Last month the first R, Reuse, was discussed. Typically two to five percent of idle assets found in many plants could be reused internally. This not only saves repurchase costs but contributes positively to a company’s sustainability program.

This month we will consider the second R which is Recondition.  Rebuilding assets such as valves, pumps, transformers and motors is more economical than purchasing new. Today’s society is programmed to replace rather than recondition. When something no longer functions, the first thought is to replace it. In discussions with front line staff, new units are not always better. There is some truth in the old saying “they don’t make things like they used too!”.

The key to a successful reconditioning program is communication. All too often non-functioning equipment gets set aside with little or no information on the problem or issue. The unit sits in storage or laydown yard and by the time someone thinks about it, nobody knows what was wrong. At this point the decision to replace rather than recondition is made and the equipment gets flagged for disposal. This missed repair opportunity could be avoided simply by having an equipment data sheet that is logged and attached to the equipment. This way, the issue is known and the decision maker is in a better position to choose the recondition option!

Investment Recovery & Corporate Sustainability
 

Sustainability is becoming a key factor in every corporate department, including procurement. However, there is a huge gap in most large organizations that fail to understand the importance of surplus equipment, supplies and inventories. An essential aspect in sustainability is to change the mind-set of buyers regarding used assets or surplus.

This role called Investment Recovery or Surplus Management can be created within the company or contracted out to a company like Veracity who specializes in surplus management.

Certified Managers of Investment Recovery (CMIR) work to maximize the value of surplus within an organization. Assets or surplus that is no longer required can then be traded in, sold, donated or recycled. The ultimate goal is to keep assets and inventories out of landfills and into hands of those who will re-purpose the item(s) and use it!

Often people think about the cost when they think about environmental sustainability. Adding in the Investment Recovery framework can help shift that idea and show them it is possible to have profitable sustainability! Investment Recovery is often referred to as the missing link in supply chain and not only will it create immediate payback to the company but it also reduces a company’s environmental liability exposure risk and be successfully sustainable.