Top 10 Factors for Selecting an Asset Management Partner to Maximize Supply Chain Value

Transcription

1 Top 10 Factors for Selecting an Asset Management Partner to Maximize Supply Chain Value Authors: Gardner Dudley, President, Capital Assets Group for Liquidity Services Tom Burton, Executive Vice President, Federal Sector for Liquidity Services Brian E. Thompson, Vice President, Americas for Liquidity Services Capital Assets Group LiquidityServices.com

2 Table of Contents Introduction....Page 3 Superior Service...Page 4 Superior Scale...Page 6 Superior Results...Page 8 Conclusion...Page 10 Page 2

3 Introduction Two decades ago, an underserved market was ripe for transformation. Pressured to continually improve and innovate their core businesses, organizations let billions of dollars of surplus and idle assets lie fallow within their reverse supply chains. With most reverse supply chain processes decentralized, reactive, low visibility and low tech, organizations were missing opportunities for substantial value through superior surplus asset management strategies. Today, industry leaders understand that the reverse supply chain can and should be optimized as a core business function to fully capture the value that exists within every surplus asset across their enterprises. They seek innovative strategies to maximize total supply chain value by optimizing recovery, improving productivity, and enhancing sustainability initiatives. The reverse supply chain presents your organization with enormous opportunities for value: For every $1 invested in a surplus asset management program, your organization can expect to receive $31 in return 1. Yet asset management is a non-core business, and your organization may lack the time, resources, or expertise to handle it internally. Your smoothest path to achieving desired results is through partnering with the right provider. 1 Source: Investment Recovery Association Page 3

4 Superior Service 1. Leverages Metrics and Marketing Strategy Best Practices Your asset management partner must be able to continually measure and report on its performance. This entails the partner s overall performance top-performing partners typically experience above-average market share, growth, and financials and the results it achieves for clients. Look for an asset management partner that measures performance in these areas: Increased Investment Recovery Measured by higher returns on surplus sales as compared with previous program Supported Zero-Waste and Sustainability Initiatives Measured by number of items redeployed or resold and amount of scrap deferred from landfills Increased Efficiency Measured by cost savings generated through redeployment and by time saved on asset management Improved Operations Measured by cost and time savings from standardizing asset management processes and by how processes mitigated risks and avoided negative outcomes Metrics Used in Analyzing Buyer Behavior Sourcing Information What web traffic resulted from your marketing efforts? What was the lead source for the buyer? Demographics Which buyers visited the online auction page? Where are the buyers located? Are these active buyers? Auction Engagement How long did the buyer stay on the page? Did the buyer click for additional information (e.g. specifications, pictures, videos, terms and conditions)? What other assets did they view or previously purchase? Did they bid or purchase? Industry Comparison How does this item compare to other similar items for sale across all industry websites? Page 4

5 Your asset management partner should regularly report its activities and results, provide annual reviews, and host regular meetings to keep you apprised of how it is measurably impacting your organization. As best practices and market conditions evolve, your partner must continuously explore opportunities to improve your program. Since effective marketing helps maximize recovery, be sure to evaluate your partner s marketing strategies, tactics, and tools. Is your partner leveraging best practices to understand, reach, and influence buyers? If not, you could be leaving recovery on the table. Providers can also increase recovery by leveraging marketing data to target the most qualified buyers. Your partner should analyze relevant data and use these findings to craft customized campaign strategies for your surplus. It should monitor results throughout the campaign, adjusting its approach as needed to maximize recovery. Carefully observe how the provider collects buyer metrics (see table below) and how it applies this data to create best practices for maximizing recovery. After every sale, analyze the reports your partner provides. Do the reports support transparency and accountability? Do they contain the data needed to measure program success? Merchandising is an important factor for providers selling surplus through online auctions. Your provider can maximize recovery by including accurate, comprehensive descriptions and photos for all assets up for auction. This information gives bidders confidence in item quality, increasing the likelihood they ll buy. For certain high-value assets, your provider should produce a short video demonstrating that the asset works. Videos can increase final sales prices four to seven percent. Merchandising is an important factor for providers selling surplus through online auctions. Your provider can maximize recovery by including accurate, comprehensive descriptions and photos for all assets up for auction. This information gives bidders confidence in item quality, increasing the likelihood they ll buy. For certain high-value assets, your provider should produce a short video demonstrating that the asset works. Videos can increase final sales prices four to seven percent. 2. Drives Green Initiatives and Sustainability Programs Most leading organizations have sustainability programs in place. Partnering with a vendor that supports your zero-waste goals and green initiatives will enhance your overall sustainability efforts. Ask the provider for case studies that illustrate its ability to help clients meet sustainability goals. A qualified provider will have online marketplaces to connect buyers and sellers, extending the life of surplus and idle equipment and inventory. It should also have strategies to defer scrap material from landfills. It s also important to align your organization with a partner that s committed to corporate social responsibility. You can trust this type of provider to operate with integrity, understanding its larger role in environmental and community stewardship. Page 5

