Most manufacturing companies have recently unearthed that fixed asset management should be considered a key area of the success of the business enterprise. It is now realised that fixed asset management results in economy of production and operation. Therefore can to boost in profits of 10 to 15 per cent, which can not be ignored because it makes an important contribution to underneath line of the business.
There’s without 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 weren’t 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 result in economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets gives a lengthier productive life. The web aftereffect of this really 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, have to be managed more closely. There has to be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A movable asset such as 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 ensure normal life of the assets with respect to the wear and tear on the asset. Adequate planning can be required for gathering financial reserves over the life span of the asset for replacing the fixed asset by the end of its useful life. Thus the 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 steadfastly keep up today’s production assets. In addition they must consider from time to time if the asset is becoming obsolete owing to new technological advances. In recent times, technology has advanced at a rapid pace and management must be vigilant on this issue to avoid being left behind by competitors. Asset management also contains adequate insurance to cover any extraordinary losses as a result of fire and natural disasters.
A kind of awakening has taken devote major industries during the past decade on the role of asset management. It is becoming attractive as a result of decreasing margins and competition growing day by day. In order to avoid major capital spending, companies are now developing strategies to get 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 least on a monthly basis is absolutely necessary. Standards must be set as well comparative analysis within industry standards must be evaluated to find out whether the business is achieving optimum production in line with the industry. If not, then suitable targets and best practices must be create inside a reasonable time period 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 could be in form of comparison studies, which could create in form of graphs and bar charts for quick 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 essential 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 be monitored on a day-by-day basis. Senior financial officers must therefore be engaged in asset management.
According to nature of assets in numerous businesses. Like, utility companies, mineral companies, oil and natural gas are having large properties within their assets. These have to be effectively managed and timely decisions have to be taken whether to get or sell properties for the healthiness of the business. Depending on the values and necessity to the running of the business, the assets could be categorized for better management.
To assist company management, you will find a number of established consultant companies having qualified manpower whose help will undoubtedly be beneficial for asset management. They can be extremely 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 enhance 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 may enable various key officials to provide their timely input to top management to be able to devise suitable plans. Like, government may turn out with special tax incentives for several industries to invest in 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 is the assets of a small business which enable the production and delivery of its goods and services. So when fixed assets are increasingly being purchased or replaced several important questions arise. What is 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? Questions relating to the use of the asset could be. What are the operating costs? Simply how much skilled and unskilled manpower could be needed for operation? What are working out costs involved? What are the installation costs? What is the useful life of the asset? Is it the latest technology? These and a lot more questions have to be asked and answered. This may ultimately factor in to the long-term strategy of the business.