Most manufacturing companies have recently unearthed that fixed asset management should be a key the main success of the business enterprise. It’s now realised that fixed asset management leads to economy of production and operation. Therefore can to increase in profits of 10 to 15 per cent, which can not be ignored because it makes a substantial contribution to underneath line of the business.
There is undoubtedly that inventory and production management deserves the main 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 lately 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 effect 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, have to be managed more closely. There should 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 needs a different focus of management. Fixed assets need regular maintenance to make certain normal life of the assets depending on the wear and tear on the asset. Adequate planning can be required for accumulating financial reserves over the life of the asset for replacing the fixed asset by the end of its useful life. Thus the newest plant and machinery could be ordered well in time for you 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 steadfastly keep up the present production assets. In addition they must consider from time to time if the asset is becoming obsolete owing to new technological advances ktam. Recently, technology has advanced at a rapid pace and management has to be vigilant on this problem to prevent 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 type of awakening has taken 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. In order to avoid major capital spending, companies are actually 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 lack of production.
In order to have reliability in scheduling, regular planning in conjunction with various departments, at least on a regular basis is completely 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 in accordance with the industry. Or even, then suitable targets and best practices must certanly be put up within a reasonable timeframe to attain 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 could be in form of comparison studies, which can put up in form of graphs and bar charts for easy visual comparison. If fixed asset performance is observed to be below par, then priorities could be fixed for the give attention to improvement.
Asset management tracking is critical 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 numerous businesses. As an example, utility companies, mineral companies, oil and natural gas are experiencing large properties as part of their assets. These need to be effectively managed and timely decisions need to be taken whether to get or sell properties for the healthiness of the business. Depending on their values and necessity to the running of the organization, the assets could be categorized for better management.
To aid company management, you can find numerous established consultant companies having qualified manpower whose help will soon be necessary for asset management. They can be extremely effective to audit present practices and suggest best practices, problem solving and action plans. It may be well worth the expense to hire established consultants to enhance performance.
Asset management data could 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 will 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 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’s the assets of a company which enable the production and delivery of its goods and services. Then when fixed assets are now being purchased or replaced a couple of 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 does it benefit the business? Questions relating to the usage of the asset could be. What’re the operating costs? How much skilled and unskilled manpower could be required for operation? What’re working out costs involved? What’re the installation costs? What is the useful life of the asset? Could it be the latest technology? These and many more questions have to be asked and answered. This will ultimately factor into the long-term strategy of the business.