Beyond Last Time Buysꓽ The Benefits for OCMs

By Logan Wamsley

When considering the prospect of making a last time buy, thoughts immediately turn to those actually making the last time buy. The recipient in the transaction, one might think, would be the one who receives the most benefit. While it is true that the equipment manufacturer receives a multitude of benefits incorporating a Last Time Buy Solution into their inventory procurement strategy, all parties, including component manufacturers, stand to benefit from such a transaction — and by referring their customers toward a Partstat Last Time Buy Solution, they stand to benefit at least as much as their customers.

Below are just a few of the benefits component manufacturers stand to receive by directing their customers toward leveraging the Partstat Last Time Buy Solutionꓽ

Economies of Scale Benefits

For example, last time buys allow component manufacturers to incorporate economies of scale into their pricing. When fulfilling a series of smaller orders, machines must be continually turned on and off, labor costs must be considered, and the final costs to the consumer reflect that. A single larger order, however, changes the equation. As production costs decrease by producing a high quantity of inventory at one time, this allows component manufacturers to pass on additional savings to the consumer. The better the discount, the better chance the component manufacturer has of forging productive, long-lasting relationships with loyal buyers and earning a place on their boards.

Obsolescence Soft Landing for Customers

Transitioning a component toward obsolescence is not a decision that a component manufacturer takes lightly, but it is one that is necessary in order to pursue new markets and grow the customer base. But before component manufacturers make such a decision, it is critical that they do not forget about their current customers and the inconvenience obsolescence represents. Component manufacturers should make every effort to help provide as soft a landing as possible for long-standing customers. Many component manufacturers send PCNs with a last time buy date, but they could do so much more. By directing them toward a Partstat Last Time Buy Solution, they become the reason their customer can make a last time buy while simultaneously preserving working capital and saving an average of 42% in annual carrying costs. This is an extra step that no other competing component manufacturer will make on behalf of their customers, and it is a guarantee you will stand out in your market.

Ability to Walk Away From Obsolescence Sooner

It is also worth mentioning that Last Time Buy Solutions provide an equally soft landing for the component manufacturer itself. As OEM product lifecycles extend, it locks in the component manufacturer to continually provide inventory for far longer than is deemed profitable. Last Time Buy Solutions offer a way to walk away from such obligations without inconveniencing the customer. After all of the inventory necessary to complete the customer’s product lifecycle is fulfilled through a Last Time Buy Solution, component manufacturers then can cleanly break away to concentrate on newer, more profitable and in-demand products.

Solve the Inventory Storage Issue for Customers

Component manufacturers are usually not designed for long-term component storage. This often creates conflict whenever a customer is moved toward a standard last time buy. The component manufacturer is not prepared to offer storage, but at the same time the customer does not have the means or ability to store the components, either. Where, then, is the inventory supposed to reside until it is needed? The Partstat Last Time Buy Solution solves this issue by incorporating a best-in-class storage solution into the transaction. Instead of being a source of friction between the buyer and seller, this can be seen as a significant benefit that benefits both sides.