Making a Last Time Buy? Consider Your Inventory Storage Needs

By Logan Wamsley

When it becomes clear that an OEM must make a last time buy to preserve the continuity of its business model, there are often several hang-ups that result in either delays or outright rejection of the last time buy plan altogether. One of these is the discovery of how much working capital it might take to cover inventory needs over several years. This, as it has been noted in a previous blog, can be easily overcome with the help of a solution such as Partstat’s Last Time Buy program. In this strategy, Partstat uses its own working capital to purchase the inventory needed in a single bulk purchase on behalf of the customer.

The other hang-up, however, may at first seem even more daunting: warehousing space. As OEMs in the current competitive business environment continually strive to accelerate production, that eventually takes a toll on overall carrying capacity. OEMs, especially smaller-market OEMs, simply cannot afford to house legacy inventory that may not be needed for another 10-15 years. This does not even account for the carrying costs inherent with any warehoused product, combined costs for necessary measures such as climate control, packaging and handling, and ESD protective measures which can often be as high as 30% of the component’s original cost.

This also does not account for the specialized storage needs certain types of inventory require. Banking raw die and wafer, for example, requires adherence to strict humidity requirements and handling procedures that can only be done with highly specialized equipment. The purchase of such equipment upfront is often too much to ask following the aftermath of a costly last time buy.

In short, last time buys simply cannot be completed without one of two things: a long-term commitment to using capital to expand and improve warehousing infrastructure, or an alternative warehousing strategy. With the former incredibly difficult due to the working capital already tied up in the last time buy, that leaves the latter option.

Knowing this, Partstat makes its long-term storage infrastructure for electronic components, semiconductors, and computer products a central component of its Last Time Buy Solution. Not only does Partstat purchase the inventory, but it stores the inventory in accordance with the strictest ISO-certified processes in the industry. These include features such as packaging and handling by an experienced team of certified storage specialists, full climate control including temperature and humidity, and, in certain cases, protection in the industry’s only custom vault designed for electronic inventory which has features including:

• Fire Rated Class 350 Certification.

• Clean Agent Fire Suppression System.

• Zone IV Seismic Rating.

• Magnetic Shielding.

• 1,100 lb. Vault Door.

• Modular Construction.

Also worth mentioning: With a Last Time Buy Solution, all inventory is stored and ready to be shipped anywhere in the world at a moment’s notice without any additional OEM costs, which eliminates virtually all risk typically associated with storing inventory offsite. When it is needed, Partstat ensures the inventory will be there. Not only is this more secure than any other storage strategy available for OEMs, but this has been proven to save customers an average of 42% in annual carrying costs.

It is important to consider all the facets of a last time buy before a transaction is completed, including the need for a proper long-term storage strategy. With a Last Time Buy Solution, however, such considerations are already factored into the equation to allow for not just peace of mind, but for investment into other short- and long-term business initiatives.