Improving Working Capital Case Study: Service Inventory

Case Study

Improving Working Capital Case Study: Service Inventory

A prominent medical device manufacturer (OEM) utilized a certain custom Graphic Card, in the production of its MRI device. The device had been in production for several years and there were many devices in the market that required service support. The OEM has an obligation to offer support of their devices for up to 10 years. The Graphic Card manufacturer announced that they would be obsoleting this particular card by year’s end. The OEM required these custom Graphic Cards for seven more years of service. The OEM was faced with an immediate $8M purchase to satisfy this need.

Through the EDX Inventory Ownership Solution, we provided purchase order administration and purchased the entire forecasted quantity of graphic cards and provided the OEM a seven year delivery schedule. The OEM and EDX entered into a Supply Agreement that included the full transfer of warranties.

The OEM preserved $8M of working capital and reduced the OEM’s inventory commitment which allowed the finance team to deploy their capital towards ROIC; which produced much higher returns.

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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