What Is Asset Inventory Management? What You Need to Know

If you’re struggling to minimize inventory carrying costs or don’t have full control over your most important assets, you need a new approach to inventory and asset management.

The good news is that in 2024, this no longer involves custom-coded solutions and expensive hardware investments. 

Things have changed with the advent of IoT (Internet of Things) and cloud-based inventory and asset management software. An efficient solution is possible and even affordable for companies of every size.

In this article, we’ll cover the benefits of inventory and asset management systems, best practices, and how to use modern software to combine the two efforts and keep your business operating at maximum efficiency around the clock.

Main Takeaways From This Article:

• Asset inventory management systematically tracks and controls organizational resources.
• Inventory management oversees product stock to prevent under or overstocking, maximizes warehouse space, and optimizes operations.
• Inventory asset management systems are vital for organizational infrastructure, facilitating resource tracking and control for efficiency and productivity.
• Getting started with these solutions involves key steps for successfully implementing and maintaining asset inventory management systems' effectiveness.
• RedBeam offers asset management system solutions to ease tracking, mitigate risks like theft or loss, and ensure efficient asset usage.

Is Asset Management the Same as Inventory Management?

While they’re both crucial business processes and have similar goals, asset management and inventory management are not the same. 

What Is an Asset?

Assets are the equipment you need to keep your business running, like manufacturing machines, vehicles, or office equipment. 

What Is Asset Management?

Asset management is all about maximizing the value of that equipment — making sure it is where it should be, effectively maintained, and replaced when necessary.

It involves strategic planning, procurement, utilization, maintenance, and eventual retirement of assets, both tangible (such as machinery, equipment, and property) and intangible (such as software licenses and intellectual property).

Advantages of Asset Management

• Optimized Asset Utilization: An asset tracking system helps organizations maximize the usage of their assets, ensuring that each asset is used efficiently and contributes to the overall productivity and profitability of the business.
• Cost Savings: Effective asset management reduces costs by minimizing unnecessary purchases and lowering maintenance expenses. It also helps in identifying underutilized or obsolete assets that can be repurposed or sold.
• Enhanced Asset Lifespan: Regular maintenance and updates managed through asset management systems can significantly extend the lifespan of assets, reducing the need for premature replacements and ensuring that assets perform optimally throughout their useful life.
• Improved Decision Making: Asset management provides detailed data and insights about asset performance, maintenance needs, and usage patterns, aiding management in making informed decisions about asset investments and management strategies.
• Compliance and Risk Management: Asset management systems help ensure compliance with regulatory requirements by maintaining accurate records for audits and inspections. They also mitigate risks associated with asset failures, which can lead to operational downtime and safety hazards.

What Is Inventory?

Inventory refers to the stock of goods or materials that a business holds for production, sales, or distribution purposes. It includes both raw materials used in manufacturing and finished goods ready for sale, as well as work-in-progress items.

Examples of inventory include:

1. Raw Materials: These are the basic materials used in the production process, such as lumber for a furniture manufacturer or fabric for a clothing company.
2. Finished Goods: These are products that are ready for sale to customers, such as electronics in a retail store or packaged food items in a supermarket.
3. Work-In-Progress: These are partially completed products that are still in the production process, such as a half-assembled car in an automobile factory or a partially painted canvas in an art studio.

What Is Inventory Management?

Inventory management is the systematic process of ordering, storing, tracking, and controlling inventory—both raw materials and finished goods—from purchase to sale. It involves the oversight of non-capitalized assets (inventory) and stock items.

Inventory control or management encompasses a variety of tasks, including forecasting demand, setting stock levels, reordering points, and determining economic order quantities. It ensures that there is always enough stock on hand to meet customer demands without overstocking, which can tie up liquidity and increase storage costs. 

Effective inventory management also includes the use of technology, such as inventory management software systems, to track inventory levels, orders, sales, and deliveries. This process is crucial for maintaining the balance between too much and too little inventory.

Advantages of Inventory Management

• Enhanced Cash Flow: By optimizing inventory levels, businesses can better manage their cash flow. Less money tied up in unused stock means more resources are available for other operational needs.
• Improved Service Levels: Having the right inventory when and where it's needed enhances service levels. This leads to higher customer satisfaction and retention by ensuring quick and accurate deliveries.
• Increased Efficiency: Automated inventory management systems streamline processes, reduce manual tasks, and improve accuracy in order tracking and stock monitoring.
• Better Planning and Forecasting: Effective inventory management enables businesses to predict future demand based on historical data, improving overall strategic planning and minimizing the risks of stock-outs and overstock situations.

Understanding Asset and Inventory Management Systems

Inventory and asset management systems are vital components of organizational infrastructure. They facilitate the tracking and control of resources to optimize efficiency and productivity. These systems encompass tools and processes designed to oversee the lifecycle of assets and inventory, from acquisition to disposal.

Within a company's infrastructure, asset, and inventory management systems integrate seamlessly to manage a diverse range of resources, including both physical assets like equipment and machinery as well as digital assets such as software licenses and intellectual property. By centralizing data and providing real-time visibility into asset and inventory levels, these systems enable informed decision-making and proactive resource allocation.

