Reduce Inventory Case Study: Excess Inventory Settlement

Case Study

Reduce Inventory Case Study: Excess Inventory Settlement

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.

EDX’s Inventory Ownership Solutions improves the working capital positions of our customers while reducing annual inventory carrying costs by as much as 50%.

EDX will purchase, own, warehouse and fulfill inventory anywhere in the world for a period of up to 10 years.

  • Preserves working capital
  • Saves inventory carrying costs
  • Allows cash flow budgeting over multiple years
  • Eliminates lead time
  • Guarantees the cost of the components over multiple years
  • Secures the inventory for production and service over multiple years
  • Protects quality by avoiding open-market buys- counterfeit prevention

Purchasing Services
Purchase Order administration

Accounting services
Invoicing and AR for OEM designees (EMS,CM)

Warehousing Services
Physical receiving, inspection, storage
Administration, audits
Insurance payment (EDX asset)
Tax payment (EDX asset)
Maintenance of warehouse ISO/AS9120A and security protocols

Worldwide Shipping Services
Picking, packing, shipping
Export administration
Freight administration
Distribution to OEM designee(s)

Electronic Component Handling Services
Maintain ESD and MSL level processes and protocols
Break manufacturer packaging consistent with JEDEC standards
Re-baking of MSL components consistent with JEDEC standards
Coordination advanced inspection and testing: solder, electrical, functional

Reporting Services
Monthly or Quarterly reports monitoring consumption
Alerts for over-consumption or under-consumption

Component Manufacturer Liaison Services
Warranty administration
RMA administration
Coordinate failure analysis requests

Excess Inventory Disposition Services
If your forecasted usage changes EDX‘s well established distribution channels can assist in selling excess inventory. During the agreement term 100% of proceeds go to offset supply agreement commitment.

BOM Vitality Reports
Real-time tracking of 25 million components

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