Most manufacturing companies have recently unearthed that fixed asset management should be a key the main success of the business enterprise. It’s now realised that fixed asset management leads to economy of production and operation. Therefore can to increase in profits of 10 to 15 per cent, which can’t be ignored as it makes a substantial contribution to the underside 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 lately it’s 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 can give a lengthier productive life. The internet effectation 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 business, 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 such as a vehicle needs proper maintenance. Otherwise without regular running and maintenance the automobile 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 depending on the wear and tear on the asset. Adequate planning can be required for building up financial reserves over the life of the asset for replacing the fixed asset at the end of its useful life. Thus the new plant and machinery could be ordered well in time 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 steadfastly keep up the present production assets. Additionally they must consider from time to time if 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 problem to prevent being left behind by competitors. Asset management also includes adequate insurance to cover any extraordinary losses due to fire and natural disasters.
A form of awakening has taken invest 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 prevent major capital spending, companies are now 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 along with various departments, at the very least on a monthly basis is completely necessary. Standards should be set as well comparative analysis within industry standards should be evaluated to ascertain whether the company is achieving optimum production in line with the industry. Or even, then suitable targets and best practices should be setup inside a reasonable time frame to attain those targets.
Logistical performance must be evaluated to consider whether transportation costs are economical and advantages of location are met. The management tools for evaluation could be in form of comparison studies, which could setup in form of graphs and bar charts for quick visual comparison. If fixed asset performance is seen to be below par, then priorities could 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 as well as financial systems and their cost versus savings benefits should be monitored on a day-by-day basis. Senior financial officers must therefore be engaged in asset management.
Based on nature of assets in various businesses. As an example, utility companies, mineral companies, oil and natural gas are having large properties included in their assets. These have to be effectively managed and timely decisions have to be taken whether to get or sell properties for the healthiness of the business. Depending on the values and necessity to the running of the company, the assets could be categorized for better management.
To assist company management, you will find a number of established consultant companies having qualified manpower whose help will undoubtedly be necessary for asset management. They can be very effective to audit present practices and suggest best practices, problem solving and action plans. It could be worth the trouble to hire established consultants to enhance performance.
Asset management data could be computerised allow management to chalk out strategies on a general 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 to be able to devise suitable plans. As an example, government may turn out with special tax incentives for several 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 company which enable the production and delivery of its goods and services. Then 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? Should the asset be purchased new or secondhand or should it be leased and how does it benefit the business? Questions relating to the usage of the asset could be. What’re the operating costs? How much skilled and unskilled manpower would be necessary for operation? What’re the training costs involved? What’re the installation costs? What is the useful life of the asset? Can it be the newest technology? These and a lot more questions have to be asked and answered. This can ultimately factor into the long-term strategy of the business.