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.