Poor management of excess inventory, or “obsolescent inventory,” can consume a sizable portion of a company’s profit margin. Not only can it tie up vital working capital, but just holding excess inventory can cost OEMs as much an additional 25-30 percent of a unit’s original value. This is an inefficient, dangerous business model, but many companies are left with no other choice.
To minimize the risk of losing a critical component before the lifecycle of a product is complete, OEMs will often overestimate their inventory needs when negotiating a Last Time Buy (LTB). While no company wants to pay for the storage and handling of excess inventory – and ultimately exposing it to the open market for pennies on the dollar – it’s preferable to navigating third-party suppliers for obsolescent parts now priced at six or seven times their original value.
EDX’s Inventory Exit Solutions grant OEMs a third way. Instead of choosing the lesser of two evils, companies now have the option to recoup most – and sometimes nearly all – of their original investment.
For over 26 years, EDX Electronics has been trusted with not only with purchasing, storing, and distributing LTB inventories necessary for life-changing – and sometimes life-saving – products, but also with the liquidation of excess inventory at maximum market value. How can EDX accomplish this when most OCMs are forced to settle for significant losses in working capital? The not-so-secret secret is their access to Big Data.
“Our Big Data is a reflection of everything our company has accomplished in the supply chain industry from 1991 to today,” says EDX CEO Dennis Menefee. “It’s only one of the many ways we establish ourselves as an innovator and inventory management authority, but it’s probably the clearest example of the value we can bring beyond the purchasing and distribution of components approaching obsolescence. The relationships we build with OEMs and CMs don’t end with the fulfillment of a supply agreement; we choose to go deeper by offering our customers solutions for all phases of the supply chain cycle.”
At the heart of EDX’s Inventory Exit Solutions program is their in-house search engine, Partstat. Powered by Big Data, Partstat is internationally respected by buyers and sellers alike for its free cost of entry, streamlined interface, and accurate depiction of market pricing for virtually any given component at any given time.
After the OEM provides a list of the excess inventory they wish to expose to the market, the experts at EDX will analyze Partstat’s Big Data to determine the demand for each individual part in a monthly Recommendation Report. If it is a seller’s market, EDX will negotiate with buyers the highest possible sale price. Conversely, if the part’s data indicates a buyer’s market with low demand, EDX will price the part accordingly to minimize the customer’s net loss.
In either case, the result is a substantial boost to the OEM’s net revenue, which can help spur additional company growth for years to come. “Our goal is to bring the human element back into the supply chain,” says Menefee. “Big Data is only as good as the individual who interprets it. That’s what we bring to our partners, what we bring to our industry, and what we are proud to bring to Philips Ultrasound.”