Framework for capex asset recovery and liquidation

Managing the used or unused inventory of equipment is a problem area for any organisation. With no organised methodology to liquidate these surplus items, the company loses a substantial sum when these items end up as scrap or liquidated inefficiently for a small return. A procurement organization can effectively use various liquidation channels to get the best out of the used equipment resale.

Returns from a surplus asset is high when the target resale value is benchmarked and the right channel partner is engaged. The strategy is to constantly choose the right channel partner whenever there is surplus generation. Partnership with asset management companies helps to leverage their appraisal services and buyer base.

The surplus assets can either be reused in any of organization’s facilities, or scraped or liquidated for returns. This is based on the need for warehousing space, target resale value, closing of accounts, and demand for the equipment. While some write offtheir dead inventory.

Challenges in liquidation of surplus assets:

Given the diverse categories of products in the surplus inventory, the value varies depending upon the demand of each equipment in the secondary market. The age and condition of the inventory impacts the value and time to liquidate the items. Other challenges include surplus inventory across multiple product locations and their tracking for liquidation.