Surplus and idle assets - Throughout industry, pressure to squeeze maximum return from each and every asset is intense. This principle drives process simplification and the focus on maximizing efficiency in production. Such strategies have become vital for day-to-day operations in many industrial sectors and return considerable value.

However, business leaders in pharmaceutical, fine and specialty chemical companies who aspire to the very highest levels of excellence are now extending this rigor to other aspects of their companies. For example, they are recognizing the additional value that proactive management of idle and surplus analytical laboratory instrumentation, and plant and packaging equipment can deliver.

Significant Asset Base Idle and Underutilized

Today's companies hold enormous value in the form of equipment and plants. Keeping an accurate asset register provides a solid basis on which to make management decisions, but research suggests that on average, 5% of a manufacturing company's global asset base is idle, with most not having good visibility of these underutilized assets.

Businesses have always traded surplus assets, and equipment dealers and auctioneers have been there to help. But increasingly, more sophisticated tools - tools that can develop a comprehensive inventory of assets and support their utilization across multiple sites as needs change - are being systematically implemented. In parallel, there has been significant growth in the market for the sale and purchase of surplus equipment.  

Progressive businesses strive constantly for an efficiency edge, but in recent years, the tough economic climate has driven consolidation, relocation, mergers and acquisitions, outsourcing, and plant closures in almost every sector and company. The result? More executive teams see that a focus on managing assets can deliver directly to the bottom line.

Once a decision has been taken to proactively manage the asset base, a company must consider a series of choices. For many, the variables are clear - redeployment vs. external sale, or realizable value vs. available time, for example.

But every situation is different - reusing equipment within an organization may be seen to deliver the highest value and, with time available to do this, some companies will have this as the sole focus. External sale is a secondary consideration that only comes into play if redeployment is not needed. For other organizations, perhaps where a site or line is being closed, time may be short and releasing as much value as possible within the available window is the overriding factor.

Whatever the goal, the process is logical and straightforward, but like much in business it needs to be carefully planned, and rigorously executed in order to maximize returns. For most executive teams, asset management is not a core activity, so contracting with an external specialist that can bring industry expertise and experience to bear, whatever the size and shape of the project, is an attractive option.

Right Tools for the Job

As noted above, auctioneers and equipment dealers offer their services in many industrial sectors. However, there is a view evolving of what best practice in asset management looks like, and specialist companies have become established leaders. 

A holistic approach that balances the needs of a company can be developed. Equipnet  describes this with its Value Control Model. Figure 1 shows how redeployment, negotiated sales with managed pricing through an online marketplace, competitive auction events and clearance programs fit together to deliver a consolidated service, whatever the individual needs of a company.

We can pull this apart to consider the key components. Importantly, what ties the redeployment part of the model together is the availability of an asset tracking platform that can be installed across multiple sites. Users should be able to post, track, identify and internally redeploy equipment that is not being used in its present location, ahead of moving to external sale.

An established example is the ARMS (Management System) platform. This simple yet robust program can sit behind the company firewall, and features workflow management, multiple access levels for plant managers and executives across the business, in-depth search functionality, and comprehensive listing specifications, providing information that lets the company know what they have and where it's located.

The rise of the Internet has seen the development of online marketplace products. Innovative features to look for here include:

• "Top-down" offers rather than the more usual "bottom-up" bidding model
• Expert evaluation of goods offered for sale and accurate setting of sale prices
• Concentrated promotion of the marketplace platform and, within it, advertising of specific equipment
• Payment by results

Auctions are another dependable channel, but the competitive nature of auction events can produce wildly differing results. Designing and managing a successful auction event depends on many factors. A specialist partner should advise on the right approach in each case; your options might include online auctions, live/webcast auction events, sealed bid and private treaty sales. Innovation should be at work here, too; look out for active marketing by the auction provider, expert knowledge of the equipment being offered for sale, and a flexible approach to managing bids close to but under any reserve set. For instance, Equipnet's Smart Auctions Technology picks up and processes bids that most auctions would ignore.

There are those assets that hold very little value and are best dealt with through clearance, by donations, scrap and environmental recycling. Working with your chosen expert, you should expect to be advised of the scrap value of your idle equipment and presented with a comparison of that amount against the market value to sell it, together with a recommended strategy that will generate the highest rate of return for your company.

Summary

Pursuing a proactive asset-management strategy is not without its challenges. It requires formalized processes, specialist knowledge of the industry and its equipment, dedicated resources, and a concerted effort to change management. Many companies lack the time or resources that are necessary to establish a successful program themselves. For this reason, the majority of companies that are succeeding in this area are relying on a partnership with a specialist service provider. They are enjoying the clear benefits of cash release, reduced costs and increased efficiency.

As to what makes us different, clients tell us that our industry expertise really adds value. We have become the world's largest specialist asset-management company by not only offering a range of tools to allow businesses to take control of their assets, but also by building a team of specialists - people who know the equipment, know the market, and understand project management. Taking a holistic view that balances the needs of a client to realize maximum value for key assets, dispose of routine items in as timely a way as possible, and deal with scrap and low-value residual materials, too, has been the platform for our success.