What is Surplus?
Surplus is idle, non-performing (non-contributing) assets,
excess to the company’s needs.
Companies that control costs better than their competitors are well positioned to succeed in the marketplace. The professional management of surplus assets–referred to as Investment Recovery or IR for short–can provide massive and surprisingly positive returns; both in cost avoidance and in substantially higher revenue generated from the disposition of a company’s surplus assets. The primary goal of investment recovery practice is to ensure that the company removes scrap and surplus assets, in a safe and timely manner, and receives the highest possible return at the least possible cost.
To achieve the highest returns, it’s important to engage Material Management Resources in a project in it’s early stages. This helps us quickly identify and prepare for activities that may produce surplus. The most common surplus producing activities are:
• Capital projects
• Equipment replacement or upgrades
• Dismantling and demolition
• Plant turnarounds
• Warehouse inventory reductions
|Cost of Capital||4 to 22%|
|Cost of Space||1 to 3%|
|Handling Cost||1 to 3%|
|Obsolescence||1 to 3%|
|3 to 10%|
|Insurance & Taxes||1 to 4%|
|Total||11 to 45%|
The average total assets that are surplus or non-performing at any given time.
Here are a few of the jobs that we have
Our expertise at work for you
MMR was approached in mid-November about assisting with the year end disposition of approximately 4,000 joints of casing, tubing and line pipe. In order to avoid property tax assessment on the pipe, the client wanted the material sold before year end. The pipe was sold under 14 different contracts. The speed of the sale saved the client over $47K in property taxes alone.
Sales Price: $1.2 Million
Money Saved: $47K in property taxes
Total Benefit: $1.25 Million
Yard Clean Up
MMR provided support to clear a storage yard of surplus after the completion of a project. There was a total of 15 sales associated with this clean up. The material was located on land that was being leased for $4,000 per month, so timing was critical and MMR was able to meet the four month deadline. The final sale associated with this clean up was to a local scrap company to remove all remaining material; they removed as many as 14 loads in one day to meet the deadline.
Price without MMR: –$4,000.00 Per Month in Lease
Price with MMR: $389,862.77
Maximizing Dismantlement Returns
MMR was involved in the planning of the demolition/dismantlement of the site, and worked seamlessly with the seller and contractor to advise which assets would yield the highest return. We marked recoverable assets, inventoried, researched data from the data library, and sent bids to thousands of bidders. We managed asset sales, scrap ticket reconciliation, and 2,300 truckloads of concrete.
Equipment Sales: $3.6 Million
Scrap Sales: $1.9 Million
Cost Avoidance: $680,000
Total Project Value: $6.18 Million
MMR was approached to sell copper generator bars. The site was going to have the bars available at two separate times. MMR presented the option to stage the first batch for 3 weeks until the second batch was available, thus allowing all material to be removed at once. By removing the material at once, it allowed all material to be loaded on flat beds as opposed to scrap bins at two separate times. This cut down on labor required by the site. This recommendation increased the sale total by $16,901.40.
Price without MMR: $53,024.00
Price with MMR: $69,925.40
MMR managed the disposition of containers as they were brought to a storage area. The project entailed tracking the containers as they came into and left the yard. The goal was to dispose of each container as quickly as possible in order to minimize storage fees. The location of the containers in the storage yard was taken into consideration to reduce lift charges. In total, MMR handled 12 sales for a total of 581 containers.
Daily Storage Fee Per Container: $1.50
Lift Charge: $28 Per Movement
Price in Scrap: Estimated $800,000.00
Price with MMR: $1,330,225.00