Most manufacturing companies have recently discovered that fixed asset management should be considered a key part of the success of the company enterprise. It’s now realised that fixed asset management contributes to economy of production and operation. Therefore can to boost in profits of 10 to 15 per cent, which cannot be ignored since it makes a significant contribution to underneath line of the business.
There’s undoubtedly that inventory and production management deserves the main focus of the management for effective functioning in scbam a production 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 lead to economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets gives a lengthier productive life. The internet effect of this is more profits for the business.
Naturally in fixed asset management, the assets accountable for production, research and development etc., which may have direct bearing on the productivity of the company, have to be managed more closely. There should be constant monitoring on the maintenance aspect to prolong the useful life of the asset. Even a movable asset such as for instance a vehicle needs proper maintenance. Otherwise without regular running and maintenance the vehicle can soon become corroded and useless.
Every sounding assets requires a different focus of management. Fixed assets need regular maintenance to ensure normal life of the assets depending on the wear and tear on the asset. Adequate planning can be necessary for gathering financial reserves over living of the asset for replacing the fixed asset by the end of its useful life. Thus the new plant and machinery may be ordered well in time for you to replace the old one.
Management also needs to weigh the benefit of replacing the plant and machinery and other production assets or continuing to keep up the present production assets. Additionally they must consider from time to time perhaps the asset is becoming obsolete owing to new technological advances. In recent years, technology has advanced at a rapid pace and management needs to be vigilant on this matter to prevent being left behind by competitors. Asset management also contains adequate insurance to cover any extraordinary losses due to fire and natural disasters.
A form of awakening has brought place in major industries during the past decade on the role of asset management. It is becoming attractive due to 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.
To be able to have reliability in scheduling, regular planning in conjunction with various departments, at the very least on a regular basis is totally necessary. Standards should be set as well comparative analysis within industry standards should be evaluated to find out whether the business is achieving optimum production consistent with the industry. Or even, then suitable targets and best practices should be set up inside a reasonable timeframe to achieve those targets.
Logistical performance must be evaluated to take into account whether transportation costs are economical and advantages of location are met. The management tools for evaluation may be in kind of comparison studies, that may set up in kind of graphs and bar charts for easy visual comparison. If fixed asset performance sometimes appears to be below par, then priorities may be fixed for the give attention to improvement.
Asset management tracking is essential 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 involved in asset management.
Based on nature of assets in various businesses. Like, utility companies, mineral companies, oil and natural gas are having large properties as part of 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 their values and necessity to the running of the business, the assets may be categorized for better management.
To aid company management, you can find a number of established consultant companies having qualified manpower whose help is going to be very theraputic for asset management. They can be quite 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 enhance performance.
Asset management data may be computerised allow management to chalk out strategies on an overall 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 provide their timely input to top management in order 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 take advantage 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. So when fixed assets are being purchased or replaced a few important questions arise. What’s 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 company? Questions relating to the use of the asset could be. What are the operating costs? Just how much skilled and unskilled manpower will be necessary 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 additional questions have to be asked and answered. This can ultimately factor in to the long-term strategy of the business.