Cash to Cash Cycle Case Study: Component Lead Time

Case Study

Cash to Cash Cycle Case Study: Component Lead Time

A global manufacturer of control systems for the Oil and Gas Industry (OEM) utilizes a variety of component parts including an expensive Field Programmable Gate Array (FPGA) in the production of their control systems. The OEM sold multiple control systems to a field operations company that would be utilized in a large upcoming project.

Due to the especially troublesome lead times of the FPGA and other components, the OEM was faced with purchasing these components very early in the manufacturing cycle. Consequently the OEM’s working capital related to these components would be tied up for at least 12 months. Coupled with their customer’s payment terms the cash to cash cycle could be as long as 15 months.

Through the EDX Inventory Ownership Solution, we provided purchase order administration and purchased all of the components at the beginning of the manufacturing cycle. EDX managed the supplier lead times and shipped the product to the OEM and extended payment terms equal to 12 months. The OEM was able to preserve their working capital and collapse their cash to cash cycle by 12 months.

EDX’s Inventory Ownership Solutions improves the working capital positions of our customers while reducing annual inventory carrying costs by as much as 50%.

EDX will purchase, own, warehouse and fulfill inventory anywhere in the world for a period of up to 10 years.

  • Preserves working capital
  • Saves inventory carrying costs
  • Allows cash flow budgeting over multiple years
  • Eliminates lead time
  • Guarantees the cost of the components over multiple years
  • Secures the inventory for production and service over multiple years
  • Protects quality by avoiding open-market buys- counterfeit prevention

Purchasing Services
Purchase Order administration

Accounting services
Invoicing and AR for OEM designees (EMS,CM)

Warehousing Services
Physical receiving, inspection, storage
Administration, audits
Insurance payment (EDX asset)
Tax payment (EDX asset)
Maintenance of warehouse ISO/AS9120A and security protocols

Worldwide Shipping Services
Picking, packing, shipping
Export administration
Freight administration
Distribution to OEM designee(s)

Electronic Component Handling Services
Maintain ESD and MSL level processes and protocols
Break manufacturer packaging consistent with JEDEC standards
Re-baking of MSL components consistent with JEDEC standards
Coordination advanced inspection and testing: solder, electrical, functional

Reporting Services
Monthly or Quarterly reports monitoring consumption
Alerts for over-consumption or under-consumption

Component Manufacturer Liaison Services
Warranty administration
RMA administration
Coordinate failure analysis requests

Excess Inventory Disposition Services
If your forecasted usage changes EDX‘s well established distribution channels can assist in selling excess inventory. During the agreement term 100% of proceeds go to offset supply agreement commitment.

BOM Vitality Reports
Real-time tracking of 25 million components

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