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Physical asset management is the practice of effectively using the physical assets of the company. Many companies have an in house department taking care of that but in some cases, an outside party is called in to help them out.
For this to work, the team has to know first hand the assets of the company. To prevent duplication, it should point out the depreciation value and the utility in the process of production. This process is better known as cost analysis as this will increase economic life and reduce component failures such as the incidence of theft and mistakes in the procurement of supplies and equipment.
It can also assist management in tax planning and forecasting business solutions which could save the company millions of dollars.
For instance, production suffers if machines break down frequently. This is normal if the machine being used is already old. The company can try to repair it but if the cost is much higher than a brand new one, then perhaps they should try to sell this at a reasonable price then use the money to buy a new one.
The same goes if a company has hundreds of stores and only a few of them are making a profit. Since the unprofitable ones are not really bringing in revenue, perhaps it will be a good idea to close them.
This is something that a lot of companies are doing now due to rising costs of fuel and the economic slowdown. Rather than filing for bankruptcy, they would rather slash a few thousand jobs and close down stores. Some companies that have done so include Starbucks, American airlines, JP Morgan and a lot more. The other option is for some companies to merge just to stay afloat.
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