6 3. Provides Solutions to Mitigate Compliance and Ethics Risks Your asset management partner must be able to protect your business and reputation from all risks associated with managing and selling surplus assets. Look for a partner that integrates into your program to ensure you comply with international trade, data privacy, financial, health and safety, and all other applicable regulations and procedures. Data privacy should be a compliance priority in the reverse supply chain. Ask your provider how it mitigates data and information security issues, including: Unintended disclosure of data Hacking or malware Payment fraud Insider information breach Physical loss of non-electronic documents Loss of portable and stationary devices Other critical compliance areas are buyer vetting and trade compliance. Your partner should have controls in place to ensure your assets are never sold to inappropriate buyers. Look for a provider that can verify buyer identity and credit information, ensure buyers provide end-use certificates for sensitive assets, and screen all buyers against global restricted-party lists. Additionally, many countries have laws restricting sales within specific asset categories or to certain countries, individuals, and entities. Your provider s buyer agreements should require compliance with all applicable export controls and economic sanctions regulations, giving you an extra layer of protection. Superior Scale 4. Seamlessly Meets International Business Needs Through Global Operational Footprint Global organizations need global coverage. By partnering with a single global asset management provider, your organization can standardize and implement best practices for asset management across all locations, resulting in operational improvements, cost savings, and maximum recovery. By partnering with a single global asset management provider, your organization can standardize and implement best practices for asset management across all locations, resulting in operational improvements, cost savings, and maximum recovery An effective global service provider will have local and regional coverage in many countries to support your global operations. This coverage allows your provider to understand the local market, buyers, language, laws, payment processing, taxes, and import/export regulations. Your partner should also provide a dedicated account manager to ensure you receive the coverage and attention you need. By holding recurring meetings, providers can make sure your goals are clearly communicated, measured, and fulfilled, ensuring a successful ongoing partnership. Page 6

7 5. Offers Robust, Wide-Ranging Services Another important element of scale is the provider s ability to deliver comprehensive solutions. While some providers offer niche or component solutions requiring you to partner with multiple vendors and affiliates to manage different asset categories or geographic locations, your partner should offer complete solutions tailored to your business requirements. Your partner should provide a full list of services and success stories to back them up. It should also tailor solutions to meet your unique needs. Its solutions should be scalable, ensuring you have the level of support currently required and the ability to scale up (or down) as needed. Sample Service Offering Surplus Asset Management Asset Discovery & Valuation Asset Recovery Planning Surplus Asset Redeployment & Sales Preparation Surplus Asset Inventory Recovery 6. Maximizes Recovery Through Multiple Sales Methods Online auctions let you reach the most possible targeted buyers, making it the most effective channel for maximizing recovery. An experienced provider, however, should recognize that every asset and situation is different, and implement the right marketing and sales strategy for each sale. An experienced provider should recognize that every asset and situation is different, and implement the right marketing and sales strategy for each sale For assets with limited demand, there are alternatives to online auctions. With the sealed-bid method, bids are received in response to an invitation-to-bid and kept private from other bidders. In the negotiated sale method, the provider reaches out directly to prospective buyers. Your provider should leverage these and other sales methods as appropriate. Page 7

