Most manufacturing companies have recently unearthed that fixed asset management should be considered a key area of the success of the business enterprise enterprise. It’s now realised that fixed asset management contributes to economy of production and operation. This in turn can to improve in profits of 10 to 15 per cent, which can’t be ignored because it makes a significant contribution to the bottom distinct 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 were not being effectively and efficiently managed. But recently 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 lengthier productive life. The web effectation 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, need to be managed more closely. There must be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A good 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 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 living 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 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 the current production assets. Additionally they must consider from time to time perhaps the asset is becoming 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 out by competitors. Asset management also includes adequate insurance to cover any extraordinary losses as a result of fire and natural disasters.
A form of awakening has brought invest major industries in 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. To avoid major capital spending, companies are now actually developing strategies to have optimum performance from available fixed assets thereby getting increased returns. This requires 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 least on a regular basis is completely necessary. Standards should be set as well comparative analysis within industry standards should be evaluated to ascertain whether the company is achieving optimum production in line with the industry. Or even, then suitable targets and best practices should be setup within a reasonable time period to reach those targets.
Logistical performance must be evaluated to consider whether transportation costs are economical and advantages of location are met. The management tools for evaluation can be in kind of comparison studies, that may setup in kind of graphs and bar charts for quick visual comparison. If fixed asset performance sometimes appears to be below par, then priorities can 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 as well as financial systems and their cost versus savings benefits should be monitored on a day-by-day basis. Senior financial officers must therefore be concerned in asset management.
According to nature of assets in numerous businesses. Like, utility companies, mineral companies, oil and natural gas are experiencing large properties included in 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 company, the assets can be categorized for better management.
To aid company management, there are a number of 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 well worth the expense to hire established consultants to boost performance.
Asset management data can be computerised allow 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 can enable various key officials to provide their timely input to top management in order to devise suitable plans. Like, government may emerge with special tax incentives for certain industries to invest in 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 make the most of the government’s tax incentive for that business.
Lastly, it’s the assets of a small business which enable the production and delivery of its goods and services. Then when fixed assets are now being purchased or replaced a few important questions arise. What is the cost and cost benefit for the business. What funds are available? Should the asset be purchased new or secondhand or should it be leased and how does it benefit the business enterprise? Questions relating to 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 is the useful life of the asset? Can it be the newest technology? These and many more questions need to be asked and answered. This can ultimately factor in to the long-term strategy of the business.