Most manufacturing companies have recently found that fixed asset management should be described as a key part of the success of the business enterprise enterprise. It is now realised that fixed asset management contributes to economy of production and operation. This in turn can to increase in profits of 10 to 15 per cent, which can’t be ignored as it makes an important contribution to the bottom line of the business.
There’s no doubt 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 in recent years 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 can give a lengthier productive life. The web 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 may have direct bearing on the productivity of the business enterprise, must be managed more closely. There has to 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 automobile 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 depending on the wear and tear on the asset. Adequate planning is also required 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 could be ordered well in time for you to replace the old one.
Management also has to weigh the advantage 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 now obsolete owing to new technological advances ktam. In recent times, technology has advanced at a rapid pace and management has to be vigilant on this issue in order to avoid being left behind by competitors. Asset management also includes adequate insurance to cover any extraordinary losses as a result of fire and natural disasters.
A kind of awakening has brought devote major industries in the past decade on the role of asset management. It is now attractive as a result of decreasing margins and competition growing day by day. To prevent major capital spending, companies are now developing strategies to have 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.
To be able to have reliability in scheduling, regular planning together with various departments, at the very 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 find out whether the organization is achieving optimum production consistent with the industry. If not, then suitable targets and best practices must certanly be put up within a reasonable time period to achieve those targets.
Logistical performance must be evaluated to think about whether transportation costs are economical and benefits of location are met. The management tools for evaluation could be in kind of comparison studies, which can put up in kind of graphs and bar charts for easy visual comparison. If fixed asset performance is seen to be below par, then priorities could be fixed for the focus on improvement.
Asset management tracking is critical 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 concerned in asset management.
According to nature of assets in different businesses. For example, utility companies, mineral companies, oil and natural gas are having large properties within their assets. These need to be effectively managed and timely decisions need to be taken whether to buy or sell properties for the healthiness of the business. Depending on the values and necessity to the running of the organization, the assets could be categorized for better management.
To aid company management, you can find a number of established consultant companies having qualified manpower whose help will undoubtedly be good for asset management. They can be extremely effective to audit present practices and suggest best practices, problem solving and action plans. It might be really worth the expense to hire established consultants to boost performance.
Asset management data could be computerised to enable 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 can enable various key officials to offer their timely input to top management to be able to devise suitable plans. For example, government may emerge 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 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 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? 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 use of the asset could be. What’re the operating costs? Simply how much skilled and unskilled manpower could be needed 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 latest technology? These and a lot more questions must be asked and answered. This can ultimately factor to the long-term strategy of the business.