Most manufacturing companies have recently discovered that fixed asset management should be described as a key area of the success of the business enterprise enterprise. It’s now realised that fixed asset management leads to economy of production and operation. Therefore can to improve in profits of 10 to 15 per cent, which can’t be ignored as it makes a substantial contribution to underneath type of the business.
There’s no doubt that inventory and production management deserves the key focus of the management for effective functioning in a production enterprise. If asset management was neglected, then fixed assets were not being effectively and efficiently managed. But lately 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 will give an extended productive life. The net effectation of this is more profits for the business.
Naturally in fixed asset management, the assets responsible for production, research and development etc., which may have direct bearing on the productivity of the business enterprise, 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 automobile can soon become corroded and useless.
Every group of 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 also be necessary for building up financial reserves over the life of the asset for replacing the fixed asset by the end of its useful life. Thus the brand new plant and machinery may be ordered well in time and energy to replace the old one.
Management also has to weigh the benefit of replacing the plant and machinery and other production assets or continuing to steadfastly keep up today’s production assets. They also must consider from time to time perhaps the asset is now obsolete owing to new technological advances ktam. In recent years, technology has advanced at a rapid pace and management has to be vigilant on this dilemma in order to avoid being left behind by competitors. Asset management also contains adequate insurance to cover any extraordinary losses because of fire and natural disasters.
A type of awakening has taken invest major industries in the past decade on the role of asset management. It is now attractive because of decreasing margins and competition growing day by day. To prevent major capital spending, companies are now actually developing strategies to obtain 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 in conjunction with various departments, at least on a monthly basis is absolutely necessary. Standards must certanly be set as well comparative analysis within industry standards must certanly be evaluated to find out whether the company is achieving optimum production in line with the industry. If not, then suitable targets and best practices must certanly be set up in just a reasonable time period to attain those targets.
Logistical performance should also be evaluated to take into account whether transportation costs are economical and benefits of location are met. The management tools for evaluation may be in form of comparison studies, which could set up in form of graphs and bar charts for quick visual comparison. If fixed asset performance is observed to be below par, then priorities may be fixed for the concentrate on improvement.
Asset management tracking is vital 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 engaged in asset management.
Depending on nature of assets in various businesses. Like, utility companies, mineral companies, oil and natural gas are experiencing large properties within their assets. These need to be effectively managed and timely decisions need to be taken whether to buy or sell properties for the fitness of the business. Depending on their values and necessity to the running of the company, the assets may be categorized for better management.
To aid company management, you can find a number of established consultant companies having qualified manpower whose help is likely to be very theraputic for asset management. They can be quite effective to audit present practices and suggest best practices, problem solving and action plans. It might be worth the trouble to hire established consultants to improve performance.
Asset management data may be computerised allow management to chalk out strategies on an overall basis. Integration of asset management systems with other financial systems would give better picture of whole operation of the enterprise. This will enable various key officials to give their timely input to top management in order to devise suitable plans. Like, government may turn out with special tax incentives for certain industries to buy 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 make the most 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. Then when fixed assets are increasingly being purchased or replaced a few important questions arise. What’s the fee and cost benefit for the business. What funds are available? Should the asset be purchased new or secondhand or should it be leased and how does it benefit the business enterprise? Questions concerning the utilization 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? Could it be the most recent technology? These and additional questions must be asked and answered. This will ultimately factor in to the long-term strategy of the business.