Asset management can be defined as a systematic process which can be used to identify, monitor, maintain, catalogue, operate, upgrade and replace any physical assets of a business on a given basis that is cost effective. In order for asset management to be effective, it needs to be constructed from a foundation that has the accepted principles of accounting and then kept to stand by strong business practices together with financial acumen. It provides the management with effective tools which can be utilized in deriving both the short term and the long term planning decisions. Asset management is very important that every business needs to apply and embrace for them to be able to succeed much easily.
Importance of Asset Management
It enables the business or an individual to generate and also maintain the important management data which needs to be internally used within the company and at times even with the company’s customers and the suppliers too. This data may include the installed base data or the maintenance entitlement data. It makes it easier to validate, acquire and also assimilate the necessary data and feed it in the corporate information system. Asset management also helps in creation of a flexible system which allows either manual acquisition or the electronic capture and ultimately the complete reconciliation of all the data that has been collected at once. Finally, asset management is a sort of program which is very accurate and also intelligent when it comes to reporting of vital operational and business information.
It is true to say that inventory as well as production management need to get the main focus of any management in order for there to be effective functioning in any manufacturing enterprise or any other type of business venture. If asset management gets neglected, the fixed assets then fail to get effectively and efficiently managed as is the requirement for a successful business. However, in the most recent years, it has been proven that managing all the fixed assets effectively for instance the plant and machinery or any other movables and immovable or fixed assets can directly lead to economies of scale. This then results to proper monitoring and also regular maintenance of every productive fixed asset which will give a longer productive life. The overall net effect that is gotten from this is that more profits will be made for the business.
Naturally in asset management, all the assets that are responsible for the production, research and also development and others which get a direct bearing onto the business productivity are managed more closely than all the others. This constant monitoring works well in prolonging how long the asset gets to function. Movable assets such as vehicles are no exceptions as they also need regular maintenance for them to keep functioning effectively for longer.