There are several terms that are used in one place of another because their meaning is the same. However, there are a few words that do not have the same meaning but they are used as if there is no difference.
One example of this, asset management & inventory management. Hence, in this blog, we will explore what exactly the meaning of inventory management and asset management.
What is Inventory Management?
Nowadays, inventory management software used by companies as a systematic approach of storing, ordering & using the inventory. It incorporates the management of raw material, finished products.
Inventory is considered one of the most important assets. A shortage of inventory will definitely affect business, especially in peak season. When the manufacturing of products is done continuously.
In business, it is crucial to maintain the right level of stock at the required place. However, inventory management is not only important in terms of maintaining the right stock but it also saves you overstock.
Knowing when & how to reorder, which warehouse location needs reorder. This is where things get chaotic & messed up. In order to avoid these types of situations, an organization needs inventory management.
Also Read: Why Barcode System is a Good Idea for Small Businesses?
What are the advantages of Inventory Management?
Some of the advantages of Inventory Management are given below:
Decreasing Costs and Increasing Profits
Inventory and stock management can enable you to cut expenses and enhance your benefit ratio. It can save your unnecessary expenses & through data analytics; you can know in advance that which item will be in more demand in which season. Through which you plan according to that information.
You can avoid deadstock & overstock situations with the assistance of an inventory management system. Inefficient management of inventory can lead to revenue loss, over-spending money, etc.
What is Asset Management?
As per Wikipedia
“Asset management is a systematic process of developing, operating, maintaining, upgrading, and disposing of assets in the most cost-effective manner (including all costs, risks and performance attributes).
It is also increasingly used in both the business world and public infrastructure sectors to ensure a coordinated approach to the optimization of costs, risks, service/performance, and sustainability.
It includes the management of the entire life cycle—including design, construction, commissioning, operating, maintaining, repairing, modifying, replacing and decommissioning/disposal—of physical and infrastructure assets.”
Overall asset management is required for the business to monitor and manage the assets using a systemized approach. The benefits from asset management include improvement in productivity and efficiency which will lead your business to a better position to increase their return on investment.
Also Read: 7 Effective Inventory Management Practices for Your Business
What are the advantages of Asset Management?
Some of the advantages of Asset Management are given below:
Saving Maintenance Costs
Bad management of Assets not only leads to unnecessary money spend on maintenance but also decreased the lifespan of an asset. At the operational stage of the life cycle of an asset, a business firm can confront several maintenance issues. Maintenance issues can cut into the benefits of the organization.
Asset management software does the job for you; it keeps all in the information & data of all assets. Asset management also helps in scheduling a maintenance job as well and create alerts for you. It assists in growing your business by identifying unproductive items.
Asset management offers deep analytics and reports expanded knowledge of all organization assets. It enables an organization to increase performance by identifying the problem & resolving it quickly to improve workflow.
Similarities between Inventory Management and Asset Management
The similarity between Inventory Management and Asset Management: Inventory management and asset management, both are used for resource optimization and cost reduction purposes.
Inventory management can be used for the objective from the perspective of selling products. It's the function of inventory management to ensure that there are not way too many products are present in our stock that can't be sold or used (as it has expiry so it will be of no use) neither a few stocks that create hindrance in the selling process.
The whole reason for doing this is just to make sure that the customer should not leave the shop for the reason that the item is not available (produce shortage) in stock. There should be midway for the stock, where you get notified that you must reorder the particular skews soon and which makes your investments easy, by showing you that you don't need to stock inventories for the particular skews unnecessarily.
Large facilities such as hospital, they don't sell the product but they offer service. Therefore, they can use asset management for a similar objective. Asset tracking allows them to find a healthy equilibrium in their asset quantities.
Hence, either it is inventory management or asset management both have a similar goal which optimizes their daily operation.
Also Read: Why Asset Tracking Software is Crucial for Every Business?
Inventory Management Vs Asset Management
The first difference between them is -
“Assets = what you own & Inventory = what you sell”
Assets are long term and they are not easily sold. On the other hand, inventories are short term and sold easily.
Here is an example, if you are someone who is responsible for managing your organization's fixed assets then you will need asset management. And if you are in charge of supplies or stockroom inventory then you will need inventory management.
Asset management included maintenance but inventory management does not need any maintenance.
Items that are tracked in Asset management includes computers, furniture, equipment, etc. Items that are tracked in inventory management includes the product, spare parts, supplies, etc.
In asset management, asset requires inspection, cleaning, or filling steps before preparation for another use. On the other hand, in inventory management, little work per item, therefore, directly prepares for sale.
What is the necessity of any of this software?
A few years ago, around 50 percent of the business did not track the inventory at all or used a manual process to track the inventory or asset.
As a result, all the calculations were wrong at the time of the requirement of a particular asset, it was not found on time or missing. When an asset is lost then it impacts the company bottom line.
So, this software provides accurate information. All the information is stored in the software. It lets you know about each asset for example, who has it, which asset is assigned to which person & when it will be returned with all the movement history regarding each asset.
It also reduced the probability of asset loss & saves from unnecessary expenses.
Also Read: What is Cloud-based Asset Management? What are its Benefits?
We hope that this blog did assist in your order to know what is the difference between inventory management and asset management software. So, if you are thinking to implement either of the solutions. The first thing you need to do is write your requirements then call Asset Infinity. We will be happy to assist & provide you with a 14-days free trial.