Five Steps To An Effective Investment Recovery Program – Part 1

At any given time, almost 20% of a typical organisation’s assets are surplus to its needs. From office equipment to production machinery to entire facilities, these assets lie idle or in storage, depreciating in value and representing potentially millions in untapped value for your organisation.

Successful investment recovery programs help organisations maximise the total value of their surplus assets by intelligently managing, redeploying, and selling them. Through a high-performing program, your organisation can maximise cost savings and recovery, simplify and standardise operations, enhance productivity, inform business decisions, and measure results to drive continuous improvement.

Since investment recovery remains a non-core function and strategic area for most organisations, your business may lack the time and resources required for a high-performing program. The ideal solution is often to select a trusted partner to handle this area. An expert partner has the proven strategies and partnership ability, standardised global processes, and asset management expertise needed to build, implement, and manage an effective investment recovery program.

Step 1: Develop Proposed Solution to Secure Buy-In from Key Personnel

Your organisation’s Procurement, Sourcing, Supply Chain, Facilities, and Finance departments as well as plant leaders will all be involved in the investment recovery process. Before presenting a fully developed investment recovery program to top leadership, you must secure buy-in from these business unit leaders. To do so, you must demonstrate how your new program will run and how it will be more effective than your organisation’s current investment recovery process, if it has one. An expert partner will help you develop a plan for a “proposed state” program that you can pitch to stakeholders.

Your partner’s proposed solution should include the following elements:

Standard Redeployment Process to Maximise Cost Savings

A systematic redeployment process allows your organisation to identify, search for, view, and transfer surplus assets across your entire organisation globally. Ideally, this process will be facilitated by web-based, enterprise-wide asset management software. When consistently used across your organisation, a comprehensive system will maximise redeployment of your surplus, generating substantial cost savings by reducing the need to buy new.

Sales Program to Optimise Recovery

In your partner’s proposed solution, surplus assets that aren’t redeployed should be sold in the secondary market for maximum recovery. Make sure your partner’s approach leverages multiple sales channels to drive sales proceeds, including online auction, direct sales, live auction, and retail “Buy It Now” sales. Your partner’s plan should also include multichannel marketing strategies – from targeted print ads to email marketing campaigns to search-engine optimisation and search-engine marketing strategies – to generate awareness of and interest in your surplus. Also look for a partner that can tap a vast global buyer base to sell your surplus anywhere in the world.

Complete Sales Support

How will your partner manage all aspects of selling your surplus, including payment, storage, removal, and compliance with applicable regulations? Make sure your partner’s proposed solution includes a plan for handling these elements. Ideally your partner will facilitate shipping and payment processing and integrate compliance into your program to ensure your organisation adheres to all regulations associated with selling and managing surplus. Storing surplus externally isn’t ideal since your goal is to avoid spending another dime on assets once they’re deemed unnecessary. But a trusted partner will have warehouse facilities at which to store your surplus when you’re in a time crunch, want to disassociate your brand from the assets, or avoid the logistics of buyers visiting your site for inspection and removal.

Before giving their blessing, organisational leaders may also ask you to provide a “proof of concept” for the program. Through a pilot project, you will need to measurably compare the effectiveness of your proposed solution versus the current approach. An expert partner will work with you to build and implement this pilot project.

Be sure to highlight your program’s ability to drive better results in the following categories:

  • Total Program Value: cost savings through redeployment + proceeds from surplus asset sales
  • Number of sites and business units redeploying surplus
  • Number of individuals bidding on or buying your surplus, and number of countries and states they came from.

By demonstrating that your proposed solution is measurably more effective than the current state, you’ll make a strong case for the program and secure buy-in from the right personnel.

Step 2: Identify Infrastructure Needs and Pitch to Leadership

With key personnel on board with your plan, you must now determine what your program’s infrastructure will look like. The most vital components of your infrastructure are the program and site Champions. The program Champion drives the program’s success and adoption across your organisation. Each site also needs a site Champion, who leads and manages the investment recovery process on site. The more widely your program is adopted across your organisation and the more consistently it’s executed, the more capital your organisation will generate. So the Champions’ jobs are extremely important.

Here’s a closer look at the site Champion’s responsibilities in the investment recovery process.

Roles and Responsibilities of Site Champions

  1. Proactively identify surplus assets on site.
  2. Maximise redeployment and sourcing of surplus assets to and from the site.
  3. Work with investment recovery partner to sell assets for maximum recovery.
  4. Provide approval before assets are sold or redeployed.
  5. Partner with Finance to ensure approval/redeployment/sale process for surplus assets is mandated in internal policies.
  6. Engage appropriate departments throughout process, including Finance, Custom Compliance, Shipping, and Health & Safety.

