As the overall lifecycle of components grows shorter by the year, last time buys (LTBs) are quickly becoming the new normal for OEMs across multiple industries. To keep a product in production for its entire lifespan, manufactures must find a way to work around the lifecycle mismatch between components and the products they create. (To read about this lifecycle mismatch in more detail, click here.)
In a perfect world, this process would be seamless. OCMs would inform customers of their intention to discontinue a component with a product change notification (PCN), an order would be placed to cover the manufacturer’s needs, and business would continue without a hitch – at least until the OEM’s next product begins its lifecycle.
But we do not live in a perfect world. Managing last time buys, even in the best of situations, is rarely a smooth process. There are dozens of variables in play – and if even one of these dominoes falls the wrong way, it could have profound consequences for your product, your business, and your profit margins.
If you are prepared to make a last time buy, below is a brief list of the most common hurdles you can expect to face. Each of these can be overcome – but without proper procedures and infrastructures in place dedicated specifically to last time buy management, your odds of reaping the success predicted by your original business plan are slim. Treat each point mentioned here with care and proper foresight, and your company will find itself in a much stronger position to innovate, grow, and ultimately reach the pinnacle of its industry:
Last time buys require a commitment that stretches far beyond a single purchase. In fact, a proper plan to manage last time buys affects all phases of the supply chain cycle. If your infrastructure does not consider the burden proper handling and storage, upfront payments of working capital, and excess inventory can have on your bottom line, then it’s time to look into the Supply Chain Solutions offered by EDX. These include:
• BOM Monitoring to stay ahead of, and confirm, obsolescence with the help of Big Data.
• Last Time Buy Solutions to secure up to 10 years of LTB Inventory without spending any working capital.
• Custom Storage and Fulfillment Solutions for LTB inventory that guarantees long-term business continuity.
• Inventory Exit Solutions to market and sell excess inventory at maximum value.
To see a Last Time Buy Solution in action, click here.