Most manufacturing companies have recently discovered that fixed asset management should be a key part of the success of the business enterprise enterprise. It’s now realised that fixed asset management results in economy of production and operation. As a result can to improve in profits of 10 to 15 per cent, which can not be ignored as it makes a significant contribution to the bottom distinct the business.
There’s undoubtedly that inventory and production management deserves the main focus of the management for effective functioning in a production enterprise. If asset management was neglected, then fixed assets weren’t being effectively and efficiently managed. But in recent years it’s been realised efficient management of fixed assets like plant and machinery and other movable and immovable fixed assets can lead to economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets can give an extended productive life. The net effectation of that is more profits for the business.
Naturally in fixed asset management, the assets in charge of production, research and development etc., which may have direct bearing on the productivity of the business enterprise, have to be managed more closely. There should be constant monitoring on the maintenance aspect to prolong the useful life of the asset. Even a movable asset just like a vehicle needs proper maintenance. Otherwise without regular running and maintenance the car can soon become corroded and useless.
Every sounding assets needs a different focus of management. Fixed assets need regular maintenance to make sure normal life of the assets with regards to the wear and tear on the asset. Adequate planning can be essential for gathering financial reserves over the life of the asset for replacing the fixed asset at the conclusion of its useful life. Thus the brand new plant and machinery could be ordered well in time for you to replace the old one.
Management also must weigh the advantage of replacing the plant and machinery and other production assets or continuing to keep up the present production assets. In addition they must consider from time to time if the asset has become obsolete owing to new technological advances ktam. In recent times, technology has advanced at a rapid pace and management must be vigilant on this issue in order to avoid being left behind by competitors. Asset management also includes adequate insurance to cover any extraordinary losses because of fire and natural disasters.
A form of awakening has taken place in major industries in the past decade on the role of asset management. It has become attractive because of decreasing margins and competition growing day by day. To prevent major capital spending, companies are actually developing strategies to obtain optimum performance from available fixed assets thereby getting increased returns. This implies proper schedule of maintenance to minimise breakdowns and consequent lack of production.
To be able to have reliability in scheduling, regular planning along with various departments, at least on a monthly basis is totally necessary. Standards should be set as well comparative analysis within industry standards should be evaluated to ascertain whether the company is achieving optimum production in line with the industry. Or even, then suitable targets and best practices should be setup within a reasonable time frame to attain those targets.
Logistical performance must also be evaluated to think about whether transportation costs are economical and features of location are met. The management tools for evaluation could be in type of comparison studies, which can setup in type of graphs and bar charts for easy visual comparison. If fixed asset performance sometimes appears to be below par, then priorities could be fixed for the give attention to improvement.
Asset management tracking is critical in large manufacturing plant and utilities. Integration of asset management with raw material and maintenance procurement systems in addition to financial systems and their cost versus savings benefits should be monitored on a day-by-day basis. Senior financial officers must therefore be engaged in asset management.
Depending on nature of assets in various businesses. As an example, utility companies, mineral companies, oil and natural gas are receiving large properties included in their assets. These have to be effectively managed and timely decisions have to be taken whether to get or sell properties for the health of the business. Depending on the values and necessity to the running of the company, the assets could be categorized for better management.
To aid company management, you can find numerous established consultant companies having qualified manpower whose help will undoubtedly be beneficial for asset management. They can be quite effective to audit present practices and suggest best practices, problem solving and action plans. It might be really worth the cost to hire established consultants to improve performance.
Asset management data could be computerised allow management to chalk out strategies on a standard basis. Integration of asset management systems with other financial systems will give better picture of whole operation of the enterprise. This can enable various key officials to provide their timely input to top management in order to devise suitable plans. As an example, government may come out with special tax incentives for certain industries to purchase fixed assets. In a situation where management is monitoring and managing fixed assets, the Finance Manager may quickly recommend purchase of new fixed assets to take advantage of the government’s tax incentive for that business.
Lastly, it’s the assets of a company which enable the production and delivery of its goods and services. When fixed assets are increasingly being purchased or replaced a couple of important questions arise. What’s the cost and cost benefit for the business. What funds can be found? Should the asset be purchased new or secondhand or should it be leased and how can it benefit the business enterprise? Questions relating to the use of the asset could be. What’re the operating costs? Simply how much skilled and unskilled manpower will be required for operation? What’re working out costs involved? What’re the installation costs? What’s the useful life of the asset? Is it the latest technology? These and a lot more questions have to be asked and answered. This can ultimately factor in to the long-term strategy of the business.