It is a proven fact: businesses who track their IT assets realize up to a 30% reduction in the amount spent on those assets during the first year of use. And that is IT assets, alone.
If you can save so much money by keeping an asset inventory, why doesn’t everyone do it? It could be as simple as not understanding what an asset is and why they are so important to track.
For perfect clarity on the subject, you must first understand what they are not: Assets are not the same thing as inventory. Still, people often confuse the two.
Everyone knows you should track your inventory. In fact, only 8% of companies who have inventory don’t track it. Read on to learn more about assets and why it is as important to watch your assets as it is to track your inventory.
What is Inventory and Inventory Management?
Inventory is the items you sell or the items used to build what you sell. Inventory management is the use of a standardized method to track the movement of parts and products through a company.
Examples of information to track when evaluating Inventory Include:
- The vendor from whom you purchased the inventory item
- The amount spent to buy the item
- The amount for which the item sells
- The physical location of the item while it waits to sell
- Quantity on Hand
- Reorder Point
What are Assets and Asset Inventory?
Assets are the infrastructure of your company. They are the machines that build your inventory items, the buildings that house those machines and even the employees who run them.
If inventory is what you sell, then assets are the items you own. That makes the asset inventory a literal inventory of all your assets.
Examples of information to track when evaluating assets Include:
- The vendor from whom you purchased the asset
- When you purchased the asset
- How much the asset cost
- Depreciation of the asset
- Where the asset is located and/or who currently has it
- When preventative maintenance was last conducted and when it is next due.
- Contract and warranty details
- Who has been trained to use the asset
It is also important to note that assets are not consumables. An item must be of value to be an asset. Consumables are generally items of little value used up in the process of day to day operations.
Consumables are shipping labels and the oil used to grease production machines. Track these items like you would inventory and assets to save money.
Is Inventory an Asset?
While not all assets are inventory, all inventory items are assets.
Inventory items in your possession are assets; something of value you own. Once sold, the cost of the item becomes an expense and the sale amount becomes income.
Non-inventory assets will never generate income. For this reason, it is important to separate inventory and asset inventory when tracking them.
Inventory vs. Inventory Asset
There are many similarities between assessing standard inventory and asset inventory. The difference comes into play when you consider which part of your business it effects.
Managing inventory improves profit margins while monitoring asset inventory improves your company as a whole. But how they do this?
That is the real question.
Effective use of Resources
Whether you track your inventory or your assets, you will learn to use your resources more effectively.
With regard to inventory, you will receive insights into which items you use most frequently in product development. You can also observe trends. Perhaps you use more widgets than gadgets most of the time, but around Christmas, you need more gadgets.
Assessing the effective use of assets is as productive. How much do you actually use that printer? Do you need another? Would it be better to rent another printer at certain times of the year?
All these questions and so many more can be answered by a detailed inventory of your assets.
It is pretty obvious that inventory tracking will optimize inventory usage. But which parts of the business does asset inventory optimize?
The answer: everything else.
Earlier, we called assets the infrastructure of a business. It is time now to revisit that statement.
An infrastructure is the physical components that make up an entity. If you are able to catalog your infrastructure, then you will be able to tell where all your company’s moving parts currently are.
You will make more efficient moves, create more accurate forecasts and minimize damages.
Why Track Asset Inventory?
Tracking inventory assets allows you to budget for the day to day expenses of running a business. It also gives you an accurate picture of what your business is worth, which always makes for happy investors.
Understanding the value of your assets gives a clearer picture of how much money you spent to earn profits for any given time frame. This knowledge gives you the power to see money saving, or money depleting, trends.
Additionally, you will know where all your asset items are within your company. When you need something, you can retrieve it thereby increasing efficiency and customer satisfaction.
Where do I start?
The execution of a new process is always the hardest part. There is so much setup, but once done, everything gets so much easier. That is how it will be when you first start using an asset inventory.
Labels and a scanning system will go a long way to automating both your regular inventory and your asset inventory tracking. The barcodes will hold most of the information for you, so you can reduce manual entry and curb errors.
If you would like a consultation to discuss which labels and scanners would work best for your company, please do not hesitate to reach out!