What is Manufacturer or Supplier Partnership

Partnering with suppliers/manufacturers is one way to finance a subscription model for product subscriptions in a product-as-a-service business model. Other options include:

What it is

For retailers or service providers who aren’t the original manufacturer (OEM), a supplier/manufacturer partnership eases financing by deferring or sharing the cost of inventory. The OEM may ship products on consignment or offer extended payment terms (a form of vendor financing). You receive the goods with little or no upfront cash and pay over time as subscription revenue comes in—a practical kind of risk-sharing.

Where it fits

• Great for asset access when you’re a retailer/distributor (not the OEM).
• Also helpful for non-asset costs via credits/support (setup help, spare parts agreements).

When it’s a poor fit

• The supplier isn’t invested in subscriptions, or their program is too rigid for your needs (limited terms, strict minimums, no returns).

FAQs

Is this debt?
Not exactly. It’s usually trade credit/consignment (vendor financing). It may still create obligations similar to debt, but with operational flexibility.

Can this work alongside bank debt or an SPV?
Yes—with consent and clear priorities. Ensure RoT/consignment terms don’t block lenders’ first claim on assets or receivables.

What if demand is lower than expected?
Your protection comes from return rights, buybacks, or extended terms. Negotiate these upfront and model a downside case.

Can suppliers help beyond inventory?
Often yes—co-marketing, install kits, training, and spare parts packages that reduce early cash strain.