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Implement Investment Recovery Plan

An investment recovery plan outlines how to identify, reuse, sell, or dispose of surplus and/or idle supplies. Investment recovery can generate significant revenue and create cost savings, allowing the Postal Service to reduce waste and increase revenue.

The investment recovery plan is first developed in the Develop Preliminary Investment Recovery Plan topic of the Develop Sourcing Strategy task of Process Step 2: Evaluate Sources and is finalized in the Finalize Investment Recovery Plan topic of the Plan for Contract Management task of Process Step 3: Select Suppliers.

Implementation of the plan will guide and outline the activities associated with, and performed during, the Investment Recovery task of Process Step 6: End of Life. Implementing the investment recovery plan is the act of establishing as practice the previously planned activities associated with measuring and managing supply. The Item Manager is responsible for measuring and managing supply, the process essential to maintaining the appropriate levels of inventory to fulfill customer demand (or lack thereof). The Client is also responsible for implementing the inventory control plan, in conjunction with the Item Manager.

By this stage of the process, a final removal decision has been made by the Client regarding discontinued products, outdated products, inoperable equipment, and excess inventory, in accordance with the finalized investment recovery plan and the quadrant approach. The entire Purchase/SCM Team is involved in investment recovery; the Item Manager and Client must consult the Contracting Officer, Market Analyst, and Pricing Analyst for their insight, input, and advice regarding storage space, hidden costs, external demand, and the current value of surplus.

The essential components that ensure best value and facilitate investment recovery pertain to actualizing the final removal decision. Investment recovery is addressed by the following methods:

Recycle - the "scrapping" of an asset that can no longer perform its intended function, cannot or should not be repaired, and cannot be sold as surplus

Reallocate - the actual relocation and redeployment of a material

Resell - the financial transaction of selling a material on the open market

Remarket - the selling of a surplus material back to the Supplier

Return - the nonfinancial transaction of providing surplus material (e.g., delivery and industrial equipment) to the Supplier for a credit

Remanufacture - 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)

Remove - the process of disposing of surplus material (e.g., old office furniture)

Donate - the donation of assets to another organization

Recycle (Scrap)

Recycling surplus reduces the impact of Postal Service operations on the environment. The Client decides which assets no longer perform their intended function, cannot or should not be repaired, cannot be sold as surplus, and therefore will be "scrapped." The Client then must consult the Market Analyst and the Pricing Analyst regarding the value of the scrap material collected, as determined by volume and geographical location of the scrap (relative to the proximity of dealers and the ease and efficiency of the collection process). The following five factors determine the degree of success of a recycling (scrap) management program:

Current market for the particular material

Type of material (e.g., ferrous or nonferrous)

Condition of the material (e.g., mixed, sorted, clean)

Quantity of the material

Involvement of a knowledgeable process manager

When it is decided that identified surplus will be recycled (scrapped), supplies will be collected and relocated to a scrap dealer. The Client determines how this surplus will be physically relocated to the dealer (e.g., send to, or require removal by the new owner of the material).

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Reallocate (Relocate and Redeploy)

Reallocating 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 originally purchased, it still can fulfill other purposes useful to the Postal Service. The Purchase/SCM Team will determine when and where specific materials are fruitful to more than one project or use and convey this information to the Item Manager and the Client. For reallocation to become a successful reality, the Purchase/SCM Team must communicate closely with any potentially concerned parties.

When it has been decided that identified surplus will be reallocated, supplies will be redeployed and relocated to a new Client with an identified need for the surplus. This puts the material to work as part of its lifespan, albeit for a different Client. To implement the final decision to reallocate, there must be the need and the space.

