Vol3-2014 – So you have obsolete or surplus MRO materials on your shelf and upper management has given you the task of selling and getting the material out of your crib or storeroom. Now the real questions: “Where do I begin” and/or “How do I sell this stuff?

MRO is an acronym for Maintenance /Repair/Operations – the items that keep the facility up and running. MRO supplies includes everything from light bulbs to nuts and bolts, motors to controls that run your machines. In 2012, U.S. manufacturers spent more than $100 billion on MRO items, so it is safe to say that every manufacturing facility or industrial site has some sort of MRO on hand. And no doubt, a significant portion of that is obsolete or no longer needed.

The goal of inventory management is to ensure the right products in the right place at the right time with minimal expense and effort. A production facility can’t operate efficiently without a safety net of backup repair parts. However, of the $100 billion worth of parts purchased in 2012, approximately 15% of that inventory will remain on the shelves and potentially never get used.

So now you have MRO to sell. Several questions should be addressed: “Are we sure we cannot use it here?” Next, “Can any of our other sites use this material?” and third, “Can I sell it back to the OEM that I bought these from?” If these questions have been answered, you’re basically left with scrapping or selling. Scrapping the material brings little value back and does not provide the opportunity to address the reuse or “green” issue. Selling brings value back to your organization and gives the opportunity for another user to put the material to use.

In selling MRO items, understand that even though the material may have never been used and is still in the original box – it is not “new.” Condition can certainly play into the resale value, but a part that has never been used is still in the box and is 5 years old is not “new.” It may be obsolete by today’s standards, but even if not, it has likely lost significant value.

Keep in mind that custom items or specific items to your site/ process, even though they may have been expensive to purchase, are marginal or tough to sell on the resale side. Should your site have material such as this to sell, the expectation for these types of items should be very low – closer to a scrap value.

As with any surplus asset, the more information you can provide to a potential buyer the better. With the large number of a typical MRO inventory, an Excel spreadsheet is a great help to you and a potential buyer. Information such as manufacturer, model, part number, capacity, age, condition (used or never been used/still in the box) will help your potential buyer do research on their end to provide an offer for your available MRO material.

This is a brief recap of a presentation made at the 80th Investment Recovery Seminar by Rick Affrica as part of a commodity round table.

– Rick Affrica, HGR Industrial Surplus raffrica@hgrinc.com 866.447.7117