Many business owners face a common problem: what to do with excess inventory. When managed properly, excess and end-of-life inventory can provide cost savings and create additional revenue streams. Establishing an asset life cycle management plan helps to ensure that used laboratory equipment is properly disposed of, sold, or redeployed. Businesses cannot afford to allow assets to lie in storage collecting dust. Improper disposal of assets risks government fees and tarnishing your Brand’s reputation.
Developing an internal team to handle surplus assets, or by working with a professional services firm, can help your business realize cost savings via redeployment, generate additional revenue through remarketing, and ensure you are in compliance with government asset disposal regulations.
Redeploying Excess Laboratory Assets
In many multi-national pharmaceutical companies employees who require a piece of equipment will seek to acquire the item new. However, that same item may be located in a different country, state, or even a different laboratory in the same building. Thousands of dollars are wasted on the purchasing of duplicate equipment every year. This simple problem could be avoided if companies had better control over their excess equipment.
Thankfully, there are actions that managers can take today to remedy this problem. The first step is implementing a company wide asset management system. This system should allow employees, especially procurement managers, from around the globe to understand what assets are readily available. Reducing redundant purchases is a quick way to avoid spending cash needlessly.
To ensure redeployment is truly the most cost effective option, your organization should follow some basic guidelines. These guidelines may vary for each company. At their core, however, should be a set of criteria for which items should be redeployed and which should be sold.
The following present a good starting point:
- Redeploy if the item is high value and has a long useful life
- Don’t spend more on replacement costs (removal of the old item, shipping, and installation of the new item) than the cost of purchasing the item new
- It is better to redeploy high value lab equipment that is not in use before it becomes obsolete or its ability to operate declines
- Low value lab equipment (i.e. hot plates and stirrers) should be donated or sold from their location. Shipping these items may not make sense.
Redeploying surplus can avoid unnecessary expenses. However, it is important to establish a time frame in which items will be redeployed. If an item has been purchased and it won’t be used in the foreseeable future, a sale may be the best option. A general rule of thumb is thirty days. If no one has claimed the asset or indicated that it will be used, it is time to consider remarketing the item.
Remarketing Excess Laboratory Assets
Once the decision has been made that an item should be sold, either because it has reached the end of its useful life or isn’t being used, follow remarketing best practices to maximize the sale price.
- Estimate the value of the item. Enlist the help of professionals if needed
- Select a sales channel: online, live auction, private sale
- Develop a marketing strategy to attract buyers
- Set a schedule for potential buyers to inspect the items
- Set a removal period and arrange logistics if you are responsible for this stage of the remarketing process
- Understand transportation costs, especially if the buyer is in a foreign country
When remarketing laboratory equipment the Pareto Principle is at play, in that 20% of the equipment will return 80% of the total amount recovered. Focusing on newer models and high value equipment, as opposed to generic and low value items, has the potential to generate hundreds of thousands of dollars for your company.
When considering your sales channel, remember that broad auctions tend to deliver higher values as opposed to private, negotiated sales. If your company has experience with national auctions, this can help boost the recovery value for your assets. Alternatively, you can work with a professional services firm that has a specialty in remarketing laboratory assets.
One benefit of working with a professional services firm is that they do most of the heavy lifting for you. From appraising the asset, to minor repairs, finding buyers, negotiating a price, and delivering the asset. This can save your company many man hours and should be an option to consider if you do not have the time or skill to remarket assets alone. Focusing on your core business and outsourcing your asset disposition needs to a professional firm creates a hassle free process that can be used time and time again.
Being proactive in your asset life cycle management planning can help you avoid assets sitting idle in your laboratories, wasting capital on duplicate purchases, and incurring fines for improper disposal. Your excess and end-of-life equipment still holds value. Knowing how to unlock that value is a competitive advantage that your company should be exploring.