Asset Management — Critical Component of Small business Managing
Most manufacturing companies have recently found that fixed asset management should be a key the main success of the company enterprise. It’s 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 not be ignored as it makes an important contribution to the underside line of the business.
There is undoubtedly that inventory and production management deserves the key focus of the management for effective functioning in a manufacturing enterprise. If asset management was neglected, then fixed assets weren’t being effectively and efficiently managed. But in recent years it’s 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 regular maintenance of productive fixed assets can give a lengthier productive life. The web effect of that is more profits for the business.
Naturally in fixed asset management, the assets accountable for production, research and development etc., which have direct bearing on the productivity of the company, need to be managed more closely. There must be constant monitoring on the maintenance aspect to prolong the useful life of the asset. A movable asset such as for instance a vehicle needs proper maintenance. Otherwise without regular running and maintenance the vehicle can soon become corroded and useless.
Every sounding assets requires a different focus of management. Fixed assets need regular maintenance to ensure normal life of the assets with regards to the wear and tear on the asset. Adequate planning can be necessary for building up financial reserves over living of the asset for replacing the fixed asset at the conclusion of its useful life. Thus the new plant and machinery can be ordered well in time for you to replace the old one.
Management also must weigh the main advantage of replacing the plant and machinery and other production assets or continuing to keep up today’s production assets. They also must consider from time to time if the asset has become obsolete owing to new technological advances ktam. Recently, technology has advanced at a rapid pace and management must be vigilant on this issue to avoid being put aside by competitors. Asset management also incorporates adequate insurance to cover any extraordinary losses due to fire and natural disasters.
A type of awakening has taken devote major industries during the past decade on the role of asset management. It has become attractive due to decreasing margins and competition growing day by day. To prevent major capital spending, companies are now actually developing strategies to obtain optimum performance from available fixed assets thereby getting increased returns. This implies proper schedule of maintenance to minimise breakdowns and consequent lack of production.
In order to have reliability in scheduling, regular planning along with various departments, at the least on a regular basis is totally necessary. Standards must certanly be set as well comparative analysis within industry standards must certanly be evaluated to find out whether the company is achieving optimum production in accordance with the industry. Or even, then suitable targets and best practices must certanly be create within a reasonable time frame to attain those targets.
Logistical performance must also be evaluated to take into account whether transportation costs are economical and features of location are met. The management tools for evaluation can be in form of comparison studies, which could create in form of graphs and bar charts for quick visual comparison. If fixed asset performance sometimes appears to be below par, then priorities can be fixed for the focus on 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 must certanly be monitored on a day-by-day basis. Senior financial officers must therefore be involved in asset management.
Based on nature of assets in various businesses. For example, utility companies, mineral companies, oil and natural gas are having large properties within their assets. These have to be effectively managed and timely decisions have to 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 can be categorized for better management.
To help company management, you can find several established consultant companies having qualified manpower whose help will soon be necessary for asset management. They can be extremely effective to audit present practices and suggest best practices, problem solving and action plans. It could be well worth the expense to hire established consultants to boost performance.
Asset management data can be computerised to enable management to chalk out strategies on an overall 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 give their timely input to top management to be able to devise suitable plans. For example, government may come out with special tax incentives for certain industries to buy 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 take advantage of the government’s tax incentive for that business.
Lastly, it’s the assets of a small business which enable the production and delivery of its goods and services. So when fixed assets are increasingly being purchased or replaced a couple of important questions arise. What’s the fee and cost benefit for the business. What funds can be found? Should the asset be purchased new or secondhand or should it be leased and how can it benefit the company? Questions associated with the usage of the asset could be. What’re the operating costs? Just how much skilled and unskilled manpower will be required for operation? What’re the training costs involved? What’re the installation costs? What’s the useful life of the asset? Is it the newest technology? These and a lot more questions need to be asked and answered. This can ultimately factor to the long-term strategy of the business.