A manufacturer (OEM) of office equipment utilized a contract manufacturer (EMS) to produce their products. As is common with many contract manufacturing agreements, at the end of production any remaining excess inventory must be purchased by the OEM. In this case, the EMS approached the OEM with a $ 1M claim.
The OEM employed EDX’s Inventory Ownership solution to settle the excess inventory claim. Instead of the OEM purchasing the inventory EDX purchased the inventory from the EMS. EDX’s program allowed the OEM 3 years to consume the inventory and/or pay for the $ 1M inventory. Over this same 3 year period EDX’s program aggressively marketed and sold a portion of this excess claim to third parties. During this term, 100% of the recovery dollars from the sales were applied towards the OEM’s purchase commitment.
At the end of the 3 year term, the OEM calculated that, not only were they able to preserve their working capital by virtue of not having to purchase the claim themselves, they actually reduced their inventory claim by several hundred thousand dollars.