While asset management primarily focuses on maximizing the value and utility of long-term assets, inventory management is more concerned with optimizing the flow of goods and materials to meet short-term demand. However, the distinction between the two is not always clear-cut, as they often overlap in practice.

Physical Asset Inventory vs. IT Asset Inventory

A physical asset inventory is simply an inventory of all business equipment, such as the drills, hammers, and vans of a field service company or the office computers, scanners, and printers of a marketing agency.

There are also other types of asset inventories, like an intellectual property asset inventory — essentially a log of all your IP — and an IT asset inventory.

An IT asset inventory is unique in that it considers not just fixed assets — like computers, tablets, and routers — but also the software assets you use to keep your business running.

Modern IT asset inventory management systems typically involve using both fixed asset inventory management software and a SaaS stack management tool.

If you only use a couple of SaaS apps, your physical assets should be the priority.

The Technologies Behind Asset Tracking

Asset tracking software relies on various technologies to accurately monitor and manage assets throughout their lifecycle.

• RFID utilizes radio waves to identify and track assets equipped with RFID tags or labels. These tags contain unique identifiers that can be read remotely by RFID readers, allowing for efficient and automated asset identification and tracking.
• GPS technology enables real-time location tracking of assets using satellite signals. GPS-enabled devices, such as trackers or tags, transmit location data to centralized systems, providing visibility into asset movements and facilitating asset recovery in case of theft or loss.
• Barcoding involves assigning unique barcodes to assets, which can be scanned using handheld barcode scanners or mobile devices. Barcodes provide a cost-effective and straightforward method for asset identification and tracking, enabling quick and accurate data capture.

Benefits of An Effective Inventory Asset Management System

Setting up an effective system to manage inventory or current assets can seem daunting. However, the benefits are significant and can transform how you run your business.

Let’s take a closer look at some of these benefits.

Improve the Physical Asset Inventory Review Process

Using an effective asset management system can speed up the physical asset inventory process by up to 70% — that’s what an internal review of RedBeam users has shown us.

It makes it more effective in many ways. Firstly, with asset location and checkout tracking, you have a real-time overview of where your assets are at any given point. That means there’s no more confusion as to whether an asset is lost, in another office, or currently in use by a team member.

Secondly, the actual inventory process is a lot easier. Your staff can simply go around scanning tagged assets (via bar or QR codes) without having to take physical or digital notes themselves.

Minimize Employee Theft and Other Asset Loss

Internal theft has been a significant problem for businesses ever since a caveman invented the wheel. However, it can be especially tricky to manage as your organization grows. Why? Financial systems (accounts payable) can be in place that staff can exploit without proper asset management practices present.

For example, in 2022, Yale discovered that a single employee had exploited a system to purchase new equipment for students. Over nine years, she stole 40 million dollars in iPads, MacBooks, and other tech, which she resold to fill her own bank account and buy sports cars.

This horror story shows how damaging even a single employee can be without the right checks and balances in place.

Even a basic asset management program that only tracks product purchase dates makes this kind of exploitation impossible. Modern asset tracking software, which also tracks location, the last person to check out the asset, maintenance status, and other things, makes internal theft a non-issue. It also helps you keep critical assets in tip-top shape.

Obtain Better Visibility of Supply Chain and Maintenance Needs

Good inventory and asset management software helps you visualize what’s happening with your equipment and product stock in real-time. This helps you improve your company's asset utilization and avoid stocking issues.

You can break down real-time data visually and set up automated notifications based on key metrics. This makes it much easier to spot crucial patterns, such as stock starting to run out or multiple pieces of equipment running late on their maintenance schedule.

Maintain Compliance with Regulations

Complete and up-to-date records of your physical assets make it much easier to follow tax regulations like the IRS's Tangible Property Regulations. 

Of course, a clear maintenance record also makes it easier to meet maintenance regulations and reduces the risk of unexpected breakdowns of equipment.

Calculate Asset Depreciation

Effective inventory asset management systems play a crucial role in calculating asset depreciation and providing organizations with financial and operational benefits. 

By accurately tracking the lifespan and usage of assets, these systems allow businesses to determine depreciation schedules aligned with actual asset conditions. This precise calculation ensures compliance with accounting standards and optimizes tax benefits by recognizing the appropriate expense amounts each fiscal period. 

Operationally, understanding asset depreciation helps companies forecast future capital needs and budget for replacements or upgrades, maintaining operational efficiency. 

Overall, these systems ensure that financial records reflect the true value of assets, supporting strategic financial planning and decision-making.

Finding the Right Software for Inventory and Asset Management

Before you can reap the benefits of inventory and asset management solutions, you need to get the right system in place.

We'll share our must-have features for each type of software to help you make a sound decision for your company and use case.

Asset Management Software: Must-Have Features

Here are a few key features that a key asset management software should have:

• Asset Tagging and Scanning: If you have to manually search a database when taking an inventory, you’re missing half the benefits. You need the ability to print asset tags and scan them effectively.
• Support for Enterprise Mobile Devices: Preferably with a robust handheld device like the Zebra TC52 with scanning and tagging capabilities.

