Most manufacturing companies have recently found that fixed asset management should be described as a key part of the success of the business enterprise. It is now realised that fixed asset management results in economy of production and operation. Therefore can to boost in profits of 10 to 15 per cent, which cannot be ignored because it makes an important contribution to underneath distinct the business.
There is no doubt 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 recently it’s 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 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, must be managed more closely. There should be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A good movable asset just like 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 ensure normal life of the assets with respect to the wear and tear on the asset. Adequate planning can be essential for gathering financial reserves over living of the asset for replacing the fixed asset at the end of its useful life. Thus the newest plant and machinery may be ordered well in time to replace the old one.
Management also must weigh the advantage of replacing the plant and machinery and other production assets or continuing to maintain the present production assets. In addition they must consider from time to time if the asset is now obsolete owing to new technological advances. In recent years, technology has advanced at a rapid pace and management must be vigilant on this matter in order to avoid 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 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 avoid major capital spending, companies are now actually developing strategies to get optimum performance from available fixed assets thereby getting increased returns. This requires proper schedule of maintenance to minimise breakdowns and consequent loss of production.
In order to have reliability in scheduling, regular planning along with various departments, at least on a regular basis is totally necessary. Standards should be set as well comparative analysis within industry standards should be evaluated to ascertain whether the business is achieving optimum production in accordance with the industry. If not, then suitable targets and best practices should be create within a reasonable time frame to achieve those targets.
Logistical performance must also be evaluated to think about whether transportation costs are economical and features of location are met. The management tools for evaluation may be in type of comparison studies, which can create in type of graphs and bar charts for easy visual comparison. If fixed asset performance is observed to be below par, then priorities may be fixed for the concentrate on 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 should be monitored on a day-by-day basis. Senior financial officers must therefore be concerned in asset management.
Depending on nature of assets in numerous businesses. Like, utility companies, mineral companies, oil and natural gas are receiving large properties included in their assets. These have to be effectively managed and timely decisions have to be taken whether to purchase or sell properties for the health of the business. Depending on their values and necessity to the running of the business, the assets may be categorized for better management.
To assist company management, you can find a number of established consultant companies having qualified manpower whose help is likely 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 may be worth the cost to hire established consultants to improve performance.
Asset management data may be computerised allow 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 will enable various key officials to offer their timely input to top management to be able to devise suitable plans. Like, government may turn out with special tax incentives for many industries to buy 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 small business which enable the production and delivery of its goods and services. Then when fixed assets are increasingly being purchased or replaced a couple of important questions arise. What’s 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 can it benefit the business? Questions relating to the use of the asset could be. What are the operating costs? How much skilled and unskilled manpower will be needed for operation? What are working out costs involved? What are the installation costs? What’s the useful life of the asset? Could it be the most recent technology? These and many more questions must be asked and answered. This will ultimately factor to the long-term strategy of the business.