Regardless of size and industry, every organization depends on assets to keep operations going.
Assets – tangible, or intangible – serve as the backbone of all businesses, facilitating everyday tasks. But what is the best way to ensure that these assets are well-maintained and are available at all times to meet the business needs?
Asset inventory management is the answer to this dilemma. It empowers businesses to manage their assets cost-effectively while optimizing resource allocation. Effective inventory management practices, such as asset tagging, maintaining the right inventory levels, and demand forecasting, determine how well your assets are being handled.
For instance, Wildlife Conservation Society Cambodia expedited their on-field inventory audits by simply scanning the assets using their mobile devices. This way, they can track asset inventory from anywhere in the world.
What is asset inventory?
Asset inventory refers to a comprehensive list of assets owned, managed, and controlled by a business. The list includes important asset details, such as asset name, identification number, description, location, and owner.
Maintaining this list helps businesses track inventory better and locate where assets are. It helps retrieve asset information quickly and conveniently.
Also Read: What is Fixed Asset Management? Features, Benefits and Best Practices
What is asset inventory management?
Asset inventory management is a systematic process to record, track, and monitor physical assets. It involves practices and tools aimed at acquiring asset inventory and maintaining it throughout its life cycle to maximize asset optimization.
Some key components of asset inventory management include:
-> Asset classification
This includes categorizing and documenting the assets based on the asset type. Categories help group assets together which increases asset accessibility. For example, asset inventory can be classified as IT equipment, vehicles, and machinery.
-> Tracking and monitoringÂ
Asset labels can be generated and assigned to each piece of asset inventory. These labels are unique to each asset and help track assets i.e., their real-time location, status, and condition. By monitoring asset movements, businesses can keep tabs on the assets at all times – reducing the chances of theft and loss.
-> Lifecycle managementÂ
This stage involves tracking assets throughout their life from procurement to disposal. Users can assign stages to an asset to clarify its current state and ensure all team members are on the same page. Assessing the state of an asset helps organizations make informed decisions regarding asset use and allocation.
-> Implementing maintenance schedules
Asset inventory can be scheduled for regular maintenance to ensure that every inventory item is safe to use. By using maintenance schedules, users can ensure that the item that needs to be serviced is available for the maintenance check, or inspection. This practice helps avoid conflicts in booking the inventory item, while helping keep critical asset inventory running smoothly.
-> Disposing of unneeded inventory
Users can conduct regular inspections to check the condition of an asset. They can assess if the inventory item has been overused and/or is not safe to use anymore. This analysis helps decide if an asset should be disposed of or replaced.
What is the asset management vs inventory management debate?
The asset management vs inventory management debate is vital to understanding the value both processes bring to enhance every day operations. Both practices guide decision-making pertaining to resource allocation. Proper resource management helps streamline operations while determining the productivity and long-term growth of a business.
Asset management is directly related to recording and controlling tangible assets that are used for long term basis, while inventory management caters directly to materials, consumables and backup machinery and equipment needed to run every day operations. Both are critical for businesses but both cater to various aspects of resource management.
The following image explains the major differences between asset management and inventory management:
What are the benefits of using an asset inventory management system?Â
Asset inventory management offers a structured approach to managing and tracking asset inventory. The core of efficient inventory management involves maintaining a detailed inventory record to simplify inventory tracking.
The trend toward adopting modern asset inventory management practices is increasing globally. An example of this is an inventory asset management system – a cloud-based platform used for cataloging and organizing inventory. As per Data Bridge Market Research, the global market for asset tracking and inventory management solutions is likely to grow from $53.29 million in 2022 to $148.83 million in 2030.
Using these automated solutions helps stay a step ahead in maintaining the right quality and quantity of asset inventory.
Let’s look at the benefits of managing asset inventory using an asset inventory management system:
1. Efficient asset lifecycle management
A vital component of asset inventory management includes having a dedicated platform to store and record asset data. This repository centralizes essential asset information allowing users to track an asset through all stages of its life. Whenever the stage of an asset changes, the information is quickly updated in the repository.
Managers and staff usually conduct regular inspections to ensure that their asset inventory is well-kept. To do so, an asset management solution can be utilized to plan and conduct periodic audits. Audits allow managers to identify exactly the condition and stage of an inventory item. In case, the item needs to be serviced or replaced, the manager can flag the item in the system. This way, they are able to keep a record of the item.
Timely checks to determine how well an item is performing eliminate hurdles in conducting operations. For instance, if a backup item has been regularly used and is worn out, then a new, similar item can be procured to continue uninterrupted operations. Likewise, by analyzing the condition of the current asset inventory, businesses can anticipate when new assets will be required – therefore, optimizing procurement costs and inventory holding costs. This forecast also allows them to budget for future procurements.
