Overcoming Challenges in Asset Management

September 16, 2016
Peter Harris , Dale Butler , Tony Parziale

Best practices for buying, selling, and transporting second-user equipment.

The role of proactive asset management within the pharmaceutical industry has significantly changed over the years, with the principle of redeploying production equipment and lab instrumentation from one facility to another as projects complete, priorities change, or companies merge now well established. As the drive for lean operation continues, companies are increasingly turning to resource recovery-the sale of redundant equipment-to liquidate their assets, and are also capitalizing on the opportunity to save money by purchasing second-user equipment.

Consequently, the surplus equipment industry has witnessed considerable growth and has evolved to meet the needs of the growing number of businesses facing the numerous challenges associated with relocating, buying, and selling equipment on a global scale. International trade agreements and packaging standards combined with local interpretations and logistical practices are just some of the elements that can make life challenging for both buyers and sellers.

This article discusses how to navigate the maze of global, regional, and country-specific regulatory frameworks and overcome the logistical challenges that affect the buying and selling of second-user equipment for pharmaceutical and biotech businesses.

Surplus-asset policies
When developing policy, a company needs to consider its liability risk. The industry standard is to sell surplus assets "as is/where is," with no warranties expressed or implied. In practice, vendors need to have a watertight section in their terms and conditions of sale documentation that covers this risk. In addition, a business must initiate auditable reporting and processes for every aspect of a transaction involving the sale and purchase of surplus assets.

It is also important to consider practices and records surrounding decontamination of equipment. While all firms will have decontamination processes in place as part of their asset decommissioning program, many buyers will request proof of decontamination and further ask for detailed information on the specific products that have been run on the equipment. The seller will need to decide to what extent they are willing to provide product information. This information is a particular concern with equipment that has run antibiotics or beta lactam products. Complete decontamination of equipment running these products is so costly that, in most cases, it is only viable for it to be sold to a new owner who is running the same type of product. In all cases, the terms and conditions of sale must be written to protect the vendor.

A final point to note for companies in Europe is the impact of CE marking. It is important for both vendor and purchaser to know whether a surplus analyzer is CE marked or not. If not, the market for the piece of equipment in Europe will be smaller and the demand is likely to be significantly lower due to the time and costs that would be required to certify the product for use.

Logistics
Trade restrictions and embargoes are specific to the individual origin and destination countries for any given shipment-which proves to be a unique challenge each time. The primary party of interest for sales transactions is responsible for confirming that a shipment is in compliance with all relevant regulations. For example, current embargoes prohibit the majority of equipment used for energy production from being sold and shipped to Russia. As a result, before any shipment can be booked with a freight carrier, documentation confirming that the equipment is not subject to the embargo must be provided. Only once the information has been validated can the shipment proceed.

Many countries have strict import regulations that are driven by commercial sensitivities. These countries often impose high duties and tariffs on imported goods and, in some cases, will not allow the importation of an item at all if it is readily available in the country from a local manufacturer. For example, when a buyer of equipment from an auction in the US is located in one of these countries, the seller needs not only to be aware of the restrictions, but also to make the buyer aware of them too. They must then work with them and their customs broker to make sure there will not be any issues with completing the sale.

Packaging and transportation
Unfortunately, transporting a piece of equipment from one location to another is not at as easy as simply packaging it up and shipping it off to its new home. There are many pitfalls that can arise through ignorance of best practice, even when a pharmaceutical business is transferring the kit to one of its own facilities. All international logistics involves managing multiple methods of transport and can involve different time zones, language barriers, and coordination of remote suppliers. When it comes to transferring specialist equipment, there is an added layer of complexity to be dealt with. For example, a flammable pressurized cylinder in a package would have to conform to International Air Transport Association regulations and be certified by a Dangerous Air Cargo assessor.

An often overlooked detail of logistical practice is the packaging itself. The International Standards for Phytosanitary Measures, Number 15 (ISPM 15) governs all wood materials used in packing for export. This means that every packing case should be documented and checked for certification prior to leaving the warehouse.

About the authors
Tony Parziale is director of Project Management at EquipNet; Dale Butler is EquipNet’s US Logistics Manager; and Peter Harris is EquipNet's European Logistics Manager, sales@equipnet.com, tel: 1.781.821.3482, www.equipnet.com.