Businesses are starting to wake up and realise there is need for innovative approaches to cost cutting through sustainable initiatives with less impact on our planet which is becoming increasingly critical. Especially for business seeking to reduce their environmental impact through a sustainable green approach at the same time as maintaining efficiencies.
It is only been since October last year when we completely changed our model from having active listings on our website for waste, to a move towards a more proactive, long-term strategic and sustainable model on focusing on asset life cycle management.
Inconsistencies between utilization and depreciation of assets
In our initial focus category of laboratory equipment, we have found stark inconsistencies between how companies utilise and ultimately depreciate their assets. This does not just apply to lab equipment, but all assets in general.
Using the example of the laboratory equipment category specifically, regulatory bodies in Australia, such as the Therapeutic Goods Administration (TGA), National Association of Testing Authorities (NATA), and the Australian Taxation Office (ATO), all have general guidelines around depreciation, but there is no standard or consistency for depreciation, often particularly within larger organisations themselves.
For instance a hospital, government sector organisation or even large private companies may implement a 5 year depreciation cycle for some of their assets.
At the end of the 5 year term the assets are generally replaced and disposed despite the assets still being in perfectly good working condition.
This is due to numerous factors, however one predominantly being that conventional Capital Expenditure budget allocations are often reduced the following year if they are not utilised. It is unfortunate, but it is true. And it is true for many other businesses that for this single reason alone, equipment in good working condition is ending up in landfill.
An alternative : procurement of second hand equipment
One key strategy to break this cycle, reduce your impact on the planet and reduce your capital expenditure to improve operating margin is to commit to a circular economy by looking at procuring second hand equipment.
You are probably thinking “It is a risk, there no warranty !”. You would be right, but take this into consideration : new equipment comes with a 12 month warranty. If something is going to go wrong with the equipment it might be in the first 3 months if you are lucky, most of the time it is just after the warranty has expired and we can all attest to this.
Yes second hand equipment will not come with a 12 month warranty however the equipment has been on a preventative maintenance plan since the start of life and is well maintained and often the manufacturers are still willing to support the new owners if they are still manufacturing that asset model. This means you will be buying proven fully operational equipment at a fraction of the price improving your Capital Expenditure and reducing your impact on our planets resources. This equipment may be second hand but is still in good working condition.
Second hand equipment of the same type of assets and model, could also be purchased either to keep your existing equipment running, particularly if the manufacturer no longer supports that model to be used as spare parts.
Within the commercial laboratory space, we have witnessed businesses out there that also run their equipment until it dies. Some of this equipment manufactured as far back as the 1960’s such as autoclaves that we have seen through our experience is still going strong to this day.
This is exactly where LUP Global has been able to assist companies within this space prolong the life of their existing assets, procure second hand equipment at a fraction of the cost and recoup costs for any of their unused or depreciated assets.
Contact us today if you would like to have a fully confidential discussion to see if we are able to assist you.