An acclaimed, widely-known automotive manufacturer encountered a setback when a critical, formerly-common semiconductor was discontinued with an immediate last time buy date.
Compounding the issue even further was the difficult decision to furlough a portion of the company's workforce during the peak of the COVID-19 pandemic, putting the manufacturer even further behind schedule. To avoid further delays, the manufacturer was prepared to either make a substantial last time buy, or alternatively look to third-party suppliers. Both options would result in significant loss of working capital.
Through an Inventory Ownership Solution, Partstat was able to make a Last Time Buy on the automotive manufacturer's behalf utilizing Partstat's own capital. Without spending any upfront capital, the customer was able to secure all five years of inventory needed to maintain production for their build's lifecycle. Additionally, Partstat agreed to store the inventory in their own dedicated warehouse facilities and ship the semiconductors as needed to the customer's plants, resulting in a 42% reduction in annual carrying costs.
Ultimately, the manufacturer was able to preserve $9M in working capital, which proved essential to maintaining their workforce and production demands during this difficult time. In other words, Partstat bought their inventory so they didn't have to.