When you hear the term “investment recovery,” what types of assets come to mind? As supply managers know, the profession involves the management of a wide variety of materials, products and services. The same can be said for investment recovery. David E. Rupert, J.D., LL.M., manager, asset recovery for American Electric Power in Gahanna, Ohio, and benchmark chair and member of the board of directors for the Investment Recovery Association, provides five sources where supply managers should focus on investment recovery.
  1. New construction: When an asset such as a plant or warehouse is being built, items usually remain following the construction process. Whether it’s parts or other building materials, if the contract is structured appropriately, the assets should return to the supplier.
  2. Special designs: While some unused assets from a construction project are returnable, one exception is any asset specifically designed for the project: for example, an asset designed with a cosmetic purpose for a building. If that asset is removed from the final building specifications, a company will avoid the inability to return that asset to the OEM.
  3. Large capital dollar assets: Consider the massive pieces of equipment that certain industries purchase for manufacturing and production. What happens to that equipment if a facility shuts down or an economic shift occurs? In many cases, the company will try to redeploy the asset elsewhere in the enterprise. If not, the real question becomes, what type of discount must be applied to the asset before a customer or competitor will purchase it?
  4. Low-dollar assets: Within many company stockrooms, low-dollar assets such as service forms, office supplies and fasteners are on hand. However, as service offerings change and new equipment is purchased, these low-dollar items can add up to millions of dollars in assets that are no longer usable in the enterprise.
  5. Dismantlement and demolition: For projects involving dismantlement or demolition, everything from fixtures to the asphalt in the parking lot are sources for investment recovery. Items such as concrete, steel, glass, wood floors and timber beams can be salvaged, recycled and used in production for new materials.

Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 2, 2007
© The Investment Recovery Association