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If you do not have the manpower to do this analysis, hire an engineering student to measure the productivity and efficiency of your machinery. You may be happy your machines are paid off but they may be costing your company market share because of their age and ineffectiveness in your current market. In some industries it is mandatory you keep up your company’s competitiveness or you lose customers and market share.
Attributes to measure on your company assets:
- Measure and compare mileage of your truck fleet because the fluctuation in fuel prices can cost you new business in a market vulnerable on freight costs.
- Measure cutting ability, accuracy and speed of your current laser equipment. The machine may be paid off but it may not be able to keep up with current market demands and speed.
- Call vendors, tell them the model machines you currently have and ask them to compare your equipment to newer models on the market. You want to know what disadvantages you have in keeping your current equipment versus buying new technology which may have quick financial payback periods.
- Request your materials vendors to report to you the latest changes in their materials offered for sale. Sometimes materials change as new processes evolve. What demands are they responding to in the market you need to be aware of? (i.e. quality of steel today is far better than in the 1970s). Manufacturing specifications change the way manufacturers make and sell materials.
- Which company assets are overvalued for property taxes? If you do not understand the valuation method your local county uses, hire an outside firm to protest your property taxes. They can also assess overpriced valuation rates and protest them annually.
- Look at utility usage by manufacturing machine or process. Do you have the best negotiated electricity rate? Can you install any equipment that will cut usage during downtime? Identify the top ten items for electricity or gas usage and get outside expertise on cutting costs.
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