Most manufacturing companies have recently discovered that fixed asset management should be a key area of the success of the company enterprise. It is now realised that fixed asset management leads to economy of production and operation. Therefore can to improve in profits of 10 to 15 per cent, which can’t be ignored because it makes an important contribution to underneath distinct the business.
There is undoubtedly that inventory and production management deserves the main focus of the management for effective functioning in scbam 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 gives a lengthier productive life. The internet aftereffect of this is more profits for the business.
Naturally in fixed asset management, the assets responsible for production, research and development etc., which have direct bearing on the productivity of the company, have to be managed more closely. There has to be constant monitoring on the maintenance aspect to prolong the useful life of the asset. Even a movable asset just like a vehicle needs proper maintenance. Otherwise without regular running and maintenance the car can soon become corroded and useless.
Every group of assets needs a different focus of management. Fixed assets need regular maintenance to ensure normal life of the assets with regards to the wear and tear on the asset. Adequate planning can also 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 new plant and machinery could 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 up today’s production assets. Additionally they must consider from time to time if the asset has become obsolete owing to new technological advances. In recent years, technology has advanced at a rapid pace and management needs to be vigilant on this problem in order to avoid being put aside by competitors. Asset management also contains adequate insurance to cover any extraordinary losses because of fire and natural disasters.
A kind of awakening has brought place in major industries during the past decade on the role of asset management. It has become attractive because of decreasing margins and competition growing day by day. To prevent major capital spending, companies are actually developing strategies to obtain optimum performance from available fixed assets thereby getting increased returns. This requires proper schedule of maintenance to minimise breakdowns and consequent lack of production.
To be able to have reliability in scheduling, regular planning in conjunction with various departments, at the least on a monthly basis is completely necessary. Standards must be set as well comparative analysis within industry standards must be evaluated to find out whether the business is achieving optimum production consistent with the industry. If not, then suitable targets and best practices must be create within a reasonable time period to reach 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 create in kind of graphs and bar charts for easy visual comparison. If fixed asset performance sometimes appears to be below par, then priorities could be fixed for the concentrate on improvement.
Asset management tracking is vital 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 be monitored on a day-by-day basis. Senior financial officers must therefore be concerned in asset management.
According to nature of assets in various businesses. For instance, utility companies, mineral companies, oil and natural gas are experiencing large properties within their assets. These need to be effectively managed and timely decisions need 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 could be categorized for better management.
To help company management, you will find a number of 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 could be really worth the expense to hire established consultants to improve 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 would give better picture of whole operation of the enterprise. This may enable various key officials to offer their timely input to top management in order to devise suitable plans. For instance, government may turn out with special tax incentives for certain industries to invest in 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’s the assets of a small business which enable the production and delivery of its goods and services. When fixed assets are now being purchased or replaced a few important questions arise. What is the fee and cost benefit for the business. What funds are available? If the asset be purchased new or secondhand or should it be leased and how will it benefit the company? Questions relating to the use of the asset could be. What are the operating costs? Simply how much skilled and unskilled manpower will be required for operation? What are the training costs involved? What are the installation costs? What is the useful life of the asset? Could it be the most recent technology? These and many more questions have to be asked and answered. This may ultimately factor to the long-term strategy of the business.