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Supplying Principles and Practices > USPS Supplying Practices Process Step 3: Select Suppliers > Finalize Investment Recovery Plan
Investment recovery is the identification, reuse, sale, or disposal of surplus
and/or idle assets. Investment recovery can generate significant revenue and
create cost savings, allowing the Postal Service to reduce waste and
increase revenue. The finalized investment recovery plan proactively outlines
final actions, identified surplus, and idle assets and, based on the product,
what will be done with said assets. It is a dynamic document that is revised
and updated throughout the project life cycle. The Develop Preliminary
Investment Recovery Plan topic is addressed during the Perform
Solicitation-Related Activities task of Process Step 2: Evaluate Sources.
(See Chapter 5 of the Administrative Support Manual for information
regarding surplus real property).
The Client is responsible for developing the finalized investment recovery
plan, which illustrates how the surplus and idle assets are to be addressed.
While investment recovery activities are not conducted until the Perform and
Manage Investment Recovery Activities task of Process Step 6: End of Life,
it is important to develop a finalized investment recovery plan during Process
Step 3: Select Suppliers, since recovery must be addressed in conjunction
with contract management activities.
The finalized investment recovery plan should address:
• Removal of surplus
• Final removal decision
The removal of surplus materials comprises any activities that remove any
supplies that are:
• Discontinued
• Outdated
• Inoperable
• Excess inventory
The responsibility of removing supplies is at the discretion of the Postal
Service. This is a task that can be assigned to internal personnel or
contracted out to a third party. The entire Purchase/SCM Team is involved in
this process and will offer any input/advice when needed to determine which
supplies are not profitable for the Postal Service so they can be removed
accordingly.
The final removal decision determines how to eliminate surplus materials at
the conclusion of the asset's useful life. These surplus materials can be
removed through any of the following methods:
• Recycle
• Reallocate
• Resell
• Remarket
• Return
• Remanufacture
• Remove
• Donate
Recycling is the process of both obtaining a market value for materials that
can be reused in the manufacturing process and reducing the environmental
impact of the material used by the Postal Service. Recycling on many items
is mandated by Federal, regional, state, or local governments and failure to
comply can lead to financial and social impacts on the Postal Service. The
Purchase/SCM Team must be aware of these potential impacts and, in
cooperation with Legal Counsel, advise the Client on appropriate actions.
The Supplier is often very aware of the status of any material restrictions and
can help in the mitigation of risk. Advice is also available to the
Purchase/SCM Team from the Supply Management (SM) Operations
Investment Recovery Team.
Reallocation of identified surplus is the actual relocation and redeployment of
a material. Reallocation puts the material to work as part of its lifespan and
avoids the cost of purchasing. Although a material may no longer fulfill the
purpose for which it was purchased, it still can fulfill other purposes pertinent
to the Postal Service. The Purchase/SCM Team will determine when and
where specific materials are fruitful for more than one project or use and
convey this information to the Client. For reallocation to become a successful
reality, the Purchase/SCM Team must communicate closely with any
potentially concerned parties.
Resale of surplus materials is the financial transaction of selling a material on
the open market. Resale generates revenue that improves short-term cash
flow and reduces the total cost of ownership (TCO). Potential revenue will be
determined through market research. Resale is also appropriate for the
Consider Auctions topic of the Develop Sourcing Strategy task of Process
Step 2: Evaluate Sources; specifically in this case, a forward auction. Some
materials require special handling before resale:
• Antiques and collectibles must have the prior approval of the
Postal Service Historian before sale.
• Material that bears the Postal Service logo must have the logo
removed.
• Electronic equipment that may contain proprietary or privacy
information must be cleansed of this information.
• Vending equipment resale will follow the instructions issued by
the Self-Service and Access Management Office.
• Resale of property such as computer software may need to take
into consideration data rights and intellectual property issues.
Remarketing is the selling of a surplus material back to the supplier.
Suppliers frequently buy back used equipment to protect proprietary
technology and prevent competition from being able to sell identical material
(e.g., automation). Potential revenue realized by remarketing will be
compared with potential revenue realized by reselling, and after a price
analysis has been conducted, the results will be communicated to the Client,
and a plan will be selected.
Returning identified surplus is a nonfinancial transaction of providing surplus
material (e.g., delivery and industrial equipment) to the Supplier for a credit.
Remanufacturing identified surplus is the use of components of a material
alone or combined with others to create a new material or product (e.g., mail
transportation equipment and spare parts). Because manufacturing is not a
core competency of the Postal Service, remanufacture may be a rare solution
for the disposal of surplus and idle assets. Remanufacture would be
appropriate when an internal Postal Service project that has decided to make
a product has been identified by the Purchase/SCM Team and these surplus
or idle assets can be leveraged to reduce the costs associated with the new
product or service.
Removal is the last-resort process of disposing of surplus material, and
comes into play when the Postal Service must pay for the physical removal
and disposition. However, as the need for recycling increases and the
technology for sorting recoverable material improves for such things as mixed
scrap metal, removal costs may decline. The Supplier or the SM Operations
Investment Recovery Team may be able to identify opportunities other than
paying for removal.
If material can not be reused within the Postal Service or sold as a revenue
offset to the TCO, it may be donated to Federal, state, or local governments
or charitable organizations chartered by these governments, in that
sequence. Antiques and collectibles must have the prior approval of the
Postal Service Historian before donation.
Consider Auctions topic, Develop Sourcing Strategy task, Process Step 2:
Evaluate Sources
Clarify Data Rights and Intellectual Property Issues topic, Develop Sourcing
Strategy task, Process Step 2: Evaluate Sources.
Implement Investment Recovery Plan topic, Manage Demand task, Process
Step 5: Measure and Manage Supply
Perform and Manage Investment Recovery Activities topic, Implement
Investment Recovery Plan task, Process Step 6: End of Life
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