Guide to Resource Recovery for Fortune 500 Companies

Guide to Resource Recovery for Fortune 500 Companies

June 24, 2022PAO-04-022-CL-08

Every manufacturer has a common and straightforward goal — to extend the value of capital equipment investments and achieve maximum return on those investments. 

While these goals are easily stated, procurement and asset management strategies that allow leading manufacturers to achieve these ends are a bit more complex. To help Fortune 500 manufacturers extract maximum value from their capital equipment investments and allow organizations to be more agile when additional equipment is required, Federal Equipment Company has developed a robust Resource Recovery Program.

The Guide to Resource Recovery for Fortune 500 Companies provides information, ideas, and solutions for both procurement executives and site-level leaders on how to reduce costs, extend the value of existing capital investments, improve productivity, and become more sustainable organizations.

What Is Resource Recovery?

Simply put, resource recovery is a systematic method to utilize equipment further or otherwise increase return on investment. Ultimately, a successfully constructed resource recovery strategy recovers maximum investment from an organization’s assets.

There are seven primary investment recovery channels:

  1. Redeployment—redeploy surplus equipment from one site to another in need of the equipment within a manufacturer’s own organization
  2. Sell equipment back to the original equipment manufacturer (OEM)
  3. Sell equipment to an end-user
  4. Sell equipment to an equipment dealer
  5. Trade-in, repair, or rebuild
  6. Scrap the equipment
  7. Donate to a charitable cause

Most enterprise-scale manufacturers leverage each of these channels within their overall resource recovery strategy. However, extracting maximum value from owned assets requires technology resources, skills, experience, and expertise not commonly found within manufacturers’ internal teams. A resource recovery partner is needed, and for nearly 70 years Federal Equipment Company has successfully served as this partner to some of the world’s largest process manufacturing organizations.

Why Large Manufacturing Organizations Need a Strategic Resource Recovery Program

Enterprise-scale manufacturing organizations own, in many cases, capital equipment worth billions of dollars across dozens of manufacturing facilities. As market demands, product assortments, and technologies change, so do site-specific capital equipment needs.

As a result, excess and/or obsolete equipment often accumulates within sites. Sometimes excess equipment at one location is needed by another site within the organization. Other times, equipment is simply no longer fit for purpose across the entire organization.

Large manufacturing organizations need strategic resource recovery programs to achieve maximum return on capital equipment investments and allow procurement executives and site-level professionals to determine how to properly manage excess equipment. Furthermore, manufacturers need access to technology platforms and communications programs, as well as the ability to tap large networks of end-users external to their organization when equipment cannot be redeployed within their organization.

Redeployment capabilities are particularly important to large manufacturing organizations. On average, when a piece of equipment can be redeployed, the investment required is 80–85% less than the cost of purchasing new equipment — across large organizations, redeploying as many assets as possible before turning to external sale saves organizations a great deal of money.

However, too often, redeployment efforts are handled by procurement professionals with many other responsibilities. Excel spreadsheets with incomplete equipment information and missing photography are frequently the communications mechanism across the sites within the organization.

Success Story

Federal Equipment Company Recovered $1.6 Million for Leading Manufacturer within Tight Timeline

One of the world’s largest manufacturing organizations and participants in Federal Equipment Company’s Resource Recovery Program needed to liquidate and vacate one of their facilities quickly. Due to the tight timeline, an auction was the most effective approach for recovering maximum value from the equipment and removing the equipment promptly.

Federal Equipment Company’s team- and site-level personnel worked closely together to inventory, determine fair market value, and compile needed equipment information and photography.

Ultimately, the effort was quite successful.

•  Equipment sales of more than $800,000.
•  More than $250,000 fair market value was redeployed within the organization.
•  Cost avoidance of $500,000 as buyers were responsible for all equipment removal costs.

 

Benefits of a Well-Designed Resource Recovery Program

The most apparent benefits of a well-crafted resource recovery program are lowered capital equipment costs and maximized return capital equipment investments; however, other advantages include sustainability and access to a dedicated on-call sourcing team.

Extending Value and Lowering Costs of Capital Equipment
Redeploying equipment, buying used industrial equipment, and extracting maximum value from equipment no longer in use reduces overall capital equipment costs. For example, a facility needing a packaging line costing approximately $1.5 million if purchased new will pay only a fraction of that if the equipment is redeployed from another site within the organization.  

When equipment is no longer of use and cannot be redeployed within the organization, selling it to an external buyer, rather than allowing equipment to sit in storage for long periods or be in the way on an active manufacturing floor, maximizes the value that can be recovered. 