8 7. Offers Redeployment Solutions Your provider should be able to facilitate internal redeployment and swiftly sell surplus that isn t redeployed. A qualified provider will have proven systems people, processes, and tools in place to support your asset management process. Web-based asset management software provides you with a clear, comprehensive view of all surplus across your global locations. This software allows you to identify underperforming or idle assets and make value-based decisions to redeploy or sell them for maximum recovery. By reducing costs and time spent on asset management, the software enables efficient, continuous asset management and generates value to improve your forward-flow business. By reducing costs and time spent on asset management, asset management software enables efficient, continuous asset management and generates value to improve your forward-flow business Superior Results 8. Is Viable, Experienced, and Professional The reverse supply chain industry is fragmented, full of small, local vendors. Select an experienced, professional provider you have confidence in. At minimum, make sure your vendor is financially healthy and stable. If the company is publicly traded and has been around awhile, that s even better. Evaluate your provider s management team. Does it have the experience and skill to support your long-term success? What are its proven methods to maximize value in your reverse supply chain? Request meetings with company leadership, marketing leadership, and account management personnel to answer these questions. Your partner should provide proof points that demonstrate its experience optimizing the asset management programs of organizations like yours. Ask for case studies on successful sales and partnerships with clients in your industry or with similar asset categories. Page 8

9 9. Has Buyer Network to Maximize Return A provider s buyer network helps it maximize recovery for your surplus. More qualified buyers equals more bids and higher recovery. Liquidity Services surveyed over 130 asset management professionals from a wide range of industries with capital assets. 25% of respondents identified recovery/price as the top selection criteria for their surplus asset management provider. Only 18% felt a provider could offer anything more valuable than recovery. Organizations are looking for maximum recovery for their surplus and a vast, targeted, and diverse buyer network helps deliver this. Often providers will claim that their marketplaces have a certain number of bidders. Examine this number are they counting active bidders only or everyone who s registered? If a provider boasts of 2 million buyers but 70% have never bid, the figure is significantly less impressive. Find out if the provider s bidders have been qualified (e.g. cleared on terrorist watch lists, have good credit). Selling your surplus to buyers who don t pay or use the item for illicit activities is worse than not selling it at all. Also consider the provider s buyer retention rate. The higher the retention rate, the better the provider s marketplace experience and the more likely you are to gain the recovery you desire. Finally, analyze your provider s buyers by asset type. If you re selling surplus assets in a wide range of categories, make sure your provider s buyer base has appropriately varied purchasing interests. Ask your provider for recent sales results of assets in your categories to see how the quantity of bidders and bids stacks up to competitors. 10. Invests in the Future Is your provider committed to developing long-term client relationships and continuously improving performance? Does it align with industry best practices to optimize results? Ask for references of current clients similar to your organization, and speak with them to get their perspectives on these questions. Your organization needs a partner that is invested in innovation and committed to industry leadership and continuous improvement. A partner that is truly committed to your business will also provide more comprehensive services that help build a better future for your organization. Your provider should get your business and offer complete value-added solutions that closely align with your needs and goals. Page 9

10 Conclusion Your organization s surplus isn t a burden it s an opportunity to add tremendous value and fuel achievement of key business goals. Since asset management is a non-core business function, your easiest path to optimizing your reverse supply chain is through partnering with the right provider. This white paper was designed to help you understand all key issues and support due diligence efforts involved in evaluating surplus asset management providers. Selecting a provider that meets the criteria detailed here by providing better service, scale, and results will ensure your asset management program runs just as effectively as your core business. About Liquidity Services Liquidity Services (NASDAQ: LQDT) is the leader in managing surplus across the globe to maximize return, more efficiently and more strategically. No matter the type of surplus asset or where it is located, we optimize and execute surplus management strategies to achieve your business goals. We are the industry innovator, leveraging insights from over 500,000 annual transactions and $1 billion in annual sales proceeds to continuously pioneer a superior model for managing the reverse supply chain. With Liquidity Services, you have a partner who maximizes the total value you can expect for your surplus higher recovery, more efficient processes, simplified and consistent operations, global coverage, lower risks, sustainable solutions, and service from people you can trust to deliver results. Learn more at LiquidityServices.com. Page 10

