Since we first implemented our Last Time Buy Solution, we have preserved over $100 million in working capital for our customers. But while it could be easily assumed that each last time buy was similar in its overall design, in fact the opposite is true. Each case is different, and our solution has the ability to adapt to fit any supply chain, in any industry, for any electronic component or semiconductor, within any given market regardless of its current state.
The final form of each solution is contingent on a variety of factors (delivery schedule, storage procedures, etc.), and while the benefits remain largely the same across the board (preserved working capital, guaranteed business continuity, reduced annual carrying costs), each industry approaches our solution from a slightly different angle. Each customer comes to us with needs that apply uniquely to them, and each has their own distinct viewpoint based on the market they choose to operate in. What is appropriate for one supply chain may not necessarily fit another quite as well without some modifications.
We have been operating in the supply chain industry for over 27 years, and over time we have come to understand just how varied some of these industry needs can be. To illustrate, here are a few of the industries we have worked in over the years, and how our Last Time Buy Solution has helped each:
In many ways, the aerospace industry runs on last time buys. A Boeing 747, for example, is designed to endure approximately 30,000 pressurization cycles, which equates to officially 27 years of service. If the components necessary to service and maintain electronic equipment such as navigational receivers, transmitters, radios, and autopilots are available only two or three years before transitioning toward end-of-life, it’s easy to understand why aerospace OEMs are struggling.
This is where last time buys are instrumental for OEMs specializing in aerospace and defense. Last time buys not only can ensure that a product be supported for as long as its lifecycle dictates, but ensure that the component in question can be implemented quickly.
Time is of the essence; if any single piece of equipment is malfunctioning, an aircraft is designated AOG (Aircraft on Ground), and every moment a commercial aircraft is AOG is a moment the airline isn’t making money. Should an OEM miss the opportunity to make a last time buy, an aircraft can be grounded for months while purchasing managers scan third-party channels for the component in question. Our Last Time Buy Solution allows the manufacturer to avoid this struggle – and with our global custom fulfillment capabilities in place, customers can rest assured their inventory will be available to them at a moment’s notice no matter where the aircraft is grounded.
A defining characteristic of the healthcare industry, which in certain sectors features products with lifecycles well over 10 years, is the commitment medical device OEMs make to long-term service agreements. Over the years, OEM supply chains specializing in medical equipment have adapted to market challenges by introducing devices designed as upgradable platforms. A standard MRI scanner can cost healthcare providers up to $3 million, and in a marketplace where buyer cycles are not measured by years but decades, a seven-year service agreement that ensures optimal performance can give an OEM the competitive edge it needs to maintain its market standing.
In order to maintain such service agreements, however, OEMs are forced to stockpile the necessary inventory and field repair units on the front end of a product launch. With strict FDA regulations in place that severely limit design changes without undergoing a lengthy reapproval process, this means making large-quantity bulk purchases to ensure critical inventory is available when it’s needed most. Our Last Time Buy Solution provides these OEMs the bandwidth to make these purchases without tying up their working capital.
With so many shared responsibilities between OEMs and their contract manufacturers, deciding who is responsible for carrying out last time buys often can be a point of contention. CMs, due to their proximity to suppliers in the supply chain, are usually the first point of contact when a component is approaching end-of-life. Such developments are unexpected, and often they even come with an immediate last time buy date.
But while CMs may be the ones who see the notification first, they are rarely in a financial position to make the purchase. Such a conversation is often tense, and not only can it fracture even the most long-standing partnerships, but once the matter is resolved, it may already be too late. Should a last time buy date pass without action, the only option left for all parties is to either commit to a product redesign, or prematurely discontinue the product entirely. Both options come with consequences that have the potential to be disastrous — for consumers, for OEMs, and for contract manufacturers.
To rectify this issue, our Last Time Buy Solution can be offered as a “bolt-on service” for contract manufacturers to offer OEM customers, ensuring continuity across multiple products without harming their own long-term goals for expansion and profitability. Having an additional service on hand has helped our CM partners stand out from the competition. OEMs realize what the disruption a delayed last time buy can cause, and as soon as they realize what can be done for them, their choice of which company to work with becomes that much simpler.