Asset Management – Key Part of Business Management

Most manufacturing firms have lately discovered that fixed asset management must 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 can’t 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 administration deserves the primary focus of the administration for efficient functioning in a manufacturing enterprise. If asset administration was neglected, then fixed assets were not being successfully and effectively managed. However in recent times it has been realised efficient administration of fixed assets like plant and machinery and other 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 effect of this is more profits for the business.

Naturally in fixed asset management, the assets chargeable for production, research and development etc., which have direct bearing on the productivity of the business, need to be managed more closely. There should be constant monitoring on the upkeep aspect to prolong the useful lifetime 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 grow to be corroded and useless.

Each category of assets needs a special focus of management. Fixed assets need regular maintenance to ensure normal life of the assets depending on the wear and tear on the asset. Adequate planning can be vital for building up monetary 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 interchange the old one.

Administration also has to weigh the advantage of replacing the plant and machinery and different production assets or persevering with to maintain the current production assets. In addition they must consider once in a while whether the asset has turn into out of date owing to new technological advances. In current times, technology has advanced at a rapid tempo and administration has to be vigilant on this challenge to keep away from being left behind by competitors. Asset management also consists of adequate insurance to cover any furtherordinary losses as a consequence of fire and natural disasters.

A type of awakening has taken place in major industries through the previous decade on the role of asset management. It has turn into attractive resulting from decreasing margins and competition rising day by day. To avoid major capital spending, corporations at the moment are developing strategies to get optimum performance from available fixed assets thereby getting elevated returns. This includes proper schedule of maintenance to minimise breakdowns and consequent loss of production.

In order to have reliability in scheduling, regular planning in conjunction with various departments, a minimum of on a month-to-month foundation is totally necessary. Standards have to be set as well comparative analysis within industry standards must be evaluated to determine whether the corporate is achieving optimum production in line with the industry. If not, then suitable targets and finest practices should be set up within a reasonable time frame to achieve those 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 evaluation can be in form of comparability 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 will be fixed for the concentrate on improvement.

Asset administration tracking is vital in giant manufacturing plant and utilities. Integration of asset administration with raw materials and upkeep procurement systems as well as monetary systems and their cost versus financial savings benefits have to be monitored on a day-by-day basis. Senior financial officers must due to this fact be concerned in asset management.

Relying on nature of assets in several businesses. For example, utility firms, mineral firms, oil and natural gas are having large properties as part of their assets. These have to be effectively managed and timely selections need to be taken whether to purchase or sell properties for the health of the business. Depending on their values and necessity to the running of the company, the assets may be categorized for higher management.

To assist firm management, there are a number of established consultant companies having qualified manpower whose help will be useful for asset management. They can be very effective to audit present practices and recommend finest practices, problem fixing and motion plans. It may be well well worth the expense to hire established consultants to improve performance.

Asset administration data will be computerised to enable management to chalk out strategies on an overall basis. Integration of asset administration systems with other financial systems would give better image of whole operation of the enterprise. This will enable various key officers to offer their well timed input to top management so as to devise suitable plans. For instance, government could come out with special tax incentives for sure industries to spend money on fixed assets. In a situation the place administration is monitoring and managing fixed assets, the Finance Manager could quickly recommend purchase of new fixed assets to take advantage of the federal government’s tax incentive for that business.

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