Last Time Buy and Inventory Ownership SolutionsBy Michael Stratton
Inventory is usually the largest asset, as well as the largest expense item for OEMs’ and their contract manufacturers. In fact, ten of the top companies on the Dow reported carrying over $40 Billion of inventory.
As you can imagine, these companies have very sophisticated inventory management systems…but, even they can’t avoid increasing inventory levels, because of the inefficiencies that are inherent in all supply chains. This is especially a problem in electronics manufacturing; it’s mostly due to the difference in the production and service life cycle of an OEM’s product and the life cycle of semiconductors and other electronic components.
Manufacturers can quickly exceed their inventory budgets and spend precious working capital due to :
- Electronics obsolescence which can force multiple-year Last Time Buys
- Product redesigns and transitions
- or to secure inventory to support their long-term service commitments
Beyond the drain on working capital, there are Inventory Carrying Costs. These annual costs range from 15% to 25% and include more than just capital costs, which are typically only 2-6%, but also include Inventory Service Costs (insurance, handling, taxes), and Inventory Storage Costs (warehousing, labor, and administration).
Our solutions were designed to lessen these inventory burdens. Partstat purchases, owns, warehouses and provide global custom fulfillment of electronic and semiconductor inventory for some of the top brands in the world. In fact, over the last couple of years, we have preserved over $100 million of working capital for customers, while reducing their annual inventory carrying costs by 42%.
This is really making a positive impact for our customers; we preserve their working capital, reduce their inventory levels; which saves on inventory carrying costs, And We protect their downstream revenues by securing the inventory needed to support their production and long-term service commitments.
Tell us about your Last Time Buy issues. What is your biggest challenge with inventory?