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3 Steps to Maximizing Value in the Aerospace and Defense Reverse Supply Chain

Liquidity Services- August 28, 2015

In the fast-paced aerospace and defense industry, expensive equipment and machinery is frequently retired. This results in a wide range of high-value obsolete assets and a need to cost-effectively procure new equipment.

Leveraging their reverse supply chains, aerospace and defense companies can solve both challenges. The reverse supply chain for aerospace and defense entails managing, redeploying, selling, and procuring a wide variety of assets including aircraft and vehicles, equipment and machinery, and even whole facilities, all of which are sitting idle at the end of their lifecycles. Through effective reverse supply chain management, your aerospace and defense business can turn your obsolete assets into valuable capital for purchasing new equipment, keeping up with your industry’s fast pace of innovation.

This post will detail a three-step process your aerospace and defense industry can use to maximize value in your reverse supply chain.

Aerospace manufacturers often have a lot of capital tied up in surplus assets, and would benefit greatly from reselling or redeploying them.
By selling or redeploying their surplus and obsolete assets, aerospace manufacturers can unlock their significant value.

Step 1: Implement an Intelligent Surplus Asset Management System
The first step of asset management is to implement software that enables your business to catalog, track, redeploy, sell, and sustainably dispose of surplus assets. This software provides complete visibility into all surplus across your organization, including real-time asset value data.  

By facilitating every step of the asset management process, this software helps you maximize value for your surplus assets:

  • Discover: Capture all asset data across your organization and identify assets with redeployment or resell potential.
  • Value: Identify assets that require valuation, which can then be appraised to enable data-driven decisions and set appropriate recovery expectations.
  • Redeploy: Facilitate redeployment across your organization by easily identifying, promoting, and requesting assets to be redeployed.
  • Sell: Easily mark assets for sale, schedule sales, and view results, turning your surplus into a recurring capital stream.
  • Source: Search for and request surplus or idle assets across your organization, efficiently filling resource gaps.
  • Monitor: Track your surplus assets throughout the entire sales process, from shipping to settlement.

Step 2: Maximize Recovery in the Secondary Market
Your aerospace and defense organization should follow these best practices to ensure maximum value for your surplus.

  • Select a sales channel. Private treaty is the ideal sale method for specialized assets, as it enables you to reach a smaller, more targeted buyer group. Online auctions are ideal for assets in high demand because they expose your surplus to the most possible interested buyers. Leveraging both methods is often the best solution to ensure maximum return.
  • Work with a global partner. Assets that are obsolete in your region may be in demand in countries with developing aerospace and defense industries. A partner with global coverage connects you with buyers in these regions to maximize recovery.
  • Have a targeted marketing strategy. Use asset data like condition, age, and location to determine your buyer base. Then, determine the best channels to reach them (email marketing, print ads, trade shows, etc.), and craft targeted communications designed to get their attention.
  • Schedule a preview period. Allowing potential buyers to inspect your assets in person will help them feel confident the assets meet their needs, increasing their interest and bidding.
  • Provide complete asset information. If you're selling online, include detailed descriptions and high-quality pictures of all assets to get buyers interested.
  • Set deadlines for removal. Ensure a smooth removal process by setting clear deadlines for when your assets should be removed.
  • Anticipate compliance issues. International sales can be subject to export controls and regulations. Inadvertently violating these laws can lead to fines, bad PR, and even criminal prosecution. An expert asset management partner will ensure you comply with all trade compliance protocols in the reverse supply chain. 

Private treaty sales are a great way to reach a targeted set of buyers for the specialized assets in the aerospace and defense industries.
Leveraging both private treaty and online auction methods is often the best solution to ensure maximum return for your surplus.

Step 3: Select a Trusted Asset Management Partner
Since the reverse supply chain is, by definition, a non-core business process, many aerospace and defense manufacturers lack the time and resources to manage an effective program internally. An experienced partner such as Liquidity Services helps you build, implement, and manage a high-performance reverse supply chain, freeing up resources for your organization to focus on core business.  Here are a few reasons why Liquidity Services is the ideal surplus asset management partner:

To stay competitive, aerospace and defense manufacturers must constantly purchase new equipment and machinery while retiring obsolete assets. By leveraging the reverse supply chain, your aerospace and defense company can maximize value for your outdated assets, value that can be invested into new equipment or other strategic initiatives.

Liquidity Services

Liquidity Services (NASDAQ: LQDT) employs innovative e-commerce marketplace solutions to manage, value, and sell inventory and equipment for business and government clients. We operate a network of leading e-commerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 500 product categories. Our superior service, unmatched scale, and ability to deliver results enable us to forge trusted, long-term relationships with over 10,000 clients worldwide. With nearly $7 billion in completed transactions, and 3 million buyers in almost 200 countries and territories, we are the proven leader in delivering smart commerce solutions. Visit us at LiquidityServices.com.