When it comes to last time buys, it doesn’t take long to realize that they are everyone’s problem. And when the time comes when such a transaction becomes necessary to ensure a product’s life cycle can be completed, it can often prove complicated to determine whose problem it is to solve.
Every EMS provider/OEM partnership operates a little differently, and there’s rarely a strict flow as to whose responsibility it is to acquire inventory — and too frequently, there is pushback from both parties as to who should write the check. Such an unpleasant financial discussion has the potential to erode long-standing relationships representing decades of trust in an instant.
Imagine a scenario where an EMS provider, tasked with manufacturing a high-demand OEM product, receives a PCN for a critical transistor from a component manufacturer indicating an immediate last time buy date. Considering EMS providers commonly operate on profit margins as razor-thin as 5-6 percent, taking sole financial responsibility for the last time buy represents a difficult proposition at best. So, what do they have to do? Naturally, the only option is to call their OEM partner and request they purchase the last time buy inventory on their behalf. If they come back with a hard “no,” what option is there left but to continue negotiations right up until the last time buy date? Should negotiations run over the last time buy date, then who is left to take the blame for the supply chain delay? Everybody pushes back, and everybody suffers because of it.
EMS providers: What if we told you there was a way to resolve this issue on behalf of your OEM partner without draining working capital from them or your own company? What if you could hold a supplementary service in your back pocket that allows you to tell potential OEM partners, “Oh, by the way, if a last time buy comes up during the production of your product, we’ve got that covered for you.” Imagine how that will sound to OEMs looking for reliable EMS providers to manufacture not just their current products, but products for the next 15-20 years. Imagine how different that will make your company appear from others seeking out the same business; where others balk at the idea of taking the burden of last time buys off their OEM partner’s back, your company welcomes the challenge.
The crux of the EDX Last Time Buy Solution is EDX’s ability to purchase last time inventory, regardless of price or quantity or inventory type, using our own working capital. If there is a supply chain partner on call to handle finances, there is no need for any unpleasant discussions regarding whose bank account the upfront payment will come from.
The dream scenario for OEMs is a supply chain so seamless that they can largely avoid involvement in the manufacturing process. The less worrying the OEM has to do regarding the fulfillment of their orders, the more likely they are to consider that EMS provider an asset that must be retained and cherished.
Trust is earned through quality results produced over many years, but to get to that point, you have to get your foot in the door with a first impression OEMs won’t soon forget. The next time you are developing your initial pitch, try telling them that you have a solution for last time buys. You’ll have their attention — we guarantee it.