Most manufacturing companies have recently unearthed that fixed asset management should be a key part of the success of the company enterprise. It’s 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 not be ignored as it makes a significant contribution to the bottom line of the business.
There is undoubtedly 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 recently it has 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 gives an extended productive life. The internet effectation of this really is more profits for the business.
Naturally in fixed asset management, the assets in charge of production, research and development etc., which have direct bearing on the productivity of the company, need to be managed more closely. There has to be constant monitoring on the maintenance aspect to prolong the useful life of the asset. Even a 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 sounding assets requires a different focus of management. Fixed assets need regular maintenance to make certain normal life of the assets with respect to the wear and tear on the asset. Adequate planning can also be required for accumulating financial reserves over living of the asset for replacing the fixed asset at the end of its useful life. Thus the brand new plant and machinery can be ordered well in time 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 keep up the current production assets. Additionally they must consider from time to time if the asset has become 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 matter to prevent being put aside 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 brought place in 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. In order to avoid major capital spending, companies are actually developing strategies to obtain optimum performance from available fixed assets thereby getting increased returns. This implies proper schedule of maintenance to minimise breakdowns and consequent lack of production.
In order to have reliability in scheduling, regular planning in conjunction with various departments, at least on a regular basis is absolutely necessary. Standards must be set as well comparative analysis within industry standards must be evaluated to determine whether the business is achieving optimum production in accordance with the industry. If not, then suitable targets and best practices must be create within a reasonable time period to achieve those targets.
Logistical performance must be evaluated to think about whether transportation costs are economical and features of location are met. The management tools for evaluation can be in kind of comparison studies, which could create in kind of graphs and bar charts for quick visual comparison. If fixed asset performance is observed to be below par, then priorities can 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 in addition to financial systems and their cost versus savings benefits must be monitored on a day-by-day basis. Senior financial officers must therefore be involved in asset management.
Based on nature of assets in various businesses. As an example, utility companies, mineral companies, oil and natural gas are receiving large properties included in their assets. These need to be effectively managed and timely decisions need to be taken whether to purchase or sell properties for the health of the business. Depending on the values and necessity to the running of the business, the assets can be categorized for better management.
To aid company management, you will find numerous established consultant companies having qualified manpower whose help is going to be necessary for asset management. They can be quite effective to audit present practices and suggest best practices, problem solving and action plans. It may be worth the expense to hire established consultants to improve performance.
Asset management data can be computerised to enable 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 may 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 several industries to purchase fixed assets. In a scenario 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 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 price 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 company? Questions concerning the use of the asset could be. What’re the operating costs? How much skilled and unskilled manpower will be needed for operation? What’re the training costs involved? What’re the installation costs? What is the useful life of the asset? Could it be the most recent technology? These and a lot more questions need to be asked and answered. This may ultimately factor into the long-term strategy of the business.