Conventionally, purchase and stock departments handle the idle assets lying in the premises. These people have grown into the hierarchy from purchase executives or storekeepers. Their main function is to look for the requirements of the organization and purchase and store them aptly. They have years of experience in procurement-related activities. They are trained for best IT tools for procurement and Inventory management.
Is this department, equipped to handle situations that occur a few times in a year, for which they are not trained enough? In a few organizations, maybe yes.
Should the organizations hire people to execute this activity, which happens a few times a year?
Should the experts be entrusted with this job?
Arguments in favour of outsourcing Surplus Asset Management
1. The Authentic Last Point: Imagine an idle 9meter long CNC lathe machine lying on the shop floor, obstructing the workflow. In all likelihood, if the company personnel are given the responsibility of disposing of it, it will end up at scrap yard, whereas the specialized people would sell it to machine re-developer or a dismantler leading to each part being put to use in some way.
2. Experts know a little more: How many of the company executives know that there is Nickel Silver in cement plant chimneys, or for that matter silver in catalytic converters of simple automobiles. Experts know, leading to better valuation. Will the scrap dealer give a better price or the fabricators for the leftover full-size metal beams? Directing the material to the right point is what the experts do.
3. Surplus Asset Management pays for itself: It pays for itself and more!!
Apart from the above, regular advantages of lesser pressure on the company personnel, attention to the company’s core activities and better control stand out.
Arguments against could be equally astonishing. As once a director of the oil major told me “we have set our standard procedures and have been working according to that for decades, we wish to continue like this”
But an organization has to gauge its own requirements, map various functions and then make a decision on out-sourcing. For ease, following Outsourcing matrix come in real handy.
In which matrix Surplus Asset Management fall; it’s for the companies to decide. There may be genuine arguments against outsourcing like proprietary intellectual rights or extreme safety requirements, but in most the cases, it does make an economic sense to outsource these functions.