Most manufacturing corporations have just lately discovered that fixed asset management needs to be a key part of the success of the business enterprise. It’s now realised that fixed asset management leads to economy of production and operation. This in turn can to extend in profits of 10 to fifteen per cent, which can’t be ignored as it makes a significant contribution to the underside line of the business.
There is no doubt that stock and production administration deserves the primary focus of the management for effective functioning in a producing enterprise. If asset management was neglected, then fixed assets were not being successfully and effectively 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 lead to economies of scale. Thus proper monitoring and common maintenance of productive fixed assets will give an extended productive life. The net effect of this is more profits for the business.
Naturally in fixed asset management, the assets liable for production, research and development etc., which have direct bearing on the productivity of the enterprise, need to be managed more closely. There must be fixed monitoring on the upkeep facet to prolong the useful lifetime of the asset. Even a movable asset like a vehicle wants proper maintenance. Otherwise without regular running and maintenance the vehicle can soon develop into corroded and useless.
Every class of assets needs a unique focus of management. Fixed assets want common maintenance to ensure regular life of the assets relying on the wear and tear on the asset. Adequate planning can also be necessary for building up financial reserves over the lifetime of the asset for replacing the fixed asset at the finish of its useful life. Thus the new plant and machinery could be ordered well in time to exchange the old one.
Management also has to weigh the advantage of changing the plant and machinery and other production assets or persevering with to take care of the current production assets. Additionally they must consider infrequently whether or not the asset has turn into out of date owing to new technological advances. In latest times, technology has advanced at a rapid pace and administration must be vigilant on this concern to keep away from being left behind by competitors. Asset administration also includes adequate insurance to cover any furtherordinary losses because of fire and natural disasters.
A type of awakening has taken place in major industries throughout the past decade on the position of asset management. It has change into attractive as a consequence of decreasing margins and competition rising day by day. To avoid main capital spending, corporations are actually creating strategies to get optimum performance from available fixed assets thereby getting elevated returns. This entails proper schedule of upkeep to minimise breakdowns and consequent lack of production.
In order to have reliability in scheduling, regular planning in conjunction with various departments, not less than on a month-to-month foundation is absolutely necessary. Standards must be set as well comparative analysis within trade standards must be evaluated to find out whether the company is achieving optimum production in line with the industry. If not, then suitable targets and finest practices have to be set up within a reasonable time frame to reach these targets.
Logistical performance must even be evaluated to consider whether or not transportation costs are economical and advantages of location are met. The administration tools for analysis will be in form of comparison research, which can set up in form of graphs and bar charts for easy visual comparison. If fixed asset performance is seen to be below par, then priorities might be fixed for the give attention to improvement.
Asset management tracking is vital in massive manufacturing plant and utilities. Integration of asset management with raw materials and maintenance procurement systems as well as monetary systems and their value versus savings benefits have to be monitored on a day-by-day basis. Senior monetary officers must therefore be concerned in asset management.
Depending on nature of assets in different businesses. For instance, utility companies, mineral corporations, oil and natural gas are having massive properties as part of their assets. These must be effectively managed and well timed choices must be taken whether or not to buy or sell properties for the health of the business. Relying on their values and necessity to the running of the corporate, the assets will be categorized for better management.
To help company management, there are a number of established consultant corporations having qualified manpower whose help will be useful for asset management. They can be very effective to audit current practices and suggest greatest practices, problem solving and motion plans. It could be well worth the expense to hire established consultants to improve performance.
Asset administration data might be computerised to enable management to chalk out strategies on an general basis. Integration of asset management systems with different monetary systems would give higher picture of whole operation of the enterprise. This will enable varied key officials to offer their well timed input to top administration with a view to devise suitable plans. For instance, government might come out with particular tax incentives for sure industries to invest in fixed assets. In a situation where management is monitoring and managing fixed assets, the Finance Manager might quickly recommend purchase of new fixed assets to take advantage of the government’s tax incentive for that business.
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