Site Closures and Footprint Reductions: What Every Asset Manager Needs to Know – Part 2

Step 3: Execution

Sell Surplus in the Secondary Market

Surplus that has value and cannot be redeployed should be sold in secondary markets. Adhering to these best practices will help you maximize recovery.

  • Estimate values for assets

Knowing how much your surplus is worth will help you set appropriate recovery expectations. A trusted asset management partner will tap market and asset expertise to efficiently value your surplus.

  • Determine sales channels

Auctions (online or live) and make an offer sales are both highly effective methods. Private treaty, which focuses on a select group of prospective buyers, is the preferred sales method for specialized assets. Auctions are preferred for general assets with high demand. A reverse supply chain partner can determine the appropriate sales channel(s) based on your assets, buyer base, location, anticipated interest, and other factors.

  • Go global

Equipment considered outdated in your region may be in high demand in developing areas. For this reason, if you use outside resources to help, look for a partner with access to a global buyer base interested in your obsolete assets.

  • Implement a targeted marketing strategy

Your buyer base will vary depending on the condition, age, and location of your assets. Identify your target buyers, determine the best channels to reach them (email marketing, print ads, trade shows, etc.), and craft targeted communications designed to get their attention.

  • Schedule a preview period

Allowing potential buyers to inspect your assets in person will help them feel confident the assets meet their needs, increasing their interest and bidding.

  • Provide complete asset information

If you’re selling surplus online, be sure to include detailed descriptions and compelling pictures to whet buyer interest. Liquidity Services’ recent survey found that nearly all buyers of surplus (95% according to the survey) want to see accurate, detailed descriptions of assets for sale. The “story” of how the asset ended up on the secondary market also interests buyers, as 61% of survey respondents found this important. That same survey revealed that 94% and 65% of buyers, respectively, deem photos and videos important to asset listings. Compelling photos and videos establish buyer trust – and drive higher bids and recovery – by providing clear evidence of your assets’ quality.

  • Set a removal time

Ensure a smooth removal process by defining and clearly communicating expectations for when assets should be removed (and make sure this date occurs before your closure deadline).

  • Address potential compliance issues

If you plan to sell your surplus internationally, you’ll want to know which items may be subject to export controls regulations. An expert asset management partner will ensure you comply with all trade compliance protocols in the reverse supply chain. In addition, that partner will guide your organization through all data privacy requirements. That partner will also undertake a thorough screening of any potential buyers before they can bid or purchase, and then continuously afterwards, ensuring your surplus is never sold to the wrong buyers.

Manage Communications

Establishing open and clear communication channels is critical to maintaining an efficient operation. All concerned parties, such as the owner, contractors, and consultants, should meet regularly to review progress and identify potential problems. Additionally, the project team should meet on at least a weekly basis to discuss the current issues affecting the close. Key elements of managing project communications are:

  • Review progress on a frequent basis with project stakeholders
  • Resolve issues affecting the project
  • Monitor satisfaction of key stakeholders’ expectations
  • Manage team and contractor performance
  • Meet and communicate often
  • Discuss and assign responsibilities
  • Recognize success – develop and implement processes for recognizing and, if possible, rewarding success as a way to enhance team morale
  • Monitor team morale and if there are problems, find the cause and remedy as quickly as possible
  • Conduct performance reviews
  • Provide team training
  • Review sales results (number of bidders, number of bids, percentage of items sold, etc.)

Manage Quality Assurance

  • Participate in walk-throughs and reviews
  • Conduct daily safety inspections and audits
  • Carry out work inspections and audits
  • Undertake project reviews
  • Monitor costs and timeline variance
  • Manage and maintain the financial plan
  • Report monthly status

Step 4: Close Out

During the final phase of the Project Lifecycle, the project is completed. The remaining work of the project team involves releasing resources to other projects, developing lessons learned for future improvement, and closing out the administrative elements of the project from an organizational perspective.

A checklist of the final activities to be completed should be maintained and checked off as each is done:

  • Completing any close permits
  • Documenting and sharing project results and lessons learned
  • Managing project acceptance
  • Reviewing and recognising team performance
  • Conducting a close out meeting
  • Reviewing and recognising financial performance
  • Ensuring that all deliverables have been completed and all measurable success indicators have been met
  • Closing the project records, updating and archiving project documentation, and making sure that all close out conditions have been met

Conclusion

Facility closures are often necessary if your business undertakes merger and acquisition activity, consolidates operations, or moves production to other regions. By following the steps in this white paper and by partnering with an experienced provider, you can transform facility closures from challenges into opportunities that maximize value to fuel achievement of your strategic goals.

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