A flexible, personalized delivery schedule. Guaranteed business continuity throughout the entire lifecycle of the OEM’s product. An average of 42 percent savings on inventory carrying costs. Up to 10 years of preserved working capital. These are only a few of the benefits OEMs and EMS providers receive upon adopting a Last Time Buy Solution.
These are more than proclamations or boasts — they are observations taken from working firsthand with some of the most respected OEMs in the world including Phillips, Emerson, General Electric, and Rockwell Automation.
But as we continue to discuss the impact our Last Time Buy Solution has on manufacturers, a very important point is often overlooked: how an EDX Last Time Buy Solution affects OCMs on the other side of the supply chain.
OCMs benefit every bit as much from our services as their OEM and EMS provider counterparts. Today, we’d like to cover just a few of the ways we’ve seen Last Time Buy Solutions help OCM partners firmly secure their positions in OEM supply chains.
In 2016 alone, over 300,000 electronic components, semiconductors, and peripheral products manufactured by OCMs were transitioned into obsolescence. Of these, 41 percent were not accompanied by a part change notice (PCN) for their OEM customers.
Sometimes, even a PCN isn’t enough. Even with 12 months’ notice, OEMs often struggle to arrange their finances and secure storage resources for the influx of unexpected inventory.
But, of course, 12 months’ notice is a best-case scenario. There are thousands of variables in place that set the last time buy date, and often the resulting time window can be very small. Notifying every customer of an end-of-life component’s last time buy date is a daunting task OCMs take very seriously, but when a single critical component is forced into obsolescence on short notice (or with no notice at all), it can significantly affect OCM and OEM relations with regards to future orders.
As a “bolt-on” service OCMs can suggest to their customers, a Last Time Buy Solution virtually eliminates the uncertainty and stress that comes with end-of-life components. With the ability to purchase, store, and fulfill inventory up to an industry-leading 10 years while preserving precious working capital, it grants a unique opportunity for OCMs to position themselves not only as a supply chain partner with foresight, but as a partner who truly does put the customer first. The power of integrity should never be underestimated.
These are the kinds of little details that separate your company from the competition. When the time comes for an OEM to partner to supply critical components for their next game-changing product, who do you think they are going to choose — the OCM who put all of the last time buy responsibilities on their customer’s shoulders, or the OCM who took the time to offer their customer a solution to their dilemma?
OEMs and OCMs alike are in the manufacturing business, not the storage and fulfillment business. As such, when fulfillment schedules of critical components are disrupted as a result of obsolescence, it can have a significant impact on both parties.
OEMs obviously have to find a solution to store last time buy inventory necessary to complete their product’s lifecycle — but if a fulfillment agreement is already in place, occasionally that responsibility can fall on the OCM at great cost.
Thankfully, our Last Time Buy Solution is a perfect remedy for this scenario.
Recently, EDX completed a case study where a respected OCM was obligated to fulfill a three-year delivery schedule on $12 million worth of ASICs. As the ASICs had already been manufactured, without the aid of a Last Time Buy Solution they would have been forced to store them onsite, on their own dime, for the duration of the agreement.
Transferring these obligations to EDX also opened up flexible delivery options for the OEM customer far beyond what the OCM was equipped to provide alone. In this case, EDX was able to present the OEM an option to extend the delivery schedule up to five years, if needed.
The key to securing long-term business relations in the manufacturing industry is to offer services that no competitor can hope to match. Flexible, personalized, long-term delivery options might just be the extra incentive that converts a one-time buyer into a permanent fixture on your fulfillment schedule.
Up to now the benefits we’ve discussed benefit OCMs somewhat indirectly. Ensuring that business-to-business relations remain strong is incredibly important, but it’s hardly the only reason to consider offering customers a Last Time Buy Solution. In fact, our Last Time Solution grants OCMs the most significant benefit of all: the immediate realization of up to ten years’ worth of revenue in a single transaction.
The most unique feature of our Last Time Buy Solution is how the OEM customer does not purchase the last time buy inventory directly. Instead, regardless of size or expense, EDX places the order on the OEM’s behalf using our own capital – and 100 percent of that payment goes straight on the OCM’s books for that quarter. If the OEM requires ten years’ worth of inventory valued at $1 billion, then that is exactly how much revenue the OCM will realize for a single purchase. No other supply chain partner can help an OCM realize immediate revenue on that scale.
EDX stands alone in our industry as the standard for those who desire a better last time buy experience. We have provided savings, service, and peace of mind on both sides of the supply chain for over 26 years, and our Last Time Buy Solution reflects the culmination of our efforts to make OEM — and OCM — issues related to obsolescence…well…obsolete!