Reallocate on eBuy: Excess Item Catalog (EIC)

All eBuy users have the ability to enter excess items into the Excess Item Catalog (EIC) located in the eBuy purchasing system. The purpose of EIC is to promote the redistribution of excess assets and to defer the cost of buying new equipment. EIC is a form of reallocation in which items no longer in use by the Client are leveraged by a new Client and is, therefore, applicable to investment recovery. However, EIC is not applicable to the investment recovery plan (as developed in the Develop Preliminary Investment Recovery Plan topic of the Develop Sourcing Strategy task of Process Step 2: Evaluate Sources) because the items are catalogued and not immediately used (and may never be used). Only items that are known to fulfill the future need of another Client can be addressed by the investment recovery plan. Obsolete items can be put on EIC by the Client, but there is always the risk that these items will not be leveraged in the future. EIC is available through eBuy: http://ebuy.usps/jsp/co/Login.jsp.

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Resell

Reselling surplus materials is the financial transaction of selling a material on the open market. Reselling generates revenue that improves short-term cash flow. Potential revenue will be determined through market research. Reselling is also appropriate for a forward auction, the traditional auction used when organizations want to sell off excess inventory, machinery, or equipment that is no longer in use to maximize revenue (which is discussed in the Auction topic of the Develop Sourcing Strategy task of Process Step 2: Evaluate Sources).

If the identified surplus will be resold, the Market Analyst must be consulted to determine the value of a specific product. Data rights and intellectual property issues may need to be considered in the resale of property such as computer software. Additional information on data rights can be found in the Clarify Data Rights and Intellectual Property Issues topic of the Develop Sourcing Strategy task of Process Step 2: Evaluate Sources.

Remarket (Resell to Supplier)

Suppliers frequently buy back used equipment to protect proprietary technology and prevent competition from being able to sell identical material. Potential revenue realized by remarketing will be compared with potential revenue realized by reselling. After a price analysis has been conducted, the results will be communicated to the Client, and a plan will be selected.

Effective remarketing usually requires an advanced agreement between the Postal Service and Supplier. This agreement should be included in the contract's terms and conditions.

Return

The return of material should be addressed in the contract. When a return takes place the supplier will give the Postal service a credit.

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Remanufacture

Except for locks, manufacturing is not a core competency of the Postal Service, so remanufacture may be a rare solution for the disposal of surplus and idle assets. Remanufacture would be appropriate when a "make" decision has been made by the Purchase/SCM Team, a product will be created internally, and these surplus or idle assets can be leveraged to reduce the costs associated with the new product or service. The decision to remanufacture will lead to the utilization of surplus to strategically make in-house another product at the Postal Service, as outlined in the Conduct Make vs. Buy Decision Analysis topic of the Decide on Make vs. Buy task of Process Step 1: Identify Needs.

Remove

Disposal is often costly, but the costs of disposal in the long run can be reduced or negated. Potential savings are determined by a total cost of ownership (TCO) analysis, the analysis of the total cost incurred over the life cycle of an item, encompassing development, purchase, use, maintenance, support, and disposal. The decision to remove identified surplus is made if it is determined to be more economical than other methods by the Pricing Analyst. The Item Manager must consult the Contracting Officer when removing items because Supplier involvement is sometimes required.

The Postal Service environmental policy, as stated in Handbook AS-550, Recycling Guide, and Handbook AS-552, Pollution Prevention Guide, must be incorporated into procedures governing material redistribution, recycling, and disposal.

Donate

If the Postal Service has determined that goods have no residual value and if their disposal is unlikely to produce any revenue, the Postal Service may authorize the donation of the assets to another organization. Such donations should be to nonprofit organizations, state agencies, or public bodies and not to individuals. Organizations can include schools, charities, and volunteer organizations. Donations must be approved by the Life Cycle Management Team, and it must be confirmed by the Market Analyst that the assets have no significant market value.

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Other Topics Considered

Conduct Market Research and Benchmarking Analysis topic, Decide on Make vs. Buy task, Process Step 1: Identify Needs

Conduct Make vs. Buy Decision Analysis topic, Decide on Make vs. Buy task, Process Step 1: Identify Needs

Develop Preliminary Investment Recovery Plan topic, Develop Sourcing Strategy task, Process Step 2: Evaluate Sources

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

Finalize Investment Recovery Plan topic, Plan for Contract Management task, Process Step 3: Select Suppliers

Investment Recovery task, Process Step 6: End of Life

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