Most manufacturing companies have recently found that fixed asset management should be considered a key the main success of the company enterprise. It is now realised that fixed asset management results in economy of production and operation. This in turn can to boost in profits of 10 to 15 per cent, which can not be ignored because it makes a significant contribution to the bottom type of 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 has been realised efficient management of fixed assets like plant and machinery and other movable and immovable fixed assets can result in economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets will give a lengthier productive life. The internet aftereffect of that 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 company, must be managed more closely. There must be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A good 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 group of assets requires 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 necessary for accumulating financial reserves over the life span of the asset for replacing the fixed asset at the conclusion of its useful life. Thus the new plant and machinery can 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 today’s production assets. They also must consider from time to time perhaps the asset is now 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 incorporates adequate insurance to cover any extraordinary losses because of fire and natural disasters.
A type of awakening has brought invest major industries during the past decade on the role of asset management. It is now attractive because 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 implies proper schedule of maintenance to minimise breakdowns and consequent lack of production.
In order to have reliability in scheduling, regular planning in conjunction with various departments, at the very least on a regular basis is completely necessary. Standards must be set as well comparative analysis within industry standards must be evaluated to determine whether the business is achieving optimum production in line with the industry. If not, then suitable targets and best practices must be set up within a reasonable time frame to attain 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 type of comparison studies, which could set up in type of graphs and bar charts for quick visual comparison. If fixed asset performance sometimes appears to be below par, then priorities can 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 as well as 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.
Depending on nature of assets in numerous businesses. For instance, utility companies, mineral companies, oil and natural gas are receiving large properties within their assets. These need to be effectively managed and timely decisions need to be taken whether to get or sell properties for the fitness of the business. Depending on their values and necessity to the running of the business, the assets can be categorized for better management.
To help company management, you will find numerous established consultant companies having qualified manpower whose help is likely to be very theraputic for asset management. They can be very effective to audit present practices and suggest best practices, problem solving and action plans. It might be well worth the cost to hire established consultants to boost performance.
Asset management data can be computerised to enable 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 will enable various key officials to provide their timely input to top management to be able to devise suitable plans. For instance, government may emerge with special tax incentives for certain 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. So when fixed assets are being purchased or replaced a few important questions arise. What is the cost 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 company? Questions relating to the use of the asset could be. What are the operating costs? Simply how much skilled and unskilled manpower would be required for operation? What are working out costs involved? What are the installation costs? What is the useful life of the asset? Can 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.