by Clarence Hopkins, President Royal Bearing, Inc.
There seems to be one over-riding issue that consistently
impedes maximum asset recovery for industrial plants. There is significant disconnect between the investment recovery department and the purchasing department at many industrial plants. The mandate of the IR department is selling surplus assets for maximum return. Yet most purchasing departments have a tendency to avoid the purchase of any surplus. Obviously, this approach both affects the sustainability of the supply chain and can actually negatively impacts the cost structure of the corporation.
As a buyer and seller of surplus bearings, our company frequently receives notice from an investment recovery department when surplus bearings are available. We inspect the bearings—and if they meet our quality standards, we make an offer. Upon acceptance, we remove the bearings to our facility, and then carefully re-inspect each individual bearing before cataloging and preparing it for sale. Too often,  however, as soon as our sales people start marketing the new (never-used) surplus bearing, they hit a solid wall. Purchasing departments slam the door in our faces, apparently considering all surplus bearings to be rejects, outdated, old, or simply too dangerous for use.
This attitude can be ultimately costly for these companies. While the surplus bearing market may be somewhat unique in that we deal only in like-new bearings that the original owner has kept in ready-to-use condition as spare-parts inventory, I expect that other surplus products distributors receive a similar reception by purchasing departments. An example would be resellers of re-manufactured and reconditioned equipment whose product often performs as well as new, is available at a fraction of the cost, and retains a guarantee of support from a reputable surplus dealer.
New product manufacturers obviously advise purchasing agents to buy new product. In my industry,
marketing campaigns referencing “scrap yards” and “landfill sites” give an impression that all surplus bearing wholesalers are disreputable and polluting the market with bad product. To understand the impact of this misinformation campaign, I challenge your IR department to survey the purchasing decisionmakers at each of your own plants as to their policies with regard to buying new surplus bearings and other surplus products. I believe you will be very surprised at the negative attitudes you encounter.
In a world increasingly sensitive to environmental consequences, the usage of surplus parts is socially responsible. In some cases, these parts would have simply ended up in a landfill rather than in operation at an industrial manufacturing plant. The energy that would have been used to create a brand-new part is saved by a resold surplus part being used in its place. Essentially, the buying and selling of surplus parts is a very good green choice.
In addition to the positive environmental impact, a surplus dealer may be able to immediately supply
a critical need when the original manufacturer has a long lead-time. Recently, we were able to immediately ship a large bearing to South Africa for which the manufacturer was quoting a one-year lead time. If you were running the South African plant, which would you prefer—to have your plant sit idle, losing money, or to buy a new quality-assured surplus bearing that was available for immediate shipment?
Recommendation: In order to promote greater use of surplus parts in industrial plants, each investment recovery professional should provide a training program for their own purchasing people. Show  the cost advantages of buying surplus, along with potential time savings of using surplus, especially when manufacturers are quoting extended lead times. Separately, all IR professionals should establish ongoing relationships with reputable surplus distributors and wholesalers, so that together, we can maximize everyone’s opportunities for meeting their business goals.
SUMMARY: It’s time for IR managers to take the lead within their organizations to make sure that the sustainability and cost savings of professional investment recovery practices are recognized and supported by the purchasing practices within their organizations. Get out your hymnals, and start singing the same tune!

Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 3, 2010

© The Investment Recovery Association


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