One of the factors for profitability is how you are managing the assets effectively. The assets can be your machines, buildings, facilities and of course your people. Let us discuss the depreciating assets like machines, equipment, and facilities. Effective utilization of asset helps you to serve your customer on time and best cost.In turn, it ensures the profitability. If you are not managing the assets well, you are incurring overhead cost of capital depreciation as well as on revenue expenses like maintenance, consumables, and power. It is the prime responsibility of business leaders to ensure he gets a high return on asset investment.
Some of the pitfalls in managing the assets effectively
- Only concern on utilization, not on efficiency
- Not much attention on basic maintenance activities
- Poor management of spares and consumables
- Idle time taken as granted as way of working
- Lack of training on usage of assets
Some of the indicators of poor asset management
Ø Frequent breakdown
Ø A Long machine idle time for setting up of tools / fixtures
Ø More accidents and unsafe practices in and around facilities
Ø Actual production output not matching with standard output
Ø More rejection on produced output
Ø Not able to release the facility for preventive / regular maintenance
The solution is that first understand where you are in the overall effective utilization of facilities, then understand the causes for the losses and write counteractions. Be aware of your revenue generation capability per hour from your facility in line with market condition. That will bring many insights!