In the supply chain industry, strict oversight is needed to streamline operations and maximize productivity. This can be achieved via asset management and inventory management — terms that are often used interchangeably but, in reality, represent very different practices. Both are capable of streamlining operations while reducing downtime. However, how they accomplish these end goals varies.
Without a clear understanding of the differences between assets and inventory, it can be difficult to justify systems that separately account for these essentials. Once you’ve implemented a tailored solution, you’ll realize just how vital customized processes are.
Keep reading to discover all that sets inventory and assets apart — and how these differences can be called upon to deliver effective tracking and management for both.
What is the Difference Between Inventory and Assets?
The concept of inventory lies at the heart of the supply chain. While inventory can take several forms, it generally involves any goods or products held by your business. These could include not only finished products, but also raw materials, parts, and supplies used to eventually create these items.
Inventory assets are similar, but hold a key distinction: they represent sellable inventory. They are recorded as such on balance sheets. Often, they create a buffer following the manufacturing process, with the intent of streamlining processes should a sudden spike in demand occur. Without consumable inventory assets on hand, shortages could occur, thereby limiting revenue.
Both concepts should be distinguished from assets, which are used to create or manage inventory. Machines and equipment for example, are common company assets that must be carefully tracked and maintained. They are more stable than inventory, but damage or loss can prove even more devastating when high-value assets are involved (such as IT assets, which include hardware, software, devices, and more). It’s essential for a business to carefully monitor the asset lifecycle in order to prevent major problems as depreciation occurs.
Asset Management vs Inventory Management
Inventory, inventory assets, and assets must all be managed carefully to produce a desirable return on investment. For assets in particular, the most crucial aspect of the management process is tracking, though this is also important for inventory as well. Requirements for tracking can differ significantly from one category to the next. A lot depends on the value of the inventory or assets, as well as how (and whether) they move through the supply chain — and how they impact your bottom line.
With assets and inventory assets, the need for tracking is largely internal. Equipment should be properly maintained for the company’s purposes including preventative maintenance to make the most of the asset life. Extensive data may be required to determine whether assets are functioning properly, whether they experience too much downtime, and what can be done to solve identified issues.
External data takes on a more important role for inventory, which is eventually intended to be sold or otherwise acquired by another entity. Management must account for inventory levels by keeping track of products throughout the supply chain process.
The internal and external concerns cited above are handled by two main systems: asset management and inventory management. Both are explained in detail below:
Also known as “asset inventory management,” this is designed for tracking internal assets such as Android and iOS mobile devices. Asset management aims to make the most of items that are regularly used by employees. Ideally, an asset inventory tracking solution will provide thorough oversight for everything from the location of the items in question to how and by whom they’re used.
Inventory management systems cover the full lifespan of inventory, tracking products not only from the warehouse to delivery, but also, through any locations or processes they might encounter along the way.
Stock levels must be accounted for in this process to help ensure correct replenishment and prevent regular overstock or depletion.
Because inventory changes hands so regularly, many businesses favor barcode scanners as a cost-effective management solution. QR codes are increasingly viewed as an equally effective option for tracking. Both can be useful when applied in the right context. However, these options also hold noteworthy concerns — such as limited efficiency — that can be addressed with RFID tags.
How RFID Tags Help
RFID (radio frequency identification) tags provide an ideal solution for both asset tracking and inventory management. This wireless system consists of tags that are affixed to the items they’re supposed to track, as well as readers meant to identify these tags.
The value of RFID in asset tracking is clear: these systems are versatile, customizable and reliable, so they can be deployed within security solutions to limit losses for business-critical assets. Beyond common concerns such as maintaining manufacturing equipment, RFID tags can be helpful for high-value IT assets, which, if lost, are not only expensive, but also disastrous from a security standpoint.
While RFID technology is widely recognized as an excellent option for handling inventory, it can also prove valuable as an asset management solution. The real-time tracking enabled by RFID tags can improve stocking efficiency or even prevent warehouse theft.
For global enterprises, RFID may represent the most reliable solution to automate shipment verification, as manual tracking just won’t cut it given the breakneck speeds maintained by today’s distribution centers.
The healthcare sector provides another illustration of the importance of both inventory management software and a fixed asset tracking system. Both elements are crucial to patient health and safety.
Within a healthcare setting, inventory often involves medications, which must be closely tracked for purposes of safety and compliance. Physical assets consist of equipment such as MRI machines and CT scanners. An appropriate software solution will take both categories into account while streamlining operations within clinics and hospitals.
Management and Tracking Solutions
Both assets and inventory are critical to business success, so both require careful tracking and management. While these essentials hold noteworthy differences worth addressing, they share the same need for real-time data.
Separate systems can be confusing and time-consuming to implement, so it’s worth your while to enact a solution capable of handling both. Ideally, this will be tailor-made to reflect the unique ways in which inventory moves through your business, as well as the specific goals and concerns that surround your most valuable assets.
Designed to deliver powerful insight into both assets and inventory management, the custom RFID solutions offered through Peak Technologies provide integration across vast supply chain systems. Our thorough process includes consulting services, RFID discovery, and pilots to ensure that we understand and abide by the unique needs of our clients. We can help you select and implement the best asset tracking software and asset management system for your situation.
If you’re ready to take on a streamlined solution that accounts for the complications of handling both inventory and assets, look to Peak Technologies for guidance. We’re happy to help you select and enact a tracking solution that delivers an ideal combination of efficiency and security. Reach out today to discuss your options with our specialists.