Asset Management – Key Part of Enterprise Management
Most manufacturing companies have not too long ago discovered that fixed asset management needs to be a key part of the success of the enterprise enterprise. It’s now realised that fixed asset management leads to economic system of production and operation. This in turn can to extend in profits of 10 to fifteen per cent, which cannot be ignored as it makes a significant contribution to the bottom line of the business.
There isn’t any doubt that inventory and production management deserves the main focus of the administration for efficient functioning in a producing enterprise. If asset administration was neglected, then fixed assets weren’t being successfully and efficiently managed. But in recent times it has been realised environment friendly administration of fixed assets like plant and machinery and different movable and immovable fixed assets can lead to economies of scale. Thus proper monitoring and regular maintenance of productive fixed assets will give an extended productive life. The net impact of this is more profits for the business.
Naturally in fixed asset administration, the assets chargeable for production, research and development etc., which have direct bearing on the productivity of the business, must be managed more closely. There must be fixed monitoring on the maintenance side to prolong the useful 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 soon turn into corroded and useless.
Each category of assets needs a distinct focus of management. Fixed assets want common upkeep to ensure regular lifetime of the assets relying on the wear and tear on the asset. Adequate planning can be vital for building up financial reserves over the life of the asset for changing the fixed asset at the end of its helpful life. Thus the new plant and machinery can be ordered well in time to switch the old one.
Administration additionally has to weigh the advantage of replacing the plant and machinery and other production assets or continuing to keep up the present production assets. In addition they should consider on occasion whether the asset has develop into out of date owing to new technological advances. In current instances, technology has advanced at a rapid pace and management has to be vigilant on this issue to keep away from being left behind by competitors. Asset administration also consists of adequate insurance to cover any extraordinary losses resulting from fire and natural disasters.
A type of awakening has taken place in major industries in the course of the previous decade on the role of asset management. It has become attractive due to reducing margins and competition rising day by day. To avoid major capital spending, corporations are now creating strategies to get optimum performance from available fixed assets thereby getting elevated returns. This entails proper schedule of maintenance to minimise breakdowns and consequent loss of production.
So as to have reliability in scheduling, regular planning in conjunction with various departments, at the very least on a monthly basis is totally necessary. Standards have to be set as well comparative evaluation within business standards have to 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 must be set up within a reasonable time frame to succeed in these targets.
Logistical performance should also be evaluated to consider whether or not transportation costs are economical and advantages of location are met. The administration instruments for evaluation might be in form of comparability research, which can set up in form of graphs and bar charts for straightforward visual comparison. If fixed asset performance is seen to be beneath par, then priorities will be fixed for the deal with improvement.
Asset administration tracking is vital in giant manufacturing plant and utilities. Integration of asset management with raw material and upkeep procurement systems as well as monetary systems and their cost versus savings benefits have to be monitored on a day-by-day basis. Senior monetary officers must subsequently be involved in asset management.
Depending on nature of assets in several businesses. For example, utility companies, mineral corporations, oil and natural gas are having giant properties as part of their assets. These have to be effectively managed and well timed choices must be taken whether to buy or sell properties for the health of the business. Depending on their values and necessity to the running of the company, the assets will be categorized for higher management.
To assist company management, there are a number of established consultant companies having certified manpower whose assist will be helpful for asset management. They can be very effective to audit present practices and suggest best practices, problem solving and motion plans. It could be well definitely worth the expense to hire established consultants to improve performance.
Asset administration data could be computerised to enable management to chalk out strategies on an general basis. Integration of asset administration systems with other financial systems would give higher image of entire operation of the enterprise. This will enable various key officials to provide their timely input to top administration so as to devise suitable plans. For instance, authorities could come out with particular tax incentives for sure industries to spend money on fixed assets. In a situation the place management is monitoring and managing fixed assets, the Finance Manager might quickly suggest purchase of new fixed assets to take advantage of the government’s tax incentive for that business.
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