What Is Asset Inventory Management? (Examples & Benefits)

At its core, asset inventory management is the process of inputting, tracking and analyzing asset information as well as the routine maintenance involved to ensure that your equipment operates as efficiently as possible. 

Sounds straightforward enough, but is it necessary for your business? Well, consider this: Reports show that 43 percent of small businesses track assets and inventory ineffectively. Some businesses fail to track assets entirely, while those that use manual tracking methods are prone to error. This can result in increased equipment downtime, shortened asset lifespan and inefficient operations overall.

All of these are far more expensive than investing in an asset inventory management solution. Let’s break down everything you need to know to help your business (and its assets) thrive. 

What Is an Asset?

Assets are any and all items used to run a business, particularly those that are instrumental to meeting the company’s production and service goals. Assets fall into several categories, including:

Physical

These are the most common asset type. The goods and products, as well as the materials used to make them, make up the bulk of most businesses’ physical assets. Machinery, vehicles and IT equipment are also considered physical assets. 

Intangible

Intangible assets include things that are more challenging to assign a monetary value to — intellectual property, patents and copyrights, just to name a few.

Operating

Operating assets are those that a business needs for daily operation. Without them, revenue generation is impossible. Think cash, buildings and copyrights. 

Non-operating

Non-operating assets aren’t as critical, but they can still be used to generate revenue. Vacant land, interest income and marketable securities fall under this category. 

What Is Inventory?

Inventory is a type of asset that refers to both raw materials used during production as well as finished products. The four types of inventory include:

• Raw materials
• Work-in-progress inventory
• Maintenance, repair and operations inventory
• Finished goods

Raw materials are the components a business uses to create final products. Once production has started, the raw materials are converted intto work-in-progress inventory and finally finished goods. Maintenance, repair and operating inventory are supplies needed for the production process that are not included in the finished products. Dead stock is also a type of inventory, but it’s the kind that asset inventory management seeks to avoid — i.e., the kind that doesn’t sell and wastes costly storage space.

What Is Asset Management?

Asset management and inventory management are related, but slightly different. Asset management includes any tools and processes used to track, maintain and repair company assets throughout their life cycles, from procurement to disposal and replacement.

The goals of asset management include:

• Tracking company assets
• Keeping assets in top operating condition to avoid breakdowns and increase asset lifespan
• Streamlining maintenance work

Asset management also helps define employee responsibilities and monitor performance. Get this: A McKinsey report showed that, in general, the workforce spends 1.8 hours a day searching and gathering information. That increases to about 2.5 hours a day for knowledge workers (engineers, analysts, researchers and the like). So, instead of employees spending time tracking down asset information in the supply chain, what if you opted to decrease this employee downtime instead and automate your inventory tracking with asset management software?

Another benefit to asset management is that it doubles as a powerful risk management measure, helping to prepare businesses for potential loss. Additionally, asset management tools ensure businesses comply with all laws and internal policies, rather than discovering holes in their maintenance schedule after failing an inspection. 

What Is Inventory Management?

Inventory management is similar, only it’s used to manage inventory, including buying, storing and tracking these materials and goods to avoid overstocking or understocking items.

Monitoring inventory stock closely helps businesses to maximize profit. Who wants their cash tied up in excessive stock? On the flip side, inventory management facilitates customer satisfaction by avoiding shipping delays due to out-of-stock items or stockout events. Inventory management also assists in sales optimization by analyzing pricing trends in real time. Additionally, being able to better predict material needs by accurately evaluating market trends may facilitate negotiations with suppliers. More favorable terms reduce production expenses, while minimizing waste reduces holding costs at the same time. 

Another aspect of inventory management is specifically spare parts inventory management. Enough spare parts must be kept on hand to repair essential assets and avoid production slow-downs. Having an inventory management process helps with tracking inventory levels so that, when spare parts are used, you know to replace them before another breakdown occurs. Of course, an asset management software would send notifications alerting you to this as well, which allows for better inventory control overall.

What Is an Asset Inventory Management System?

An asset inventory management system covers both asset management and inventory management in one streamlined interface. Using a combination of hardware and software as well as processes, an asset inventory management system oversees the monitoring and maintenance of assets and inventories. 

Using one centralized platform serves multiple purposes, all of which aid in the functionality, efficiency and security of your  business operations. An asset inventory management system is not just for massive corporations, either. Businesses of all sizes benefit from accurately tracking their inventory data and asset performance. Growing and scaling a business is much easier when you have a clear picture of your assets and using an asset inventory management system allows you to do that with a much smaller margin of error. Since it saves you from numerous costly headaches, a quality management platform ultimately saves time and money. 

Goals of Asset Inventory Management

Having a centralized place to oversee all current assets owned by a company is more than convenient. It provides an overview of where assets are located at any given time. This is especially helpful in the transportation industry and in any industry that relies on vehicles and other mobile equipment. The healthcare industry, for instance, uses ambulances filled with costly devices and tools, along with vehicles for the distribution of essential supplies like bedding and IV tubing. Being able to track the location of assets ensures that they’re available when workers need them without lengthy delays.

