Most manufacturing companies have recently found that fixed asset management should be considered a key area of the success of the business enterprise. It’s now realised that fixed asset management results in economy of production and operation. As a result can to boost in profits of 10 to 15 per cent, which can’t be ignored because 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 manufacturing enterprise. If asset management was neglected, then fixed assets weren’t being effectively and efficiently managed. But in recent years 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 can give an extended productive life. The web aftereffect of this really is more profits for the business.
Naturally in fixed asset management, the assets accountable for production, research and development etc., which have direct bearing on the productivity of the business, must be managed more closely. There has to be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A good movable asset just like a vehicle needs proper maintenance. Otherwise without regular running and maintenance the vehicle can soon become corroded and useless.
Every category 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 be necessary for accumulating financial reserves over the life of the asset for replacing the fixed asset at the end of its useful life. Thus the newest plant and machinery may be ordered well in time to replace the old one.
Management also must weigh the benefit of replacing the plant and machinery and other production assets or continuing to maintain today’s production assets. Additionally they must consider from time to time if the asset has become obsolete owing to new technological advances ktam. Recently, technology has advanced at a rapid pace and management must be vigilant on this problem in order 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 in the past decade on the role of asset management. It has become attractive as a result of decreasing margins and competition growing day by day. To avoid major capital spending, companies are now actually 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 in production.
To be able to have reliability in scheduling, regular planning along 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 organization is achieving optimum production consistent with the industry. Or even, then suitable targets and best practices must certanly be setup inside a reasonable timeframe to attain those targets.
Logistical performance should also be evaluated to consider whether transportation costs are economical and benefits of location are met. The management tools for evaluation may be in type of comparison studies, which can setup 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 focus on 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 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 receiving large properties as part of their assets. These need to be effectively managed and timely decisions need to be taken whether to purchase or sell properties for the fitness of the business. Depending on the values and necessity to the running of the organization, the assets may be categorized for better management.
To assist company management, there are numerous established consultant companies having qualified manpower whose help is going to be beneficial for asset management. They can be very effective to audit present practices and suggest best practices, problem solving and action plans. It could be worth the expense 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 will give better picture of whole operation of the enterprise. This may enable various key officials to give their timely input to top management to be able to devise suitable plans. As an example, government may come out with special tax incentives for many 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 company 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 is 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 will it benefit the business? Questions associated with the use of the asset could be. What are the operating costs? How much skilled and unskilled manpower will be necessary for operation? What are working out costs involved? What are the installation costs? What is the useful life of the asset? Can it be the newest technology? These and additional questions must be asked and answered. This may ultimately factor into the long-term strategy of the business.