by Gretchen Gayowski
It’s 8:00 a.m. in the office and time to get started on the day. Around 8:15 you hear a familiar pshhhhhhhhtttttttt sound outside…
You wander over to the dock, open the door, and look into the dark recesses of yet another trailer full of items—some marked, sometimes not—destined for final disposition. Sound familiar? Maybe it’s a panicked phone call telling you the asset has to be out yesterday!

Investment Recovery has long been thought of as the final resting place for company assets, the
place where excess and obsolete assets go for final disposition. But how does the final link in the supply chain impact your company? Bringing Investment Recovery out of the basement requires a paradigm shift in how material is received and how information is reported. There is a translation that has to take place from selling junk to managing life-cycle asset disposition. Before you go into the boardroom, be sure you have aligned Investment Recovery objectives with overall company objectives. Show how Investment Recovery can support financial and corporate responsibility objectives. Be prepared to make the translation from “junk on a truck” to speaking the language of numbers.

Some thoughts on how to make your Investment Recovery numbers dance:

  1. Set Sales Targets. Understand your sales history, what will be retired from use in the company in the future, and what Fair Market Value is today for the commodities you sell. Know your assets, know your plan!
  2. Measure Service Provider Performance. Through the use of scorecards, set measurable financial objectives for service providers, including things such as expected gross revenues, margins, expense targets, Benefit to Cost, and Cost Avoidance metrics. Also include measures for excellence that might look at audit results or SOX (Sarbanes Oxley) compliance. Including productivity measures will help to determine whether the service provider is making your business a priority and will be the cornerstone for understanding your internal and external customer experience.
  3. Identify Key Internal Metrics that will help to identify success: a. Margin %—Will help to understand what it costs to do business b. Gross Proceeds
  4. Understand Internal Customer Objectives. Know what is important to your internal customers by understanding how their success is being measured. Internal customer objectives could include things such as reduction of property tax or elimination of real estate. It could also include things such as number of pounds of material recycled or quantity of redeployed units.
  5. Eliminate Fixed Costs. Make sure your costs can scale with your demands.
  6. Intentional Performance Plans. Understand that there will always be events that impact targets, but it is important to understand what is within your span of control and set strategies to accomplish these goals. By identifying your business strategies, setting goals, defining your actions and reporting results monthly, you keep focused on where your IR business is, where it is taking you, and most importantly, what to expect when you get there.
  7. Dashboards. Executives speak in numbers and what drives them—actionable, measurable goals. Show financial results, what drove those results, and how these results stack up against your projections.
  8. “Brag Decks.” Show the results of year-after-year financial success in a presentation.
  9. Corporate Responsibility. Investment Recovery is about more than just money. Show executives the other intangible benefits that IR provides in terms that are meaningful. a. Recycling—Highlight in a “Brag Deck” what % of your company’s assets have been recycled. Green is the new currency! b. Donations—Present Fair Market Value of items that were donated to charitable organizations. c. Redeployments—Here is an opportunity to report savings in the form of cost avoidance by eliminating the need for a new purchase.
  10. Trade-in Value. Close the loop with purchasing by offering to support new contract savings opportunities through the trade-in of obsolete material or verification on the value of a trade-in vs. asset sale.
The language of the boardroom is numbers. For Investment Recovery to show value toward overall company objectives, IR professionals need to think about how money talks. Know what you need to sell and understand how proper disposition of assets can impact corporate social responsibility. Let the success of your measurements drive your Investment Recovery services from the basement to the boardroom.
Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 1, 2008

© The Investment Recovery Association