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Take control - How best to develop a seamless asset management programme to boost your bottom-line
November 2016
Take control - How best to develop a seamless asset management programme to boost your bottom-line Packaging Europe speaks to Mark Morgan, of EquipNet Inc. In this Q&A, Mark describes how forward-thinking companies are taking advantage of the benefits of buying and selling assets to meet growth targets and drive operational efficiencies. He also provides an insight into the used equipment market in the packaging industry, sharing recommendations for success and key advice on the importance of taking a proactive approach to asset management.

As featured on PackagingEurope.com

You have been working in the packaging industry with EquipNet since 2008, Mark, tell me, what's been developing over the past couple of years?
The packaging industry has experienced some major changes over the past few years. With more new products reaching market, new and improved packaging is required and older packaging is remodeled. This helps to attract buyers, protect the product and inform consumers about the purchase they are looking to make. Often, with these constant redesigns, comes the purchase of newer packaging equipment. Whilst this can often seem a necessity for companies, a vast number of the packaging processes remain the same.

Once the purchase of new equipment has been completed, much of a company's legacy equipment lays idle. Many companies have therefore begun to look towards asset management as a solution, repurposing and reselling equipment to prevent it from falling into disuse. This means other sites within the same company or second hand buyers can benefit from good quality packaging machinery.

With the rise of the internet, online portals for buying and selling second hand instruments are now more common. However, many of the websites simply provide basic auctions for companies to buy and sell second hand machinery, meaning the quality and therefore the value of machinery is never taken into account.

Proactive asset management has therefore developed over the last decade in response to this challenge. This solution helps companies to value their surplus equipment and provides key information for buyers, such as whether an instrument has a remaining warranty. This solution also takes care of crating, shipping, exportation and importation documentation for the final destination. EquipNet, as one of the providers of this solution, can help with all these processes.

Can you pinpoint the reasons behind the current upsurge in demand for second-user manufacturing and packaging equipment from the global players?
There are many factors behind the upsurge in demand for second-user packaging and manufacturing equipment. With more products reaching market and in turn needing to be packaged, companies have needed to invest in instrumentation. The modern era has meant an increase in smaller family sizes. This has therefore led to products being packaged in smaller sizes, but produced in greater quantities, increasing the strain on machinery. The global economic recession continues to have ramifications today, forcing businesses to constantly rethink their methods - such as advances in product packaging - to remain efficient and turn over a profit.

The increase in consumption and purchase of packaged goods has meant that the global packaging industry is predicted to grow at an annual rate of 4% to reach $975 billion in 2018 . Businesses in the industry are, therefore, looking to mirror this growth whilst keeping costs low.

European businesses are now reaping the rewards of repurposing or purchasing disused packaging or manufacturing machinery, gaining in terms of production and controlling expenditure.

What are the main advantages that come with buying and selling second-user equipment nowadays?
There are multiple advantages that come with both buying and selling second hand equipment, but it is important to first be sure that machinery is no longer useful to the company through an internal redeployment system. EquipNet's ARMS system (Asset Redeployment Management System) is an example of this. The ARMS system features workflow management, access levels for plant managers and executives across a business, as well as listing specifications to allow the company to track what assets they have where. This means that companies can internally identify, post, track and redeploy equipment before looking to sell externally, knowing that these instruments are not required at any other sites.

Using the revolutionary option of a specialist partner when buying second hand equipment also helps a company to benefit, through being assured that the instrumentation is of good quality and that they are paying a fair market price. They also gain access to any existing warranty for the machinery they buy. All the buyer needs to do is organise collection and delivery.

Purchasing and selling second hand machinery has, therefore, never been easier and, with the advantages a specialist partner brings to this process, more companies can benefit from obtaining both the financial and production rewards as a result.

Can you highlight the main challenges sellers may face?
Sellers face such challenges as deciding which of the various portals to use, whether to sell online or at auctions and face the time-consuming and difficult process of negotiating the sales price. However, using a specialist partner with specific industry experience and a good reputation will help with this. Support may range from advice on selling through webcast auctions, to guidance on obtaining the correct price for your instruments. EquipNet often advises clients on pricing for machinery, as well as for scrap metal should redeployment of a particular instrument not be possible. The asset management partner will then take care of the transportation to the buyer.

When dealing with second hand packaging equipment, the consensus from buyers has previously been that new packaging equipment is needed for new product lines. When instruments have then been put up for auction, finding a buyer has been difficult. Recently however, with the packaging industry becoming more sophisticated, the buying of good quality second-hand instrumentation has become much more common. This has been helped by the launch of good quality asset management businesses, such as EquipNet. The challenge sellers currently face therefore, has been making sure that their instrumentation reaches the correct market and that potential buyers are aware that legacy machinery often uses the same processes as new packaging equipment.

In your experience, why is it so important for companies to develop a complete system for asset management?
The use of a complete asset management system stems from the need to use the opinion of industry experts in order to gain the correct valuation for second-hand machinery. This allows companies to recoup as much of the original purchase as possible and allows buyers to see equipment come into the channels used for purchasing machinery. Often, a company is both a buyer and seller at different times and a complete system for asset management is therefore beneficial. This complete system also allows executives to optimise resources by easily monitoring current equipment across a company's sites at the simple click of a button.

Time can also be saved if the asset management company takes over the analysis, auctioning, dispatch and delivery of the equipment for the buyer, therefore allowing company employees more time to work on other projects internally.

Summary
Companies looking to succeed in the global packaging market need to have a solution to deal with their legacy equipment. Surplus asset management allows these businesses to save time and money whilst receiving expert advice from industry specialists. Turning surplus equipment into cash and helping companies reach their growth targets is critical and a reliable partner with industry knowledge is key to this success, helping to ensure operational efficiency through well-managed assets.