Two Ways EMS Providers and Authorized Distributors Can Utilize a Partstat Inventory Management SolutionBy Logan Wamsley
Last time buys are a critical element of any manufacturer’s production strategy. Due to the many inconveniences typically required to make a last time buy transaction, however, many organizations view them as a last resort.
Partstat’s innovative inventory management solutions aim to change that perception and make last time buys a key component of supply chains. The first solutions of their kind in the industry, they offer customers an alternative to either exploring the open market for end-of-life components or tying up their cash flow and bank lines in inventory that may not be needed for many years.
There are two ways that an EMS provider or authorized distributor can take advantage of a Partstat inventory management solution. While both have the same function fundamentally, they accomplish two different goals.
Below is a brief explanation of each of these two paths:
Inventory Reduction Strategy
Although Partstat’s strategies are designed around last time buys, there are occasions where a potential customer reaches out to us after the last time buy has already been made. However, this does not mean that the company cannot realize the benefits of our solution. The inventory reduction strategy meets this need.
Going this route, Partstat will step in and purchase all of the slow-moving, already-owned inventory in an EMS provider’s or authorized distributor’s possession. Not only does this instantly convert all of their inventory into cash that can immediately be used in whatever way will produce the greatest economic return, it also removes the inventory from their balance sheet, which in effect, frees up all tied up capital. Not only does this allow the EMS provider or authorized distributor to maintain efficient, effective cash flow throughout the supply chain, but it seamlessly moves the payment obligation to the OEM customer and avoids any friction that could occur between long-standing supply chain partners.
Once the transaction is complete, Partstat will then store the inventory in our industry-leading warehousing facilities on the customer’s behalf, handling all of the hidden associated with long-term storage such as inventory carrying costs, insurance, taxes, and administration fees. When the inventory is needed, Partstat will then ship the inventory back to the customer in accordance with a personalized delivery schedule, ensuring that there are no delays in production. It’s all the benefits of a last time buy transaction without the drawbacks.
Partstat’s inventory management solutions are capable of looking beyond already-owned inventory, as well. Utilizing the solution in what we call a “go-forward strategy,” Partstat will work with customers and complete last time buys on end-of-life inventory whenever PCNs are issued. All of this is done with Partstat working directly with the component manufacturer. This way, the manufacturer, EMS provider, or authorized distributor will never be responsible for providing upfront capital. The inventory will be immediately shipped to Partstat’s secure warehousing, where it will remain until needed by the customer.
This is a more forward-thinking solution that will help guarantee business continuity for the entire lifecycle of the OEM product. These last time buys have no limits in terms of quantity, inventory storage specifications, or term length. For example, Partstat has worked with medical device manufacturers who require end-of-life inventory for 15 or more years. The “slower” the inventory moves, the more a Partstat inventory ownership solution can help.
To see how Partstat can play a part in solidifying your supply chain, speak to one of our inventory specialists today!