Manufacturing Operations Spring Cleaning

As warmer weather ushers in the season of renewal, manufacturers have an opportunity to refresh not only their operations, but also their facilities. Just as households take part in spring cleaning to eliminate clutter, industrial and manufacturing businesses should leverage this time to assess, organize, and clear out excess equipment and inventory taking up valuable space and capital.

Clean House with an Asset Disposition Plan

In manufacturing, unused assets are not just idle, they are costly. Aging equipment, surplus spare parts, and outdated machinery depreciate, strain budgets and disrupt operational flow. A basic spring-cleaning exercise should be a reoccurring part of a manufacturing operation’s asset disposition program. Plants are constantly replacing old machines with new ones due to ever-changing production needs. Spring is a great point on the quarterly calendar to dispose and liquidate unused and underutilized assets before they start to fill storage areas and warehouses and consume valuable plant floor space.

Find Floorspace

Floor space is a premium in any manufacturing facility. Many companies struggle with floor space management because they are not prioritizing asset disposition practices. Allowing old machinery and obsolete parts to accumulate wastes space and compromises efficiency. Cluttered work areas hinder production flow, and impact safety by increasing tripping and cutting hazards. This can contribute to higher total recordable incident rates (TRIR). A high TRIR reflects poorly on a company's safety culture and can lead to regulatory scrutiny, increased insurance premiums and reputational damage. Removing non-essential equipment from production areas creates a safer work environment and improved TRIR scores.

Drive Operational Excellence & Support 5S/6S Initiatives

The 5S/6S methodology supports a clean, organized facility, which is foundational to lean manufacturing. These time-tested workplace organization systems are designed to enhance efficiency, reduce waste and improve safety.

• Sort – Eliminate unnecessary items from the workplace.
• Set in Order – Organize tools, parts and equipment for optimal workflow.
• Shine – Clean and inspect regularly to maintain standards.
• Standardize – Establish clear procedures for consistency.
• Sustain – Ensure the discipline to maintain improvements over time.
• Safety (6S) – Incorporate safety into every step of the process.

When facilities are filled with unused machines and surplus inventory, it becomes incredibly challenging to adhere to these principles. Asset disposition literally and operationally clears the way for successful 5S/6S implementation. This leads to better ergonomics, faster production, improved employee morale, and a safer, more professional work environment that aligns with customer expectations and quality standards.

Improve Cash Flow Through Smart Asset Liquidation

Beyond physical cleanup, a well-managed asset disposition plan directly benefits your company’s financial performance. Monetizing unused or obsolete equipment and surplus spare parts boosts cash flow and helps reduce the carrying costs associated with storing non-performing assets. By turning idle assets into liquid capital, manufacturers can fund new initiatives without tapping into credit lines or delaying critical investments.

It’s important to ensure maximum value recovery through targeted auctions, resale to vetted buyers, and environmentally responsible disposal when considering liquidation.

Improve Cash Flow & EBITDA

Monetizing unused or obsolete equipment and surplus spare parts can boost cash flow improve earnings before interest, taxes, depreciation, and amortization (EBITDA).

Purposeful and planned asset disposition can:

• Reduce maintenance costs – Disposing of non-productive assets eliminates the costs associated with maintaining, storing, or insuring idle equipment.
• Decrease depreciation expenses – Removing depreciated or fully amortized assets improves the bottom line by reducing non-cash depreciation charges.
• Increase asset efficiency – Streamlining the asset base allows more focused investments into high-performing machinery, directly supporting profitability and productivity.
• Generate revenue from sales – Auctions and liquidation proceeds go directly to the income statement, positively impacting EBITDA in the period received.

Hire a Professional Cleaner

The good news is there is cost-effective asset disposition help available. Disposition plans can facilitate the fiscal management of equipment when:

• Aged or outdated manufacturing equipment requires replacement.
• MRO or spare parts to repair or maintain the equipment is overstocked or outdated.
• Scrapped equipment requires attention due to a plant closure or procrastination.

Procrastination Compounds the Project

Asset disposition can be a daunting task and an undervalued function. If not addressed on a regular basis, a plant will fill up just like your garage, shed or basement. Eventually, it will begin to affect operational efficiency and profitability.

About the Author

David Zimmerman is CEO of BTM Industrial, a leading asset disposition company. He is an automotive executive with more than 30 years of business development, operations and turn-around experience. He can be reached at d.zimmerman@btmindustrial.com.

BTM Industrial is an MMA Premium Associate Member and has been an MMA member since November 2024. Visit online: btmindustrial.com.