11 Authors Gardner Dudley serves as President for Liquidity Services Capital Assets Group, which includes Liquidity Services awardwinning marketplaces Government Liquidation, GoIndustry DoveBid, Network International, and TruckCenter.com. As the top executive for the Capital Assets Group which provides surplus asset management and investment recovery services to organizations with extensive capital investments in equipment and machinery Gardner s team is shaping the way that surplus capital assets are managed, valued, and sold. In this role, he is furthering the company s ability to meet client needs for superior service, scale, and results while expanding and unifying its capital assets business. Gardner joined Network International in 2000, as a start-up, to sell energy surplus and helped turn it into a profitable business. Gardner has continued as the energy marketplace s senior leader, following its acquisition by Liquidity Services in Over his long tenure with the company, he has led the marketing, sales, and operations teams and has been involved in corporate development efforts. Since 2009, he has hosted Network International s Annual Energy Insight Conference, which attracts leading oil and gas companies to learn about investment recovery best practices. Prior to Liquidity Services, Gardner worked in investment banking and finance for the oil and gas industry. Gardner obtained his BBA from the University of Texas at Austin and is a member of the Independent Petroleum Association of America (IPAA). He also serves on the board for the Texas and Southwestern Cattle Raisers Association and chairs the board of directors for the Chinquapin Preparatory School. Thomas B. Burton serves as Executive Vice President, Federal Sector for Liquidity Services. In this new role, Tom manages the Company s account relationship with the Department of Defense (DoD), ensuring superior delivery of service and results. He also provides leadership for selected new business opportunities in the federal sector. Tom has been a member of Liquidity Services senior management team since 2001, dating to the inception of the company s DoD relationship. Most recently, he has served as President, Capital Assets Group where he oversaw the integration of the company s DoD business operations with its commercial capital assets organization and the acquisition of the company s GoIndustry DoveBid marketplace. Under his leadership, Liquidity Services dramatically expanded its industry coverage, service offerings, buyer base, and global footprint while delivering award-winning service to DoD. Tom has been a central leader for the company since the procurement of its exclusive contracts with the DoD for the management and sale of surplus and scrap assets. He built a scalable asset recovery program for the DoD capable of processing 10,000 new auction items per week and 20 to 30 million pounds of scrap metal per month. Tom has applied this knowledge to benefit Fortune 1000 companies looking to optimize their reverse supply chains. Prior to joining the Company, Tom served for a decade as the Western Region Director of EG&G Technical Services, a government contractor. Tom obtained a bachelor s degree in Business Economics from Cameron University and is a member of the National Auctioneers Association and the Certified Appraisers Guild of America. He is quoted often in industry publications, providing expertise in managing, valuing, and selling surplus capital assets, and volunteers as a charity auctioneer to help raise funds for valuable causes, such as the Wounded Warrior Project. Brian E. Thompson, CPPM, CF, serves as Vice President, Americas for Liquidity Services Capital Assets Group. In this role, he serves as a critical point of contact between the Company and clients across the Capital Assets Group, ensuring that asset management and disposition projects are properly implemented to reach the client s investment recovery goals, reducing total supply chain costs in the process. Prior to Liquidity Services, he was the Vice President of Solutions, Strategic Markets at Sunflower Systems. He was also previously a Vice President of Sales at AssetSmart, where he achieved record sales for the company, and the Director of Page 11

12 Communications on the board of directors for the National Property Management Association (NPMA), where he won the NPMA Presidents Award in Brian frequently authors thought leadership pieces in The Property Professional publication and has earned an Article of the Year Award. Brian earned a master s degree in Business Administration and a bachelor s degree in Management from Pepperdine University and is a former faculty member of the UC Berkeley Haas School of Business. He also holds two certifications from NPMA: CPPM (Certified Personal Property Manager) and CF (Consulting Fellow). In his free time, he serves on the board of advisors for Reid s Gift, which assists teens and young adults with special needs in Southern California, and on the board of directors for Train 4 Autism, a group that raises funds and awareness for national and local autism non-profits. WP_0102_1502 Page 12