Who Are Partstat’s Inventory Financing Solutions For? Part 3: Component Manufacturers

Although many of the supply chains solutions throughout the industry focus on equipment manufacturers (both OEMs and their EMS partners), one commonly overlooked but equally important consideration is the benefits they have on component manufacturers.

Such a solution may not directly be associated with them, but the adoption of an Inventory Financing Solution can have profound effects on the component manufacturer and go a long way to forming longstanding relationships that will ensure their place on OEM customer boards for many years to come.

Putting the Customer First

The last thing component manufacturers want is to inconvenience their customer base. Any production delay, even ones that are beyond component manufactures’ control such as the current raw materials shortage caused by the effects of the COVID-19 pandemic, increased the likelihood of their customers moving toward alternative sourcing strategies.

In some cases, this can include their customers entering into gray markets where the component manufacturer does not have as much direct control over the quality of the product being sold, or even locating different component manufacturers entirely with alternate components. In order to forge long-term customer relationships, it is in the component manufacturer’s – and its customer’s — best interest to have some form of retention strategy in place.

Inventory Financing Solutions as a Value Add

Many component manufacturers around the world have referred our customers to Partstat Inventory Financing Solutions for exactly this purpose. By offering customers a means to source the inventory they need upfront with a single purchase, component manufacturers then have the luxury of fulfilling a large single bulk order with instant payment realization — which lowers manufacturing costs and in turn gives the manufacturer the option of transferring that savings onto the customer. More importantly, however, it gives the customer today’s locked in price while avoiding any potential disruption that could occur over the lifecycle of its product. A lot can happen in five, ten, or twenty years — shipping delays, production issues, unexpected but necessary component obsolescence, natural disasters and global pandemics, labor shortages, political instability in the component manufacturer’s regions of operation — and offering a means to avoid such potential issues is a service that OEM customers will not soon forget.

In Summary

In short, as stated on the Parstat Component Manufacturer’s page, component manufacturers can see several benefits should their customer choose to take advantage of an Inventory Financing Solution. These include:

• Support Long-Term Platforms

• Make Obsolescence Transitions Earlier

• Eliminate Price Erosion

• Protect Design Wins

• Receive Immediate Payment

• Realize Multiple Years of Revenue in One Transaction

Most importantly, however, is that an Inventory Financing Solution keeps component manufacturer customers happy and free from supply chain disruption. Especially in today’s competitive marketplace, risk mitigation comes at an all-time-premium, and offering that as a value-add to customers will be something that will get attention. No more costly redesigns, preserved working capital, no price inflation, no extended lead times, and quality inventory direct from the manufacturer on hand for the entire lifecycle of the product.

Next, for the final part in our series, we will discuss the benefits authorized distributors receive through our Inventory Financing Solution.