• Store and Forward: This feature allows you to use the software in locations (like an equipment warehouse) with poor wireless network connections. It'll upload the changes your staff makes as soon as they connect again.

• Checkout Tracking: Know exactly where each asset is and which employee last used it (or is still using it).
• Detailed History: This allows you to track maintenance history and pinpoint exactly where something happened to an asset.
• Locations: Categorize physical locations like warehouses and offices to make it easy to find assets.
• REST API: Perfect for integrating with your ERP so relevant managers can get easy access to the data.

This combination of features makes it easy not just for your employees to tag and scan but also for your managers to get the insights they need.

There are plenty of asset management tools on the market, but only a few of them offer all of the features listed above (RedBeam being one of them).

Inventory Management Software: Must-Have Features

In an inventory management platform, you want features that make it easier to match your stock levels to fluctuating demand.

• RFID Tags: RFID goes beyond the typical bar tag for your SKUs (stock-keeping units). It also empowers location tracking, making both your warehousing and fulfillment processes more efficient.
• Crystal-Clear Data Visualization: You can’t make important restocking (or product-cutting) decisions without access to the right data.

• AI-Powered Demand Forecasting: Machine learning models use more than just historical data. With them, you can adapt your stock levels based on factors beyond just seasonality.
• Reorder Points and Low Stock Alerts: Take some stress out of your managers’ lives by automating this process for products with reliable demand.
• Supplier and Purchase Management: Helps you maintain good supplier relationships and keep raw materials stocked.

There are other nice-to-haves (and even must-haves for specific use cases). But these five are unnegotiable if you want to deliver a positive customer experience.

How to Get Started with Asset Inventory Management

Getting started with an asset inventory management system involves several key steps to ensure its successful implementation and ongoing effectiveness.

1. Assess the organization's needs and requirements for asset inventory management. Identify the types of assets to be tracked, the desired level of detail, and any specific functionalities required.
2. Research and choose an appropriate asset inventory management system that aligns with the organization's needs and budget. Consider factors such as scalability, ease of use, and integration capabilities with existing systems.
3. Once the system is chosen, engage with staff members and provide comprehensive training to ensure they understand how to use the system effectively. Encourage feedback and address any concerns or questions to promote buy-in and adoption.
4. After implementation, best practices for maintaining and updating the system should be established regularly. Conduct periodic audits to verify data accuracy and identify any discrepancies. Schedule regular updates and upgrades to ensure the system remains current and aligned with evolving business needs.

Maximizing the Impact of Your Asset Inventory Management System

Whether you're onboarding new software for asset or inventory management (or both), we’ve outlined some best practices that will help you get the most out of them.

Make It Easy for Employees to Adopt

If your system is hard to use, you risk that employees won’t start using the new system or that they’ll start using it incorrectly or inefficiently.

For example, if you try to use a QR-code-based system with a mobile app, and tell your staff to use their own cell phones, a lot of things can go wrong: 

• The app may not be compatible with all models.
• QR codes can be tricky to scan with older smartphones, slowing down the process.
• Network connectivity issues can disrupt workers’ workflows.

If, instead, you use a reliable handheld device with a built-in scanner like the Zebra TC52, you make standardized adoption a lot easier.

Centralize Your Data

Don’t let individual offices and teams cause silos by working with different software. Unless your whole organization manages company assets with the same software, you can’t get a real-time overview that shows the complete picture. 

The same goes for inventory management. By having access to data from all your warehouses, you can quickly adjust to shortages in one region. For example, if unusually hot weather affects buying habits in California, you can quickly ship more summer clothes from an Idaho warehouse.

Plan the Whole Lifecycle

Before you buy a new physical asset, you should have a clear idea of its entire lifecycle.

Here are a few questions you can ask yourself that can help you map out the journey.

• Who is the best vendor for post-purchase support and onboarding?
• How often does it need to be maintained, and when will we schedule it?
• What will our repurchase timing be?
• Does it have resale or scrap value when replaced?

Make sure you cover all your bases through every major stage. Map it all out from pre-purchase selection to maintenance, potential re-selling, and purchasing replacement assets.

Adapt Your Approach Based on Relevant Data

Whether you're reworking your asset or inventory management, informed decisions are the only path forward.

Routinely check — once a quarter, for example — for ways you can improve your current processes in the data. For example, you might do an analysis and find more asset breakdowns or stockouts than you’d like.

Look at the actions and processes that led to these failures, and adapt your approach going forward. 

It sounds simple in theory. But it requires hard work to pull off. Efficiency is won an inch at a time.

Take Back Control of Your Assets with RedBeam

Say goodbye to risks like internal theft, asset loss due to misplacement, inefficient usage, or duplicate purchases with RedBeam -- the number one asset management solution.

Must-have features like a dedicated app for the Zebra TC52, expanded history, offline mode, and unlimited locations set RedBeam apart. With it, you can easily keep track of your fixed assets and get the absolute most out of them.

Plus, you get all of this with the top-of-the-line data security of Google Cloud and role-based user security. 

If you’d like to see just how much easier it could be to manage crucial assets in your company, try the RedBeam 30-day free trial today.