EMS Provider: Reduce Inventory & Improve Free Cash Flow

A leading EMS provider contacted Partstat to assist with a reduction of inventory they were holding for their OEM customer. The EMS had $8.6M on their books from purchases they made on behalf of their OEM customer. Furthermore, they had an additional $3.4M in on-order items for their OEM.

Utilizing Partstat’s Inventory Ownership solution, the EMS was able to recover the $8.6M in working capital and transfer their obligation to purchase the additional $3.4M of on-order items to their OEM. It was Partstat and the OEM customer who entered into a supply agreement.

The OEM was able to take control of the inventory and garnered a discount for the on-order items as Partstat was able to purchase all of that inventory immediately. They also were given an extended 10-year term to take and pay for the inventory. The OEM compared their holding costs to Partstat’s fees and discovered that they saved 47% in annual inventory carrying costs with Partstat’s solution.

Due to the successful execution of this immediate-need scenario, the EMS was able to reinvest the recovered cash to winning projects. Because of the benefits for both sides in this scenario, both the EMS and OEM look forward to engaging with Partstat for all future inventory needs to support both production and service commitments.