Every business leader needs a robust asset management system to manage company assets properly. Still, it is not uncommon to confuse it with inventory management due to the overlap between the terms inventory and asset. Given the importance of knowing the distinction between these two critical aspects of company operations, we will cover their similarities and differences and the role that RFID asset tracking systems can play in managing both classifications.
Defining Asset Management and Inventory Management
Asset management is the process of planning, monitoring, and controlling the tangible assets of an organisation. Fixed asset management works to ensure that such assets are used as efficiently and effectively as possible, including ensuring that they are always properly maintained, available when needed and with the ability to determine its location.
Effective asset management grants many vital advantages: increased operation efficiency by reducing equipment and infrastructure duplication, optimising current assets’ utilisation, improving facilities with the benefit of staff’s safety and security.
In contrast, inventory management is tracking, managing items and stock levels, monitoring inventory turnover, and accurately forecasting future demand. Its primary goal is constantly maintaining the right stock level to keep up with customer demand, which requires balancing stockout cost and carrying cost. Inventory management can only be effective if it closely aligns with other business functions like operations, sales, and marketing.
The Similarities and Differences
The critical difference between asset management and inventory management is their focus: the former is concerned with fixed business assets, ensuring effective usage and manage its location or placement. In contrast, the latter is focused on monitoring the flow of the company’s goods which is in constant movement, based on in coming and out going.
Inventory management works to precisely track stock levels and ensures constant availability through accurate forecasting that allows for the proper ordering schedule. It also involves maintaining efficient inventory levels to avoid tying up too much capital in stock.
Apart from fixed assets, asset management covers the organisation’s intellectual property and even third party companies that may be involved within the business operation. Asset management’s top priority is maximising the value and usage of business assets, so they can be used to generate income and increase productivity within the organisation.
Despite the disparity between asset and inventory management, they share some similarities. Both involve tracking and managing assets, including staying on top of their location, condition, and how they are being utilised.
Asset management and inventory management also require businesses to decide how to fully use their assets, including planning when to order new inventory and sell used assets. Lastly, both also involve planning for the long term by forecasting demand so that companies can order the right quantities and set aside funds to replace old assets.
Managing Assets and Inventory Together
Most businesses generally manage their assets and inventory in separate systems. Although keeping them separate works well, there are advantages to managing both in the same system.
Firstly, doing so improves accuracy since there is only one main source of data, which can be particularly helpful when certain inventory is low. Assets will be at maximum usage, filling customer orders. Secondly, managing assets and inventory from a single source can reduce costs by eliminating duplicate data entries and the necessity for manual updates.
All in all, managing assets and inventory in the same tracking system depends on the business and its specific needs. However, several practical advantages make this approach worth considering.
Comprehensive Asset Management With RFID
RFID asset management solutions provide numerous advantages essential to streamlining operations. Organisations across various industries, retail and healthcare, are turning to RFID companies to simplify their asset and inventory management systems. By integrating RFID asset management into their operations, they gain real-time visibility across their fixed assets and inventory, this helps to facilitate automation and optimisation of their key processes.
Next, managing fixed assets and inventory is critical to ensuring regulatory compliance that all assets are properly accounted for and are traceable. As mentioned, real-time capabilities let businesses track and stay on top of their assets and identify which are used most frequently. Furthermore, automation and optimisation of key business processes like ordering, receiving, and asset tracking are all simplified, saving valuable time, money and increasing operational efficiency. Lastly, greater scalability and flexibility allow companies to expand their asset management.
By leveraging real-time visibility into the work progress of assets and inventory, organisations can implement more streamlined operations and verify that their assets are always where they need. In addition, automating and optimising vital processes naturally improves their bottom line.
Asset management and inventory management are two business processes that share similarities and can be managed by one system instead of two separate ones. RFID asset management solutions offer numerous advantages in managing these processes that any business would need to leverage their growth, productivity and profitability.