This way the current inventory is managed with appropriate funds and future needs are catered to as well.
2. Reduction in theft and misplacementÂ
Modern asset inventory management is powered by tracking technology, such as barcodes, QR codes, and RFID tags. These labels can be generated and labeled on each inventory item to track the asset movement. Barcodes can be scanned to quickly retrieve asset information – using mobile devices or barcode scanners.
The ability to track asset inventory using asset management software reduces the chances of theft and misplacement. For instance, 43% of small businesses do not track inventory at all. These instances usually occur when businesses do not have a system to accurately record their inventory. External parties or mischievous employees can engage in fraudulent activities leading to inventory theft.
As per the Association of Certified Fraud Examiners, one-third of fraud cases occur because companies lack internal controls, leading to an estimated 5% revenue loss. Such instances cost businesses thousands of dollars since procurement of new assets can be expensive.
By deploying a system for inventory management, businesses control costs associated with lost assets. With asset inventory tracking, businesses can always track where and in whose custody is the asset inventory. This not only makes it harder to steal the asset but also identifies the point of misplacement.
3. Accurate financial reporting
Stakeholders, such as internal teams, managers and investors, need financial information to make data-driven decisions. Reports serve as valuable means of data consolidation and help present information in a visually appealing manner. Clear and concise information develop trust and transparency amongst stakeholders.
Staff members can generate detailed reports to assess their inventory needs. By using an asset management software, they can import large quantities of inventory data and streamline the information as per business requirements. These reports can be exported to present to important stakeholders. With information at their disposal at all times, businesses can forecast their inventory needs better, assess costs, and identify any gaps.
Moreover, businesses can set up their personalized profiles to display Key Performance Indicators (KPIs). These KPIs include total inventory sold, low stock inventory items and inventory reservations. Staff members and managers can display these metrics on their dashboards to stay updated about their business performance on a daily basis.
When businesses leverage graphs, pie charts, and other means of data visualization using reports, they experience a significant increase in their day to day productivity. The ability to easily present and understand complex inventory information elevates the overall user experience and in turn, business performance. As decision-makers are able to clearly see trends, patterns, and gaps in performance, they are able to apply corrective action where necessary.
4. Reduced administrative costs
Effective inventory management goes beyond tracking. It speeds up several administrative tasks allowing businesses to save time and reduce costs.
Manual inventory tracking makes it difficult to ensure effective record keeping. Paper-based records are prone to human errors and on-site accidents – leading to mistakes such as over-ordering, under-ordering and shipping mistakes.
Using an asset management system enables businesses to automate data entry and inventory counts. For instance, if a new asset inventory item is procured, then it can be added to the system, which will update the inventory level and reflect the new count elsewhere.
These systems often come with easy interfaces and tutorials that improve the user experience. Managers and staff members can conduct various actions, such as checking in or checking out a new inventory item directly from the profile – saving their effort and time. This also reduces the need to train employees to use more complex systems.
Accurate forecasting reduces the burden of handling excess orders at the same time. A business can ensure that it has the right inventory available to meet future demand. Efficient inventory management makes businesses proactive and able to handle operations in an effective manner.
ConclusionÂ
Inventory management is a systematic approach that helps businesses organize their business activities. Through categorization of asset inventory and consistent monitoring, businesses can ensure that they utilize their assets to their full capacity. An accurate inventory record further helps businesses have a holistic view of their asset inventory – allowing managers to make quick decisions.
Using an asset management system for inventory tracking makes it easier for businesses to develop a greater control over their inventory. Such systems are tailored to enhance the visibility of assets so instances of theft and misplacement can be significantly reduced. Upscale your business today and improve your business performance using an asset management system!
Frequently Asked Questions (FAQs)
1. What is an inventory asset management system?
An inventory asset management system is a platform dedicated to track and monitor a business’s asset inventory. It entails several capabilities aimed at maintaining an accurate inventory count and saving costs through reduced wastage. It serves as a nexus between inventory management and streamlined business processes.
2. How does an inventory management system contribute to improved operations?
Asset inventory management provides a strong and robust approach to maintaining an accurate and up-to-date asset inventory. With the real-time dashboards embedded in asset management systems, it can be made readily accessible to a business. This allows businesses to optimize the use of their inventory while the comprehensive inventory data guides analytical decisions.
3. What are different types of asset inventory management techniques?
There are various asset inventory management techniques that can be used to fit exact business needs. They majorly include Just In Time (JIT), Economic Order Quantity (EOQ), ABC Analysis, Minimum Requirement Planning, Reorder Points, and Cycle Counting.
About EZOfficeInventoryÂ
EZOfficeInventory is an asset management software that can help you manage your fixed assets. It offers features such as quick check-in, checkout, maintenance and depreciation tracking to ensure your fixed assets are performing at optimal levels at all times.
