A prominent medical device manufacturer utilized a custom graphics card in the production of their MRI device. The device had been in production for several years and there were many devices in the market that required service support. The OEM has an obligation to offer support of their devices for up to 10 years. The graphics card manufacturer announced that they would be obsoleting this particular card by year’s end. The OEM required these custom graphics cards for seven more years of service. The OEM was faced with an immediate $8M purchase to satisfy this requirement.
Through an Inventory Ownership Solution, Partstat provided purchase order administration and purchased the entire forecasted quantity of graphics cards and provided the OEM a seven-year delivery schedule. The OEM and Partstat entered into a supply agreement that included a full transfer of warranties.
The OEM preserved $8M of working capital and reduced the OEM’s inventory commitment which allowed their finance team to deploy their capital towards winning projects, producing much higher returns.