With onshore and offshore production, energy, and infrastructure needs growing worldwide, demand for surplus mining and construction equipment will continue to increase. Large-scale construction projects in the developing world are creating a need for mining and construction surplus from developed regions. Additionally, increasingly strict environmental and safety guidelines in the U.S. and Europe have led companies in these regions to sell their outdated assets in favor of new ones that meet these requirements.
These trends represent organizations that employ heavy equipment with a great strategic opportunity to achieve maximum recovery for their surplus assets through selling them on the secondary market. Mining and construction companies should follow these proven guidelines to ensure their reverse supply chain program maximizes recovery on surplus asset sales.
Understand Your Surplus Assets and the Market
The next step is knowing the value of all surplus assets within your enterprise. A trusted partner leverages market data and asset expertise to appraise each item, ensuring maximum recovery. In general, the most valuable 20% of a company’s assets brings in around 80% of its total recovery value. A reverse supply chain program should focus on selling these highest-value assets first.
It’s also critical to understand the market for your surplus, which varies based on the age, type, and condition of the assets for sale? For instance, a 20-year-old conventional crawler and a five-year-old hydraulic all-terrain crawler will attract different types of buyers. Additionally, expanding the target market to include developing regions can give mining and construction companies opportunities to achieve maximum value for their assets. What’s obsolete and unsellable in one market might be a highly prized item in another.
With any sale, international or local, companies must be aware of regulations. For example, with mining surplus that comes from a decommissioned site, all removal and disposal of assets must be done in accordance with environmental, health, and safety laws. The right engagement can help companies navigate international laws and compliance regulations.
Adhere to Best Practices for Selling Surplus Assets
Surplus equipment and other assets that have value and cannot be redeployed should be sold in the secondary market. Adhering to these best practices will ensure you maximize recovery:
- Determine sales channels. Online auctions are great for general assets with high demand, while private treaty sales work best for highly specialized assets with a targeted group of buyers.
- Implement a targeted marketing strategy. Know the market and the best channels to reach the right buyers.
- Schedule a preview period. Some buyers will want to see the assets in person before they make a purchasing decision.
- Provide complete asset information. Buyers will be more likely to make a purchase if they can view a complete description of the assets – including photos and videos if possible.
- Designate a removal timeline. Define and clearly communicate expectations for when assets should be removed.
- Screen all buyers before the sale. Ensure that all buyers are reliable and aren’t connected to illicit activities.
A reverse supply chain partner with a global reach will help mining companies maximize recovery for their surplus assets.
Select a Trusted Asset Management Partner
A reverse supply chain has a lot of moving parts. You need a dedicated team to handle surplus asset management, but many companies don’t have the internal bandwidth or systems to continually manage their surplus while mitigating all risks and maximizing recovery. A trusted partner handles your entire surplus program so you can focus on core business. Here are some of the qualities mining and construction companies should look for in a reverse supply chain partner:
- A track record of success within the mining and construction industry.
- Transparent reporting on all aspects of your program.
- A scalable, flexible program that can adapt to future needs.
- An extensive, global buyer base and an understanding of local markets to maximize recovery.
- Multichannel marketing and sales strategies to optimize return.
Case Study: Six-Week Sale Exceeds Recovery Expectations for Leading South African Construction Company
Liquidity Services recently worked with a client that is a leading civil engineering and construction group based in South Africa. The construction market in the region was on the decline, and the firm wanted to increase efficiency and reduce costs by strategically consolidating business units. We were able to identify 15 high-value surplus assets that could be sold to help the company recover significant value.
The client selected Liquidity Services due to our wide global reach, which was key for a business that had a short timeframe to complete the sale. We had the assets removed within a week, and managed all aspects of selling the client’s surplus, from preparing the assets for sale to promoting the auction to handling payment.
After tapping our network of over 50,000 buyers and finding the right audience thanks to our targeted multichannel marketing strategies, we completed the sale within the tight six-week timeframe. Liquidity Services sold all of the client’s surplus for $1.7 million, exceeding the high reserve prices and the client’s expectations for its primarily late-model surplus.
Equipment recovery can be a lucrative endeavor, but the success of these projects relies heavily on execution. By following these tips and partnering with an experienced reverse supply chain partner, organizations can see a strong return on investment and increased margins for each project.