Sustainable Manufacturing
Sustainable manufacturing, which is defined as manufacturing products through economically sound processes that minimize negative environmental impacts while conserving energy and natural resources, has dramatically increased in importance among leading manufacturers. Redeploying equipment whenever possible or finding another organization that can utilize the equipment contributes significantly to the sustainability and zero-carbon objectives set forth by many forward-thinking manufacturers.

As just one reflection of sustainability’s importance among leading manufacturers, Federal Equipment Company was a finalist for BASF’s Sustainability Supplier of the Year.

Operational Efficiency
Often, surplus equipment is simply in the way, blocking or slowing access to equipment and materials in active use. The mere act of removing unused equipment from the manufacturing floor can increase productivity by allowing teams and goods to move around the floor more efficiently.

On-Call Sourcing Team
Particularly given the supply chain disruptions caused by the COVID-19 pandemic, Federal Equipment Company’s ability to serve as an on-call equipment and parts sourcing team has been of particular benefit. With increasing frequency, used parts and equipment must be acquired to maintain operational continuity or to make needed manufacturing capacity changes given the long timelines for securing new equipment.

With a large inventory in our warehouses and an extensive network of resources, the Federal Equipment Company team locates and procures needed equipment and components for our resource recovery program partners — often under tight timelines.

Components of a Successful Resource Recovery Program

Effective resource recovery across large organizations with many sites is a complex endeavor that is typically best handled in partnership with a respected industry leader such as Federal Equipment Company. While programs need to be tailored to the specific needs and nuances of each organization, successful resource recovery programs include the following.

Resource Recovery Online Portal
Site-level professionals need access to an easy-to-use resource recovery tool to effectively communicate both available equipment and equipment needs. Each company participating in Federal Equipment Company’s Resource Recovery Program utilizes a custom-built portal. This portal allows site-level professionals to efficiently list excess equipment and search for the equipment they need that might be available from another manufacturing site within the company.

Of course, not all equipment can be redeployed within a given company. However, comprehensive equipment listings allow Federal Equipment Company to effectively sell excess equipment to external end-users at the best price possible.

Fair Market Value Equipment Valuation Expertise
Tapping into decades of industry expertise, Federal Equipment Company helps companies participating in the resource recovery program to quickly and accurately assign fair market value to equipment so that the best asset recovery strategies are applied to each situation.

Resource Recovery Strategy Solutions
Redeploying assets whenever possible is optimal for extracting maximum value from excess equipment. However, when redeployment is not possible, Federal Equipment Company provides the expertise, network, and resources to extract maximum value on the market. Whether the best solution is a direct sale to another end user, Federal Equipment Company purchasing the equipment, auction, donation, or scrapping, Federal Equipment Company has the full complement of resources, networks, and expertise to advise and execute.

Inventorying Services
Sometimes facilities are not aware of the full assortment of excess equipment on hand. A Federal Equipment Company team can help with this inventorying process so that the needed equipment information and photographs can be gathered and the best resource recovery strategy decisions can be made.

Ongoing Awareness of the Resource Recovery Program across the Organization
Program awareness and regular communication regarding the equipment available are integral parts of the success of a Federal Equipment Company Resource Recovery Program. Through regular email and telephone communications, Federal Equipment Company ensures that stakeholders across the organization are kept up to date on available equipment and informed on how to begin the process of managing excess equipment at their facility.

Site-Level Training
Federal Equipment Company works hand in hand with all stakeholders to ensure that site-level professionals understand how to participate in the resource recovery program, the benefits for their site, and the advantages for the company as a whole.

Collaboration with an Internal Champion
While the Federal Equipment Company Resource Recovery Program is designed to be a turnkey solution that is easy for all stakeholders to execute, an internal champion is the difference between a highly successful program and a moderately successful effort.

An internal champion facilitates collaboration and provides insight into the organization’s needs, allowing the program’s value to escalate over time.

Federal Equipment Is the Go-To Partner for Resource Recovery Among Fortune 500 Manufacturers

As one looks across the used manufacturing equipment market, numerous companies of varying skill levels, experience, and integrity actively pitch their willingness to buy surplus equipment or sell used industrial equipment on the owner’s behalf.

However, a broader view of capital equipment asset management is generally absent from the conversation. Federal Equipment Company has a different perspective after nearly 70 years of building our capabilities and reputation within the used industrial equipment market.

We look for opportunities to add value to the entire capital equipment life cycle. In short, we strive to help manufacturers extract maximum value from their manufacturing equipment investments. Our resource recovery program, designed for Fortune 500 manufacturers, is an essential component of these efforts.

To learn more about Federal Equipment Company’s resource recovery program and to request a free asset recovery management consultation, click here.

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