Five Steps To An Effective Investment Recovery Program – Part 2

As mentioned last week, at any given time almost 20% of a typical organisation’s assets are surplus to its needs. Successful investment recovery programs help organisations maximise the total value of their surplus assets by intelligently managing, redeploying, and selling them. Read on to learn about Step 4 and 5 in building an effective investment recovery plan.

Step 4: Launch the Program and Measure Its Effectiveness

With a standard process in place and team member training complete, your organisation can go live with its investment recovery program. You should hold this program to the same high standards as any part of your core business. It must be continually measured and evaluated to ensure return on investment.

Your investment recovery partner can provide program performance data for a wide range of metrics. Which metrics you’ll measure success by depends on your program’s goals. Do you aim to maximize cost savings and recovery? Or are you primarily focused on avoiding costs, reducing compliance risks, and driving sustainability initiatives?

Here are some metrics by which to consider measuring your program:

  1. Redeployment Savings: How much money did you save by redeploying assets? Generally, a redeployed asset’s value is calculated as a percentage of the cost of buying new.
  2. Sales Proceeds: How much recovery did you generate by selling your surplus in the secondary market?
  3. Cost Avoidance: How much removal, storage, disposal, tax, and other cost did you avoid by redeploying or selling surplus?
  4. Operations: What productivity gains did your organisation realise by standardising investment recovery processes?
  5. Sustainability: How does your program measurably enhance your sustainability initiatives? Two common sustainability metrics are volume of assets deferred from landfills and percentage of assets sold instead of scrapped.
  6. Program Utilisation: What percentages of sites and potential users are actively using the program? How many assets have been redeployed or sold? Asset management software helps you measure program usage so you can focus on underutilising sites as necessary.
  7. Used Equipment Purchase: How much did you save by purchasing used equipment via your investment recovery partner instead of buying new? Tapping its connections in your industry, your partner can locate used assets to buy for a fraction of the cost of new.
  8. Timing: How expediently can your partner remove surplus assets, taking them off the books and freeing up storage space?
  9. Auction Results: How many individuals bid on your surplus assets? How many viewed them? How many total bids were received? How much higher than net book value was your recovery? These stats indicate your partner’s ability to generate high levels of interest in your surplus, maximising recovery.

Continually monitoring some or all of the metrics above will ensure your program is achieving desired results in line with your organisation’s goals. It will also help you identify opportunities for continued improvement. That leads us to the next step.

Step 5: Continuously Monitor Your Program for Improvement Opportunities

Continuously seeking improvement opportunities is vital to your program’s success. While monitoring program metrics will help you measure and maximise program effectiveness, you may also consider the best practices below.

Integrate Asset Software into Your Capital Approval Process

Before requesting to purchase a new piece of equipment, team members should always check to see if it’s available elsewhere in your organisation. Integrating asset management software into your organisation’s capital approval process makes it easy for personnel to identify and redeploy assets they need. By maximising use of existing assets and reducing the need to buy new, this simple change can save your organisation thousands, if not millions, of rands annually in capital expenditures.

Get Your Site Closure Team Involved

Your organisation’s site closure team should be integrated into your investment recovery program. Site closures are common events for many organisations and usually result in surplus assets. Your investment recovery partner will work with your site closure team from early in the process to identify all surplus resulting from closures and redeploy or sell it as appropriate.

Leverage Internal Communications to Increase Program Adoption

Your organisation’s internal communications department can promote your investment recovery program internally, drawing attention and increasing adoption. Once your program is up and running – with all surplus in your asset management software, ready to be redeployed – all appropriate team members should receive an email communication announcing the launch of the program and providing instructions for posting or requesting assets for redeployment.

Program successes should be communicated to appropriate employees. Consider a monthly or bimonthly emailer that announces redeployment savings and recovery generated from the program. You could also spotlight key assets that were redeployed and stats associated with asset sales, such as number of assets sold and number of bidders participating. When team members see the measurable impact the program is making, they’ll be more likely to participate. Recognising Champions and other team members for their roles in the program will make these team members feel appreciated and increase their enthusiasm.

Keep top leadership informed of the program’s performance as well, especially leadership who approved your initial plan. Provide executives with a high-level view that includes the key success indicators you determined in Step 4, and explain that more detail is available if they’re interested. Demonstrating program ROI will ensure continued leadership buy-in.

Establish Process for Training New Champions

Work with program and site Champions to develop a process to train future Champions when current ones leave or move into new roles. This process should be standardised and documented, and should help the Champion-in-training understand the value of an investment recovery program and the necessary process to ensure its continued success.

Conclusion

Without a consistent, best-practices-driven investment recovery program, your organisation may be leaving millions of rands in savings and sales proceeds on the table. By following the actionable guidelines in this white paper, you can implement a program that maximises ROI and turns you into an investment recovery hero at your organization.

It’s possible to build, implement, and continually manage an investment recovery program entirely in-house. But, for most organisations, enlisting an outside partner is a more effective solution. Investment recovery is a highly specialised and non-core process, and most organisations lack the time, expertise, proven processes, resources, and secondary market access needed to achieve desired results.

An expert partner will not only work closely with you to maximise value for your surplus through strategic redeployment and sale. It will also help you develop and implement a winning program from the ground up. It will partner with you to execute proof-of-concept pilot projects, help you champion the program to all necessary stakeholders, provide asset management software to optimize redeployment and standardise asset management, maximise recovery for surplus sold while ensuring regulatory compliance, and deliver the metrics needed to help you continually justify your program to the C-suite. By managing all of these areas, an expert partner will minimise your required time and resource investment in the program, freeing up your organisation to focus on core business.

About Liquidity Services

Liquidity Services (NASDAQ: LQDT) employs innovative e-commerce marketplace solutions to manage, value and sell inventory and equipment for business and government clients. The company operates a network of leading  e-commerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 500 product categories. Our superior service, unmatched scale, and ability to deliver results enable us to forge trusted, long-term relationships with over 9,000 clients worldwide. With nearly $7 billion in completed transactions, and 3 million buyers in almost 200 countries and territories, we are the proven leader in delivering smart commerce solutions.

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