Most manufacturing companies have recently discovered that fixed asset management should be considered a key area of the success of the business enterprise 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’t be ignored because it makes an important contribution to underneath type of the business.
There’s undoubtedly that inventory and production management deserves the key focus of the management for effective functioning in scbam a manufacturing enterprise. If asset management was neglected, then fixed assets weren’t being effectively and efficiently managed. But in recent years 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 can give a lengthier productive life. The internet effectation of this 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, have to be managed more closely. There must be constant monitoring on the maintenance aspect to prolong the useful life of the asset. Even a movable asset like 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 with regards to the wear and tear on the asset. Adequate planning can also be required for building up financial reserves over the life span of the asset for replacing the fixed asset by the end of its useful life. Thus the newest plant and machinery can be ordered well in time for you 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 today’s production assets. In addition they must consider from time to time whether the asset is now obsolete owing to new technological advances. Recently, technology has advanced at a rapid pace and management needs to be vigilant on this matter to prevent being put aside by competitors. Asset management also incorporates adequate insurance to cover any extraordinary losses due to fire and natural disasters.
A type of awakening has taken devote 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 avoid major capital spending, companies are actually developing strategies to obtain optimum performance from available fixed assets thereby getting increased returns. This involves proper schedule of maintenance to minimise breakdowns and consequent loss of production.
To be able to have reliability in scheduling, regular planning together with various departments, at the least on a monthly basis is completely necessary. Standards must certanly be set as well comparative analysis within industry standards must certanly be evaluated to determine whether the company is achieving optimum production consistent with the industry. Or even, then suitable targets and best practices must certanly be put up inside a reasonable time period to reach those targets.
Logistical performance must be evaluated to consider whether transportation costs are economical and features 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 quick visual comparison. If fixed asset performance is seen to be below par, then priorities can 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 along with financial systems and their cost versus savings benefits must certanly be monitored on a day-by-day basis. Senior financial officers must therefore be engaged 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 have to be effectively managed and timely decisions have to be taken whether to buy or sell properties for the health of the business. Depending on their values and necessity to the running of the company, the assets can be categorized for better management.
To aid company management, there are numerous established consultant companies having qualified manpower whose help is going to be good for asset management. They can be quite effective to audit present practices and suggest best practices, problem solving and action plans. It could be worth the cost to hire established consultants to improve 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 would give better picture of whole operation of the enterprise. This will enable various key officials to give 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 buy 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 is the assets of a small business which enable the production and delivery of its goods and services. So when fixed assets are being purchased or replaced a few 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 can it benefit the business enterprise? Questions concerning the usage of the asset could be. What’re the operating costs? Just how much skilled and unskilled manpower would be necessary for operation? What’re working out costs involved? What’re the installation costs? What is the useful life of the asset? Is it the latest technology? These and additional questions have to be asked and answered. This will ultimately factor in to the long-term strategy of the business.