Most manufacturing companies have recently discovered that fixed asset management should be considered a key the main success of the business enterprise. It is now realised that fixed asset management contributes to 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 underneath distinct the business.
There’s no doubt that inventory and production management deserves the main focus of the management for effective functioning in a manufacturing 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 cause economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets will give a lengthier productive life. The net aftereffect of this is more profits for the business.
Naturally in fixed asset management, the assets accountable for production, research and development etc., which may have direct bearing on the productivity of the business, must be managed more closely. There must be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A good movable asset such as for instance a vehicle needs proper maintenance. Otherwise without regular running and maintenance the car can soon become corroded and useless.
Every sounding assets requires a different focus of management. Fixed assets need regular maintenance to make certain normal life of the assets with regards to the wear and tear on the asset. Adequate planning can be required for gathering financial reserves over the life of the asset for replacing the fixed asset at the conclusion of its useful life. Thus the newest plant and machinery may be ordered well in time for you to replace the old one.
Management also has to weigh the advantage of replacing the plant and machinery and other production assets or continuing to steadfastly keep up the present production assets. Additionally they must consider from time to time if the asset is becoming obsolete owing to new technological advances ktam. Recently, technology has advanced at a rapid pace and management has to be vigilant on this dilemma to avoid being left out by competitors. Asset management also contains adequate insurance to cover any extraordinary losses due to 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 is becoming attractive due to decreasing margins and competition growing day by day. To prevent major capital spending, companies are actually developing strategies to have optimum performance from available fixed assets thereby getting increased returns. This requires proper schedule of maintenance to minimise breakdowns and consequent loss in production.
In order to have reliability in scheduling, regular planning together with various departments, at the very least on a regular basis is completely necessary. Standards must certanly be set as well comparative analysis within industry standards must certanly be evaluated to determine whether the business is achieving optimum production consistent with the industry. If not, then suitable targets and best practices must certanly be set up in just a reasonable time frame to reach those targets.
Logistical performance must also be evaluated to think about whether transportation costs are economical and benefits of location are met. The management tools for evaluation may be in type of comparison studies, that may set up in type of graphs and bar charts for quick visual comparison. If fixed asset performance is seen to be below par, then priorities may be fixed for the concentrate on improvement.
Asset management tracking is critical in large manufacturing plant and utilities. Integration of asset management with raw material and maintenance procurement systems as well as financial systems and their cost versus savings benefits must certanly be monitored on a day-by-day basis. Senior financial officers must therefore be concerned in asset management.
Depending on nature of assets in numerous businesses. Like, utility companies, mineral companies, oil and natural gas are experiencing large properties included in their assets. These need to be effectively managed and timely decisions need to be taken whether to buy or sell properties for the healthiness of the business. Depending on the values and necessity to the running of the business, the assets may be categorized for better management.
To aid company management, there are several established consultant companies having qualified manpower whose help is going to be necessary for asset management. They can be quite effective to audit present practices and suggest best practices, problem solving and action plans. It could be well worth the expense to hire established consultants to improve performance.
Asset management data may be computerised allow management to chalk out strategies on a general basis. Integration of asset management systems with other financial systems would give better picture of whole operation of the enterprise. This can enable various key officials to provide their timely input to top management to be able to devise suitable plans. Like, government may emerge with special tax incentives for several industries to purchase fixed assets. In a scenario 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 business which enable the production and delivery of its goods and services. When fixed assets are increasingly being purchased or replaced several important questions arise. What’s the cost and cost benefit for the business. What funds are available? If the asset be purchased new or secondhand or should it be leased and how does it benefit the business? Questions relating to the use of the asset could be. What’re the operating costs? How much skilled and unskilled manpower could be necessary for operation? What’re the training costs involved? What’re the installation costs? What’s the useful life of the asset? Can it be the newest technology? These and many more questions must be asked and answered. This can ultimately factor in to the long-term strategy of the business.