You also need to identify a team member to serve as systems administrator for your asset management software. This person will give users access to the software, facilitate the asset identification/redeployment/sale process, keep asset listings up to date, load assets into the system if needed, and pull sales/redeployment figures to help determine program ROI.

With your infrastructure in place, you can now pitch the program to top leadership. Because of the planning work you and your partner have already done, you should be prepared for any questions they may have. Also be sure to communicate what you need to make the program successful, as leadership can help you identify program and site Champions. Once they’ve signed off, they also may be willing to promote the program across the organisation or to specific individuals.  Vocal support from top leaders will increase interest in and adoption of your program.

Step 3: Set Program Standards and Conduct Training

Now that you’ve developed a program and have the buy-in and infrastructure to support it, you must set consistent guidelines for how the program will run day-to-day. Program and site Champions and other key personnel will also require training to ensure they understand the new process and replace old habits with new ones. Take the steps below to ensure your process is aligned with investment recovery best practices and consistently executed across your organisation.

Implement Asset Management Software

The first step of your investment recovery process is for site Champions or other personnel to catalogue all surplus assets at their sites. Asset management software enables personnel across your organisation to easily enter vital information about surplus assets – such as make, model, and location – and mark them as available to redeploy.  Employees at other sites, viewing this information in real time, can then request to redeploy these assets. Users can also request assets that aren’t currently available.

Assets not redeployed within a certain time period are automatically moved to the secondary market to be sold. The software also allows you to monitor the shipping, settlement, and payment processes to ensure these run smoothly.

By providing a standardised, easy-to-follow process rooted in best practices, asset management software facilitates consistency and  effectiveness in your investment recovery program.

Set Criteria and Timeline for Redeployment and Sale

Firm but flexible guidelines for redeploying and selling assets ensure that your program balances saving money with gaining recovery and maximising velocity. Most critically, you’ll want to give site Champions guidelines for when to redeploy an item versus when to sell it. Although these criteria will vary from one organisation to the next, here are some guidelines to consider.

When your program first launches, prioritise internal redeployment for all surplus assets as long as their total breakdown, removal, and shipping costs are small percentages of the costs of purchasing new. Redeployment facilitates program adoption, a core goal of your program in the early stages. Each redeployed asset benefits not one but two sites, increasing program visibility. Redeployment also generates significant cost savings that stress the program’s value. Even redeploying a basic item such as a projector, for instance, can generate a net cost savings of nearly $2,500. Since redeployment focuses on reusing items and deferring them from landfills, it also enhances your sustainability metrics.

What surplus should you sell? All assets not needed elsewhere in the company should be sold, regardless of value. Selling your surplus generates valuable cash and supports sustainability initiatives by deferring items from landfills. You may be tempted to scrap certain assets instead of selling them, but it’s important to let your partner advise you here. You’d be surprised what your seemingly low-value surplus could go for on the secondary market. 

Provide site Champions with a standard timeline to guide the redeployment and sale process. As a rule of thumb, surplus assets should be redeployed within 30 days after being identified. After that, they should be moved to the secondary market to sell. This timeframe gives team members ample opportunity for redeployment while keeping assets flowing through the investment recovery lifecycle to ensure a steady stream of value.

You’ll also want to identify which stakeholder (or stakeholders) at your company will approve redeployment/sale decisions. This may be a leader in Finance, Procurement, Supply Chain, or a related business area. Meet with this person to make sure they understand their new responsibilities and are committed to expediting approvals to ensure program velocity and efficiency.

Conduct Training

Site Champions are responsible for conducting training sessions to help team members become fluent in the new investment recovery process. For instance, certain team members will need to be trained to use your asset management software. An investment recovery partner can provide on-site training as needed.

To facilitate training, make sure to document every step of your program in sufficient detail. Put the process in writing and equip every site involved in the program with a copy of this guide. Having a straightforward investment recovery “bible” close at hand will help team members adhere to the process you’ve worked so hard to implement.

Ensure Program Compliance

Appropriate training will help your team members understand and commit to the new process. Still, Champions will have to monitor the program, especially in the first few months, to ensure program compliance. Old habits die hard, and even team members who understand the value of the new program may find themselves slipping back into the “old way of doing things.” It’s up to your Champions to keep everyone marching in the same line.

Your Champions must also ensure that the organisation is aligned and communicates well regarding the program. For instance, assets in the process of being sold should be clearly identified so other units know not to scrap or redeploy them. Your organisation may decide to institute penalties for team members who interfere with the investment recovery process. Your partner may also charge fees to recoup sales expenses it has already incurred.

A standard process, appropriate training, and the right level of oversight will ensure that your program is consistently executed.

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