Proactive Asset Management
As featured on Packaging Europe – Ben Potenza, VP marketing at EquipNet Inc., the company operating the world's leading specialist marketplace for used manufacturing and production equipment, takes a look at how manufacturers are reaping the benefits of buying and selling surplus and idle equipment.
Out with the old, in with the new
Packaging plays a vital role in product innovation in most industries with the global packaging industry estimated to hit close to $1 trillion by 2018. Sometimes packaging is about safety and protection, as in the pharmaceutical industry, for example. For other products its role is to create or reinforce a brand experience, as with consumer electronics brands for example. Oftentimes, it is visual appeal in a retail environment that is most important. Interestingly, a recent industry report highlighted a series of packaging trends for 2016, including: the rise of digital printing to personalise packaging; the market drive for clearer information on packages; a need for larger (and smaller) pack sizes for many products; and the importance of recyclable packaging in the customer buying decision. It is easy to imagine the potential impact each of these could have on production and packaging processes.
Against this background, manufacturing companies around the world are buying and selling all kinds of equipment and production assets. In fact, they always have done, and a variety of equipment dealers and auction houses have been around to help. In recent years however, as forward-thinking businesses have moved to take a more strategic view of managing idle and surplus equipment, a new breed of specialist companies - like EquipNet - has emerged as leaders in this field.
With so much capital tied up in the equipment needed to run a business, and with research suggesting that as much as ten per cent of a manufacturing company's assets lay idle at any one time, it is no surprise that this has come under close scrutiny. Relocating assets to a different facility or, if this is not appropriate, selling equipment that has fallen out of use can deliver a significant return on the original investment in a piece of kit, freeing up useful capital. With growing demand fuelled by the need to control equipment acquisition costs and manage project timetables more efficiently, proactive asset management has emerged as an important tool for enterprises large and small.
A dynamic model
Accessing the benefits of asset management on a day-to-day basis requires the same commitment and rigour as any other business area. Although companies are often looking to obtain the most returns in dividends from surplus assets, this requires time and knowledge from industry experts, which a lot of companies don’t have. Successful implementation of an asset management strategy therefore most often involves a partnership between the company and a specialist provider. Outsourcing or partnering in those tasks considered non-core is now a well-accepted strategy.
Best practice has been developing over the last decade and specialist service companies staffed by industry experts and proven project management professionals have emerged to become leaders in this new field. They offer an approach and services that are significantly different from the ‘traditional equipment dealer or auctioneer’. As one of the preeminent vendors in this field, EquipNet provides a holistic approach to surplus asset management that balances the needs of both sellers and buyers. This is effectively illustrated using its ‘Value Control Model’ (Figure 1).
The value control module, based on time, can be customized using a central tracking platform that provides communication and workflow tools and ensures the exposure of assets throughout the business. Various disposition channels which include redeployment, negotiated sales with managed pricing through an online market and competitive auction events can also be used, as well as clearance, disposal and scrap programs, customized specifically for each individual company.
In order to redeploy equipment and therefore keep track of surplus assets, a partner should possess a solid software platform to list all assets in a company or business. These programmes can sit behind a corporation’s firewall, in order to allow visibility of all assets belonging to a business in various locations worldwide.
Figure 1: Value Control Model
EquipNet’s ‘Value Control Model’ shows how redeployment, negotiated sales with managed pricing through an on-line marketplace, competitive auction events and clearance programs fit together to deliver a consolidated service that ensures a ‘seller’ company achieves maximum return and at the same time sees equipment come into the channels that are used by a ‘buying’ company. In many cases, a business is both a seller and a buyer at different times.
Planning for success
When deciding to purchase second hand equipment, it is important to do your research. This can be time consuming and the choice available can be overwhelming. Experts like EquipNet know the marketplace inside out and can provide useful, objective insight relating to budgets, specifications and risk mitigation (e.g. how reputable a supplier is).
Guiding buyers through a possible purchase, including reading the small print and assessing warranties and future support the equipment may require makes the process as efficient and stress free as possible for the buyer.
As manufacturers continue to look towards increasing productivity whilst striving to keep costs as low as possible, more companies have been turning towards the second-hand equipment business for both buying and selling. However, this industry does have its downfalls and in order to provide the buyer with the best possible product whilst allowing the seller to recoup the maximum amount from their original investment, expert evaluation of equipment is required. Therefore, a reliable asset management partner is crucial in order to obtain the best result for both buyer and seller.
A buyer's story
Terry Geck is the Founder of Stage Coach Sauces LLC, a Florida-based contract and bottling company specializing in pourable food products. The company continues to invest in equipment that upgrades the facility and increases throughput by de-bottlenecking the packaging lines. There is a constant drive to do things faster, quicker or better, but maintaining a low cost base is also vital.
Mr. Geck commented: “The savings that can be made by investing in used equipment are significant - as much as 20 to 70 percent. Re-using equipment can transform the economics of a re-tooling or upgrading project, but you need a trustworthy partner to source good kit. They need to know the market and the machinery inside out, and be able to set a deal at the right price for both the seller and buyer.”
Mr. Geck continued: “Putting it bluntly, the biggest concern is that you will buy junk. Some of the equipment I have bought has been in the region of $50,000 - a significant sum. So when I came to look at re-tooling via this route, establishing a quality supplier relationship was critical. EquipNet was recommended to me by other companies and their professionalism and quality is now so valuable to us.”
“EquipNet has been very good at researching any guarantees available from the vendor and in making sure that they transfer through to us, but in truth, all the equipment we’ve purchased has been of really high quality and worked reliably. And that’s why we keep going back,” concluded Mr. Geck.