Survey says: the Investment Recovery Association's latest Benchmarking survey examines how companies manage their surplus assets.

Investment recovery (IR) professionals are continually challenged with maximizing value/ROI and reducing risk and liability for their companies during the final disposition of surplus assets. Benchmarking and identification of best practices are tools that help these professionals establish solid operating standards to maximize effective management of surplus assets. The Investment Recovery (IR) Association is the only central resource for providing a variety of such tools to assist companies with surplus asset management. This includes providing valuable knowledge and process standards that guide necessary work with external service providers, such a demolition/dismantling and construction professionals.

Benchmarking, in some form, is an essential process for sustaining success, at various levels, in all companies and industries. Objective operational measurement, against similar operations within and outside of a company's specific industry segment, provides a foundation for sound business management decisions. In the case of investment recovery operations this process is even more critical because professional practices are still not fully matured across industry segments. Although pressures in today's marketplace are forcing more attention on the management of surplus assets, operational knowledge and standards are not consistent. The profession, as a separately defined discipline, is still relatively young. Some companies/industries are handling it effectively, while others are still in an 'ad hoc' mode with the process handled as just another task for a manager in a larger, more traditional department (like finance, procurement, maintenance, facilities, engineering, etc.).

ESTABLISHING BENCHMARKS

The professionals within the IR Association, Kansas City, Mo., recognized that formalized benchmarking was imperative to establishing standards that would help maximize bottom line impact. In addition, the focus on benchmarking/best practices would serve to support and strengthen training and professional certification efforts. Consequently, in 1995, the association contacted CAPS Research (Center for Advanced Procurement and Supply) to explore developing a professional benchmarking study. CAPS Research is the preeminent research organization for Supply Chain Management, and is jointly sponsored by the Institute for Supply Management and the W. P. Carey School of Business at Arizona State University. Later that year, the first Investment Recovery Performance Benchmarking Survey was developed and distributed to 21 IR professionals inside the IR Association.

Following that first survey, the IR Association has worked with CAPS Research to refine that survey on a recurring three-year interval. D. Steven Wade, director of Benchmarking Programs and Marketing Initiatives for CAPS Research, notes that, "strategic timing of surveys is critical. Having surveys too frequently minimizes the effectiveness of the survey, as change does not happen rapidly enough within most organizations. For the IR Association, three-year intervals have proven to be most effective."

In February of this year, the sixth IR Association Performance Benchmarking Survey was distributed to 182 organizations that currently have or are contemplating having IR operations within their organizations. During the six weeks allotted for completion of the survey, 70 organizations participated. This was a 30 percent increase over the most recent survey, performed in 2004, when only 54 organizations participated. "We are very pleased with the participation in this year's survey," notes Todd Thompson, CMIR (Pfizer), president of the IR Association. "The benchmarking we provide for the association members is a significant benefit to their company operations and their own professional development, and we look forward to providing them with the latest information." Because the survey results are considered a significant benefit to the association members, a multifaceted marketing approach including printed materials, emails, Web site links and personal phone calls were used by the IR Association to stimulate participation in the survey.

Preliminary survey results were scheduled to be available from CAPS Research in early May and will be provided, through an executive summary, during the next IR Association Seminar and Tradeshow, held in Scottsdale, Ariz. Later in the summer, the fully tabulated survey will be made available to the association members. Those results allow users to fine tune their inquiries to a specific industry segment. This can be critical for users because the generic data may not adequately reflect the user's unique circumstances. An example of this would be the utilities industry segment versus the pharmaceuticals industry segment. Typical surplus assets in these two industry segments are different in terms of physical nature/application, value, market conditions and regulatory issues. Consequently, the number of annual transactions and dollar volumes may not equate to one another. Correspondingly, these industry segments may have divergent staffing requirements and processes. Wade notes that the 70 respondents represent industry segments as diverse as aerospace, pharmaceuticals, utilities, chemicals/fertilizer, telecommunications, oil and gas and consumer products. The fully tabulated survey results thus reflect unique industry segments to make the data more relevant to the end user.

Though there are differences between industry segments, there are also some similarities. Based on the results of the 2004 and 2007 surveys, 94 percent of the companies reported their primary IR services are sales of material and equipment. This same group of participants said their other primary services are recycling (63 percent) and dismantling/demolition services (32 percent). When it comes to outsourcing, half (50 percent) of the participants reported they outsource their dismantling/demolition services.

BEST PRACTICES

Elements of the survey that transcend all industry-specific IR operations are management best practices. Several years ago, survey results clearly indicated there were several practices used by successful IR operations that were common across industry segments, and from company to company. Between 2001 and 2003, members of the IR Association Benchmarking Committee visited several of those successful IR operations and quantified those best practices. From that point forward, the IR Performance Benchmarking Survey has tracked the use of those best practices, which are:

* Strong, Visible Management Support

* Reporting of Metrics and Successes

* Active management of Surplus Assets

* Supplier Integration and Support

* Pre-procurement Surplus Check

* Hierarchical Disposition Options

* Effective Incentives

* Early Involvement in Asset Management Planning

* Effective Use of Intranet and Internet

* Programs for Surplus Prevention

* Professional networking by Investment Recovery Staff

Best practices are critical to the success of an IR organization. With this latest survey the IR Association hopes to verify the previously identified best practices, determine if there are others to add to the current list, and then provide tangible tools to the association members for use within their organizations.

The association is developing a presentation that association members can take to their management to promote IR best practices and how those practices have benefited other organizations

The benchmarking, best practices identification and education/training efforts by the IR Association are all coming together to sustain and refine surplus asset management as an increasingly important profession and business component throughout industry. Another result from this professional maturity is positive impact and business opportunities for providers of out-sourced IR services in dismantling, demolition, construction and other fields. Companies are developing heightened awareness of IR service provider value and better understanding of how to work effectively with external resources to achieve business goals.

Dave Rupert is the IR Association board director and chair of the benchmark committee. D. Steven Wade is director of benchmarking programs and marketing initiatives for CAPS Research. They call be contacted through www.invrecovery.org.

Respondents' List of Most-to-Least
Outsourced Activities.

Survey Year                                 2007    2004
                                              %       %

Auctions                                     63      79
Recycling                                    47      51
Bids or Negotiated Sales                     45      46
Dismantling/Demolition                       53      46
e-Auctions                                   42      41
Appraisals                                   43      38
Equipment Refurbishing                       13      26
Surplus Identification & Characterization    20      18
Offsite Surplus Storage/Management           20      15
Internal Surplus Redeployment                13      08
Used Equipment Searches                      22      08
Internal Staff Augmentation                  13      05