Are you tired of failing to meet your internal and external customer’s expectations? Are you being pulled a dozen different directions at once? Is your boss getting phone calls from your internal customers complaining that you are not providing them with the services they assume is your responsibility? Well join the club!

A large percentage of Investment Recovery Departments today have downsized and are still expected to deliver the goods. Trying to do more with fewer resources is a growing problem and can have several negative effects; starting with the loss of customer confidence, loss of senior management support, and most Page 14 importantly, the erosion of IR staff members’ commitment and morale.

The company I used to work for went from being the economic leader in the forest products industry in the 1960’s and 70’s to dead last in the late 80’s. In 1988 our new company president set a new course which did not include several of the diverse businesses that had become part of the company’s portfolio. A major move was afoot to divest these non-core businesses including our used retail machinery and equipment business, located in four retail stores across the nation. During the 16 years that we operated the retail stores, our internal and external customers came to expect several perks and services. Our internal customers could deliver surplus machinery, equipment and supplies to one of the stores and receive an instant credit back to their business. Our external customers could visit one of the stores, without the plant restriction, and purchase any item(s) that they found that fit their needs on the spot. The expectations of these two customer groups were just two of the major hurdles we had to deal with as we began to close the stores and make the move to a service organization.

A downsizing solution. In the early 90’s, after downsizing our Investment Recovery organization from 83 to a staff of eight (!), we soon realized that our dramatically smaller team could not possibly provide the same level of service as when we were 83 strong. We made a request to our senior vice president (our organization sponsor) to support a limitation on the value of machinery and equipment that we would become involved with. We by setting a $50,000 stipulation as the minimum sales value. We soon found we were still frequently working below our self-imposed limit as the company changed how they purchased several types of rolling stock, i.e., lift trucks, pickups and automobiles. With 250 to 300 surplus lift trucks to dispose of every year, we were routinely selling equipment below the $50,000 limit, yet were still adding significant value to company.

The Investment Recovery Charter: Defining the IR Function. Our solution to the situation was to develop an Investment Recovery Charter. Our team engaged several of our internal clients and our procurement department to review the types of surplus that was routinely reported to us for sale or redeployment. We made a generic list of the assets and grouped them into two columns:

Column #1 included those types of machinery and equipment that required evaluation, extensive marketing and where we could add substantial value through our efforts.

Column #2 was a list of assets that had minimal value and the cost of our efforts exceeded their value. We concluded that by focusing our efforts on the surplus items from Column #1 and developing a process and markets for items in Column #2 that the business personnel could access without the Investment Recovery Department’s direct involvement, we would—over time be able to provide the highest possible value to the organization with the limited resources at our disposal. Obviously, the act of creating our IR Charter did not change our clients’ expectations immediately. But over time, having a charter that defined for everyone the appropriate role of Investment Recovery, substantially  reduced the calls to sell a desk, chair or old computers and allowed us to focus our efforts on providing the highest value for our organization. I have outlined below the charter that has worked well for over 20 years.

INVESTMENT RECOVERY CHARTER

MANAGED BY I.R. DEPARTMENT The disposition of the following items is managed by IR at Unit Level: 

Machinery—Individual machine units, manufacturing process units or systems.

Power Feed—Switchgear, distribution panels, circuit breakers, safety switches and transformers used to distribute energy to electronically operated machinery. Substation equipment when owned by the company.

Process Piping—Where manufacturing process systems are used, i.e., pulp and paper mills, plywood and composite panel manufacturing, etc.

Plant Vehicles—This includes lift trucks, cranes, tractors, etc., which are not licensed for road use.

Motor Vehicles— his includes trucks, tractors, trailers and other motor vehicles licensed for road use.

Logging Equipment—Machinery and equipment used specifically in the harvesting of logs, i.e., yarders, skidders, delimbers, forwarders, etc.

Construction, Transportation and Material Handling Equipment—Machinery and equipment used in light and heavy construction, i.e., graders, backhoes, wheel loaders, scrapers, dozers, tugs, railroad, barges, etc.

Electric Motors—AC and DC motors 250 HP and larger. All sizes if part of a major project.

MANAGE D BY UNIT STAFF The disposition of the following types of machinery, equipment and supplies is managed by the Unit personnel, and not managed by IR unless part of a Major Project*: 

Power Feed— iring, conduit bus duct, bus bar and junction boxes.

Plant Piping—The term “plant piping” should include non-process types of industrial installations. Pipe fittings, valves, hangers, instrumentation, meters as connected to the plant buildings. Water mains, firefighting, air, etc.

Lab/Test Equipment —This includes all items necessary for the operation of a laboratory or test facility. Typical equipment would be microscopes, clean tables, fume hoods, ventilation systems, spectrographs, ovens, stills, glassware and other apparatus.

Office Furniture and Fixtures—This includes desks, tables, chairs, credenzas, filing systems, cabinets, safes, portable partitions, etc.

Office Machines & Devices—This includes typewriters, calculators, photocopiers, check writers, dictation equipment, cash registers, duplicators, etc.

Data Processing Equipment—This includes computers, printers, plotters, terminals, modems, monitors, word processors, etc.

Tools: Permanent Tools—Portable electric and air tools, anvils, vises, etc.

Perishable Tools— Items that are used up rather than wear out such as drill bits, chisels, reamers, etc.

M.R.O.—Maintenance, repair parts and operating supplies. * Major Project definition: A complete plant or process line. 

Recommendation. Almost all of us are being asked to do more with less. If you are struggling to meet your internal customers’ expectations, it behooves you to consider developing your own Investment Recovery Charter and gain support from upper management. It only works if  the company senior management team endorses the charter and supports your need to focus on those assets that bring the highest return for your efforts.

Dennis Knutz, CMIRF, ASA President, Investment Recovery Exchange, irexch@msn.com 360.915.6941