The Need for ROIC: How Partstat Works to Save OEM Working CapitalBy Logan Wamsley
The costs of last time buy inventory go far beyond the initial cost to acquire it; in fact, according to a recent survey of equipment manufacturers, the annual costs of carrying inventory alone are, on average, greater than 21% the original cost of the product. Despite this reality however, the need to acquire last time buy inventory in a world still recovering from the COVID-19 pandemic is as much of a necessity as ever.
Much of this need stems from supply chain disruption. According to a recent study by Resilience360 and the Business Continuity Institute, 73% of the companies surveyed experienced detrimental supply-chain disruption resulting from the pandemic. Additionally, nearly 20% of companies said they expected to hold more inventory. As a result, companies already limited by strained working capital are being forced to tackle an additional burden they may not be prepared for in the form of multiple years of last time inventory. This may preserve the lifecycle of current production runs, but without the proper investment in secure long-term storage facilities and procedures to go along with the last time buy inventory acquisition, much of the sensitive electronic inventory acquired will not maintain optimal functionality long enough to be incorporated into a build.
In order to survive, new strategies must be implemented that work to preserve available capital and improve overall ROIC. Such strategies, however, have historically been difficult to discover and even more difficult to implement.
What separates the Partstat EOL Last Time Buy Solution from other solutions that claim to preserve working capital is that Partstat uses its own capital to complete the transaction. Without any upfront costs placed onto the customer, Partstat will purchase and acquire the entirety of the last time buy inventory needed by the customer regardless of cost, quantity, or terms of schedule. Combine this with Partstat’s secure long-term storage facilities which will house the inventory for as long as needed — as well as ship it anywhere in the world on a personalized delivery schedule — no working capital directly from the customer is tied up or wasted on additional costs. According to our findings, in fact, taking advantage of Partstat’s long-term storage options as part of an EOL Last Time Buy Solution have been proven to save customers as much as 50% in annual carrying costs.
The future of the electronics manufacturing supply chain is still largely uncertain, and well into 2020 we are still trying to fully understand the repercussions current events will have on current and upcoming production initiatives. In order to maximize flexibility, working capital must be available to deploy projects that will maximize return on investment. The post-COVID-19 world demands operational change, and manufacturing solutions like the ones offered by Partstat put OEMs in a position that prepares their finances for whatever tomorrow might hold.
For more information about how our EOL Last Time Buy Solutions improve your ROIC, check out the below video from Partstat CEO Dennis Menefee: