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.