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Overcome Compliance Hurdles to Maximize Surplus Asset Recovery

The surplus or idle assets in your business can free up valuable warehouse space and reduce carrying costs while generating cash that be invested back in the business. To access this often-untapped revenue source, look no further than your own reverse supply chain.

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Currently, there is a growing market for assets that most companies already have available – a financial opportunity that does not require costly R&D investments or a cash investment. In fact, the surplus or idle assets in your business can free up valuable warehouse space and reduce carrying costs while generating cash that be invested back in the business. To access this often-untapped revenue source, look no further than your own reverse supply chain.

I encourage all industrial manufacturing and plant operation teams to maximize value across the global supply chain by selling their used, idle and surplus assets. The secondary market has grown steadily over time, with companies becoming more comfortable selling their surplus and buyers readily purchasing used equipment. Organizations have several options to manage their reverse supply chain, including maintaining an internal team or partnering with an expert provider. It’s important to keep in mind that with either method, it’s critical to manage risk and compliance issues through the entire process.

While the secondary market is an ideal way to maximize return for surplus assets, there are risks, and organizations must establish proper protocols when remarketing surplus equipment. A complex array of regulations may impact the management, valuation, and sale of surplus, and without the right processes and expertise, the reverse supply chain can represent significant compliance challenges.

To clear these compliance hurdles, organizations must focus on the following actions:

1. Screen buyers – Selling capital assets to generate revenue can backfire if you unintentionally violate international laws and export regulations. The secondary market for surplus gives your organization access to a wide range of potential buyers around the world. But unfortunately the secondary market – like any market – contains bad players. These include criminals, known terrorists, and representatives of sanctioned countries.

A proactive screening process can protect your company’s reputation and bottom line, as fines and criminal prosecution can be significant. Your internal team or trusted partner should always screen buyers before they can bid or purchase to ensure your surplus is never sold to the wrong individuals. This screening requires a multi-faceted approach, including monitoring more than 200 global restricted-party lists that identify restricted buyers such as those listed above. Additional buyer vetting should focus on screening IP addresses (to block buyers in sanctioned countries), verifying identity and credit information (to confirm buyer identity and ability to pay), and requiring that buyers provide end-use certificate requirements for sensitive assets (to restrict buyers from transferring assets to illicit buyers or sanctioned countries). Each screening method further protects your surplus – and business – from illegal parties.

2. Monitor international trade regulations – A global buyer base allows you to capitalize on supply-and-demand differences between countries, but international transactions also have their challenges. Complex international trade regulations vary, and several countries have export controls that restrict sales within specific asset categories, for certain end uses, or to certain countries, individuals, and entities. It’s vital that your team understand and abide by all export control classifications for assets or inventory you sell. Since there is such a high risk for issues with exports, governments and regulatory bodies keep close watches on international trade and will aggressively levy fines and pursue criminal prosecution against violators.

3. Protect your data – Many assets and inventory items contain sensitive data, and it’s important to apply industry-standard data wiping processes that ensure your surplus assets are never sold containing confidential information. To compound this challenge, data privacy laws are complex, varying by country, state, and type of information. For instance, some jurisdictions consider personal data to have the same legal protection as personal property. Your organization must establish a thorough process to identify and address all data privacy concerns.


In compliance, what you don’t know can hurt you.  Numerous regulations and laws can impact the reverse supply chain, and your organization must adhere to these regulations as diligently as you do to those pertaining to your forward-flow business. Otherwise, the potential consequences are significant: PR catastrophes, massive fines, and even jail time for the individuals involved. To avoid these issues, ensure that your compliance team has the skills and resources to proactively identify issues, navigate options, and determine solutions. Expert compliance support can ensure you maximize value in your reverse supply chain, unlocking working capital to achieve your strategic goals.

Gardner Dudley is President of the Capital Assets Group at Liquidity Services, a global solution provider in the reverse supply chain with the world’s largest marketplace for business surplus. He can be reached at [email protected], and more information about the company is available at