Most manufacturing firms have lately discovered that fixed asset management ought to be a key part of the success of the business enterprise. It is now realised that fixed asset management leads to economy of production and operation. This in turn can to increase in profits of 10 to 15 per cent, which cannot be ignored as it makes a significant contribution to the bottom line of the business.
There is no such thing as a doubt that stock and production management deserves the main focus of the management for efficient functioning in a manufacturing enterprise. If asset administration was uncared for, then fixed assets weren’t being successfully and effectively managed. But lately it has been realised environment friendly management of fixed assets like plant and machinery and different movable and immovable fixed assets can lead to economies of scale. Thus proper monitoring and common maintenance of productive fixed assets will give a longer productive life. The net impact of this is more profits for the business.
Naturally in fixed asset administration, the assets answerable for production, research and development etc., which have direct bearing on the productivity of the business, need to be managed more closely. There have to be constant monitoring on the upkeep aspect to prolengthy the helpful life of the asset. Even a movable asset like a vehicle wants proper maintenance. In any other case without common running and maintenance the vehicle can quickly develop into corroded and useless.
Each class of assets wants a different focus of management. Fixed assets need common upkeep to make sure regular lifetime of the assets relying on the wear and tear on the asset. Adequate planning is also obligatory for building up monetary reserves over the life of the asset for replacing the fixed asset at the finish of its useful life. Thus the new plant and machinery will be ordered well in time to replace the old one.
Management additionally has to weigh the advantage of changing the plant and machinery and different production assets or persevering with to take care of the current production assets. In addition they should consider infrequently whether or not the asset has grow to be obsolete owing to new technological advances. In current times, technology has advanced at a rapid tempo and administration has to be vigilant on this problem to avoid being left behind by competitors. Asset management also contains adequate insurance to cover any additionalordinary losses due to fire and natural disasters.
A type of awakening has taken place in main industries through the past decade on the role of asset management. It has turn into attractive attributable to decreasing margins and competition rising day by day. To keep away from main capital spending, firms are actually developing strategies to get optimum performance from available fixed assets thereby getting elevated returns. This includes proper schedule of upkeep to minimise breakdowns and consequent loss of production.
With a view to have reliability in scheduling, regular planning in conjunction with various departments, at least on a monthly basis is completely necessary. Standards must be set as well comparative evaluation within industry 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 greatest practices should be set up within a reasonable time frame to succeed in these targets.
Logistical performance must even be evaluated to consider whether transportation prices are economical and advantages of location are met. The management instruments for evaluation can be in form of comparison studies, which can set up in form of graphs and bar charts for simple 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 vital in massive manufacturing plant and utilities. Integration of asset administration with raw materials and maintenance procurement systems as well as monetary systems and their price versus financial savings benefits should be monitored on a day-by-day basis. Senior financial officers must subsequently be involved in asset management.
Depending on nature of assets in different businesses. For example, utility companies, mineral firms, oil and natural gas are having massive properties as part of their assets. These need to be successfully managed and well timed choices should be taken whether to purchase 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 assist firm administration, there are a number of established consultant firms having certified manpower whose help will be beneficial for asset management. They can be very efficient to audit current practices and counsel finest practices, problem solving and action plans. It may be well worth the expense to hire established consultants to improve performance.
Asset administration data may be computerised to enable management to chalk out strategies on an overall basis. Integration of asset management systems with different financial systems would give better image of whole operation of the enterprise. This will enable various key officials to present their well timed enter to top management with the intention to devise suitable plans. For instance, authorities may come out with particular tax incentives for certain industries to spend money on fixed assets. In a state of affairs the place administration is monitoring and managing fixed assets, the Finance Manager could quickly suggest purchase of new fixed assets to take advantage of the government’s tax incentive for that business.
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