Asset inventory management also tracks asset downtime and performance, improving asset utilization and optimizing costs. If a piece of equipment has been breaking down more frequently than usual, it may be more cost-effective to replace it sooner than originally planned. Asset tracking systems also make it easy to schedule maintenance on individual assets and easily review maintenance history throughout the asset’s lifecycle. 

Because management systems store asset data in one convenient place, generating reports on asset performance for business forecasting becomes a breeze. Gone is the need for picking apart data from multiple Excel spreadsheets. 

A Quick Guide on How to Track Assets

How does asset tracking actually work, you ask? There are many ways to track assets, and the specifics depend on the type of assets in question. The way a vehicle is tracked is different from the way an IT asset would be tracked, for example. Asset tracking software provides a digital map of physical objects, but businesses still need a concrete way to monitor information. Some of the most common methods include: 

• Scannable barcodes
• Radio frequency identification
• GPS
• Bluetooth low energy

Placing barcodes on your assets makes it easy to monitor inventory and stock levels as well as easily access information about a given asset. Using barcode scanners on a mobile device, employees can even use this method to report issues with equipment and submit maintenance requests. Radio frequency identification, also known as an RFID tag, tracks individual items. They’re similar to barcodes in some aspects, but they come with a few notable benefits. Unlike barcodes, RFID tags: 

• Track complex assets
• Can be read without direct visibility
• Can specify individual products, while barcodes for identical items are generally all the same
• Can be scanned in multiples by RFID scanners
• Can store more data
• Are both reusable and more durable

The downside? They’re also more time-consuming to set up than barcodes and they’re more expensive, costing up to $30 instead of just a few cents. 

Bluetooth low energy, or BLE, may be considered the middle ground between barcodes and RFID tags. It’s another wireless technology used for tracking and falls somewhere in between barcodes and RFID tags in both functionality and cost. It’s cheaper to use than RFID, but BLE beacons require batteries and have a shorter read range than RFID. On the upside, BLE is a better choice for tracking assets that need to be easily read by smartphones, while RFIDs are best used for large-scale retail tracking and inventory management. 

GPS is the obvious choice for large machinery and tools, like motor vehicles. In addition to lowering the likelihood of theft or loss, employees are more likely to use equipment efficiently when location data is easily monitored. Many businesses rely on more than one method of asset tracking as well. 

Benefits of Using an Asset Inventory Management System

The benefits of using an asset inventory management system are widespread. Scheduling maintenance is especially tedious when done manually. With a quality asset management system like Coast, maintenance workflows are almost completely automated. Asset value is easier to determine as well. As soon as the stage of an asset changes throughout its lifecycle, the information is immediately updated. This allows managers to flag items that need servicing or replacement before a costly breakdown, allowing for uninterrupted operations. 

Tracking inventory also reduces the likelihood of theft or misplacement, whether due to internal fraud or external parties. Many fraud cases occur due to a lack of internal monitoring. Tracking assets makes them considerably harder to steal. They’re also easier to find when the exact point of misplacement can be identified. 

Using an asset inventory management system is vastly more efficient than tracking assets and inventory by hand. Having a birds-eye view of everything that matters most to your business’ bottom line makes decision-making about its trajectory easier. Once all team members have adapted to the system, most companies notice a marked improvement in operational costs, resource accountability, productivity, maintenance management and overall ROI. 

Key Factors When Choosing Asset Inventory Management Software

Since it takes time and resources to switch over to a new method of asset tracking, it’s best to spend time choosing the right asset inventory management system for your business from the start. There are a few things to look for: 

• Robust asset-tracking capabilities: Does the software offer multiple ways to track assets, including barcodes, RFID tags, BLE and GPS if needed?
• Cloud-based, mobile-first software: In today’s modern world, cloud-based software is essentially a requirement for convenience and ease of use. Most companies use mobile apps more frequently than desktop interfaces, so a mobile-first platform is ideal.
• Work order management and maintenance tracking capabilities: Not all software includes both of these key features, but most businesses benefit from them. 
• Analytics and reporting: Audit capabilities and easy report generation are extremely time-efficient compared to building reports by hand. 
• Security and compliance features: Online fraud is rampant, so keeping your company’s data safe should be a top priority. 
• Ease of integration with other systems: It’s always a bonus if an asset inventory management system plays well with your existing financial software or ERP software.
• Scalability: The asset management solution should have the capability to grow with your company and the various workflows it may one day require.
• User-friendliness: Intuitive software keeps the learning curve to a minimum, making the implementation process easy as well as ensuring team adoption from the get-go.

Using Coast for Asset Inventory Management

Last but not least, vendor support is invaluable. In addition to covering all of the features mentioned above, Coast has top ratings and convenient chat support.  Moreover, the app offers a user experience with unmatched customization — use the features you need and hide everything you don’t. 

Easy in-app messaging, announcements and upload support streamline your operations. In addition to all-inclusive asset management, Coast also makes it a breeze to schedule preventive maintenance, track progress, set reminders and more. 

Create a free account today to take it for a spin. No credit card required.