How Partstat Saves OEMs 42% on Annual Inventory Carrying Costs

By Logan Wamsley

Over the past 27 years, Partstat has partnered with some of the largest and most accomplished and innovative manufacturers in the manufacturing industry. GE, Philips, Boeing, Harris, IBM, and HP have all enrolled in a Partstat solution, and all have realized benefits that only Partstat can provide. One of these is saving an average of 42 percent on annual inventory carrying costs through our Last Time Buy Solution.

For some, this claim doesn’t quite add up considering the scale of some of the customers who employ are services. How can we possibly save customers on carrying costs when these billion-dollar companies have such vast in-house resources at their disposal? This is a good question, and one that we are happy to explain:

It all relates back to economies of scale.

Consider the benefits of incorporating ASICs into an OEM product. Application specific integrated circuits, unlike general circuits, are custom-designed from the ground up for a single unique purpose. Unshackled from the need to craft a component that provides everything to everybody, OCMs are free to push the limits of what a single circuit is capable of in terms of power and efficiency versus size. ASICs are optimized for a singular unique skill, which grants OEMs the leverage to stand out in a competitive marketplace.

Partstat operates in very much the same way. Manufacturers fund their endeavors, from design to production to component storage, from the same pool of working capital. To invest in one means to cut funding from the other — and as a result, manufacturers force themselves to walk a precarious tightrope that requires detailed forethought into where their priorities truly lie. Can industry-leading OEMs store their own inventory? Of course they can, but what are they sacrificing by doing so?

Quite a lot, as it turns out. A long-standing rule-of-thumb in the manufacturing industry is that annual carrying costs equate to approximately 20 percent of the inventory’s original value. In recent years, however, the need to incorporate specialized equipment capable of maintaining more sensitive electronics has increased carrying costs for some components over 30 percent.

Our solutions are designed for OEMs who deem that their priorities should lie not on the side of storage costs, but on the side of innovation. A specialized focus on our infrastructure allows us to offer storage capabilities that are more secure, efficient, and cost-effective than anything else a manufacturer can adopt on their own.

While an OEM would prefer to invest in technologies that can improve their products, we do the same by considering storage our product. Over time, our infrastructure has expanded to include a natural disaster-proof custom storage vault, desiccant ECD dry cabinets for die banking, and global custom fulfillment capabilities that allow us to pick, pack, and ship sensitive electronic inventory anywhere in the world.

We don’t have to sacrifice innovation in the name of carrying costs, because critical inventory storage is our innovation.