Most manufacturing companies have recently unearthed that fixed asset management should be a key the main success of the business enterprise enterprise. It is now realised that fixed asset management leads to economy of production and operation. Therefore can to boost in profits of 10 to 15 per cent, which can’t be ignored because it makes an important contribution to the bottom type of the business.
There is undoubtedly 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 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 longer productive life. The web aftereffect 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, have to be managed more closely. There must 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 category of assets requires a different focus of management. Fixed assets need regular maintenance to ensure normal life of the assets with regards to the wear and tear on the asset. Adequate planning can also be essential 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 newest plant and machinery may be ordered well in time and energy to replace the old one.
Management also must 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 whether the asset has become obsolete owing to new technological advances ktam. In recent years, technology has advanced at a rapid pace and management must be vigilant on this matter to avoid being left out by competitors. Asset management also contains adequate insurance to cover any extraordinary losses because of fire and natural disasters.
A kind of awakening has brought place in major industries during 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 involves proper schedule of maintenance to minimise breakdowns and consequent loss in production.
To be able to have reliability in scheduling, regular planning together with various departments, at the least on a regular basis is totally necessary. Standards must certanly be set as well comparative analysis within industry standards must certanly be evaluated to determine whether the company is achieving optimum production in line with the industry. Or even, then suitable targets and best practices must certanly be setup inside a reasonable timeframe to reach those targets.
Logistical performance must be evaluated to think about whether transportation costs are economical and benefits of location are met. The management tools for evaluation may be in form of comparison studies, which can setup in form of graphs and bar charts for easy visual comparison. If fixed asset performance is observed to be below par, then priorities may be fixed for the give attention to 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 involved in asset management.
According to nature of assets in various businesses. As an example, 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 get 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, there are numerous established consultant companies having qualified manpower whose help is going to be very theraputic for asset management. They can be very 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 boost 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 will give better picture of whole operation of the enterprise. This can enable various key officials to offer their timely input to top management to be able to devise suitable plans. As an example, government may turn out with special tax incentives for many 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 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. So when fixed assets are now being purchased or replaced a few important questions arise. What is the fee 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 will it benefit the business enterprise? Questions concerning the utilization of the asset could be. What’re the operating costs? Simply how much skilled and unskilled manpower could be required for operation? What’re working out costs involved? What’re the installation costs? What is the useful life of the asset? Could it be 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.