Most manufacturing companies have recently found that fixed asset management should be a key the main success of the company enterprise. It is now realised that fixed asset management contributes to economy of production and operation. As a result can to increase in profits of 10 to 15 per cent, which can not be ignored because it makes a significant contribution to the underside distinct 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 recently 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 a lengthier productive life. The net effect of that is more profits for the business.
Naturally in fixed asset management, the assets accountable for production, research and development etc., which may have direct bearing on the productivity of the company, have to be managed more closely. There must be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A 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 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 is also required for accumulating financial reserves over the life span of the asset for replacing the fixed asset at the end of its useful life. Thus the new plant and machinery can be ordered well in time and energy to replace the old one.
Management also needs to weigh the main advantage of replacing the plant and machinery and other production assets or continuing to keep the present production assets. They also 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 contains adequate insurance to cover any extraordinary losses due to fire and natural disasters.
A kind of awakening has taken invest 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 actually developing strategies to get 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 along 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 ascertain whether the business is achieving optimum production consistent 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 benefits of location are met. The management tools for evaluation can be in form of comparison studies, that may put up in form of graphs and bar charts for easy visual comparison. If fixed asset performance sometimes appears to be below par, then priorities can be fixed for the concentrate on improvement.
Asset management tracking is essential in large manufacturing plant and utilities. Integration of asset management with raw material and maintenance procurement systems in addition to 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 having large properties within their assets. These have to be effectively managed and timely decisions have to be taken whether to purchase or sell properties for the healthiness of the business. Depending on their values and necessity to the running of the business, the assets can be categorized for better management.
To assist company management, there are numerous established consultant companies having qualified manpower whose help is going to be good for asset management. They can be very effective to audit present practices and suggest best practices, problem solving and action plans. It might be really worth the trouble to hire established consultants to boost performance.
Asset management data can be computerised to enable 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 in order to devise suitable plans. As an example, government may turn out with special tax incentives for certain industries to purchase 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 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’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 can it benefit the company? Questions associated with the usage of the asset could be. What’re the operating costs? Simply how much skilled and unskilled manpower will be necessary for operation? What’re the training costs involved? What’re the installation costs? What’s the useful life of the asset? Can it be the latest technology? These and many more questions have to be asked and answered. This can ultimately factor to the long-term strategy of the business.