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 leads to economy of production and operation. As a result can to boost in profits of 10 to 15 per cent, which cannot be ignored because it makes an important contribution to the underside type of the business.
There’s no doubt that inventory and production management deserves the key focus of the management for effective functioning in scbam a production enterprise. If asset management was neglected, then fixed assets were not being effectively and efficiently managed. But lately it has been realised efficient management of fixed assets like plant and machinery and other movable and immovable fixed assets can result in economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets will give a longer productive life. The internet aftereffect of that is more profits for the business.
Naturally in fixed asset management, the assets responsible for production, research and development etc., which have direct bearing on the productivity of the business, must be managed more closely. There should be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A movable asset like a vehicle needs proper maintenance. Otherwise without regular running and maintenance the automobile 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 also be required for building up financial reserves over the life span of the asset for replacing the fixed asset at the end of its useful life. Thus the brand new plant and machinery may be ordered well in time for you to replace the old one.
Management also needs to weigh the benefit 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 is now obsolete owing to new technological advances. In recent times, technology has advanced at a rapid pace and management needs to be vigilant on this matter to prevent being left out by competitors. Asset management also includes adequate insurance to cover any extraordinary losses due to fire and natural disasters.
A type of awakening has brought devote major industries in the past decade on the role of asset management. It is now attractive due to decreasing margins and competition growing day by day. To prevent major capital spending, companies are now developing strategies to obtain optimum performance from available fixed assets thereby getting increased returns. This calls for proper schedule of maintenance to minimise breakdowns and consequent loss of production.
To be able to have reliability in scheduling, regular planning together with various departments, at the least on a regular basis is absolutely necessary. Standards must certanly be set as well comparative analysis within industry standards must certanly be evaluated to determine whether the organization is achieving optimum production in line with the industry. Or even, then suitable targets and best practices must certanly be put up in just a reasonable time frame to attain those targets.
Logistical performance should also be evaluated to think about whether transportation costs are economical and advantages of location are met. The management tools for evaluation may be in kind of comparison studies, that may put up in kind of graphs and bar charts for easy visual comparison. If fixed asset performance is seen to be below par, then priorities may be fixed for the focus on improvement.
Asset management tracking is critical in large manufacturing plant and utilities. Integration of asset management with raw material and maintenance procurement systems along with 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.
Based on nature of assets in different businesses. As an example, utility companies, mineral companies, oil and natural gas are receiving large properties within their assets. These have to be effectively managed and timely decisions have to be taken whether to buy or sell properties for the health of the business. Depending on their values and necessity to the running of the organization, the assets may be categorized for better management.
To assist company management, you will find numerous established consultant companies having qualified manpower whose help will soon be beneficial for asset management. They can be quite effective to audit present practices and suggest best practices, problem solving and action plans. It may be worth the cost to hire established consultants to enhance performance.
Asset management data may be computerised allow management to chalk out strategies on a standard basis. Integration of asset management systems with other financial systems would give better picture of whole operation of the enterprise. This may enable various key officials to provide their timely input to top management in order to devise suitable plans. As an example, 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 is the assets of a business which enable the production and delivery of its goods and services. So when fixed assets are now being purchased or replaced several important questions arise. What’s the fee and cost benefit for the business. What funds can be found? If the asset be purchased new or secondhand or should it be leased and how does it benefit the business? Questions associated with the usage of the asset could be. What are the operating costs? Simply how much skilled and unskilled manpower could be necessary for operation? What are working out costs involved? What are the installation costs? What’s the useful life of the asset? Is it the newest technology? These and a lot more questions must be asked and answered. This may ultimately factor to the long-term strategy of the business.