including Gartner’s Cool Vendors in Supply Chain Management and Procurement, the Supply & Demand Chain Executive 100 for 2009 and the 2009 Ruban d’Honneur European Business Award in the category of Information and Communication Technology Effectiveness. Privately-held, FreeFlow has headquarters in Tralee, Ireland and US headquarters in San Jose, California.  For more information, visit www.FreeFlow.com.

Press Contact:
Anne Patterson
FreeFlow
860.705.0285
Anne_Patterson@FreeFlow.com