Inventory and asset are key terms used in manufacturing and distribution that are often used interchangeably. However, both are critically dissimilar in many ways. Asset tracking and inventory management have different functions and hence, require different software solutions for improved performance of these applications.
Although both focus on improving resource optimization and cost reduction, the difference in the two lies in how they have been tracked and more importantly why to track them. A warehouse management software may cater for both of these applications, but there also exist standalone asset tracking and inventory management solutions that involve the tracking of items.
In general, assets are what you own and inventory is what items you sell or consume.
The ‘asset’ is a fairly predictable and stable pool of items; ‘inventory’ can be highly volatile and continuously moving items in and out of the warehouse.
Inventory Management:
Inventory management software helps businesses, especially manufacturers, manage the stocks of their consumable items across multiple environments such as shop floor, assembly line, etc. Moreover, it can be applied to a broad range of markets – from optimization of incoming raw materials and outgoing of the finished products in the manufacturing industry to the on-shelf stock management and reordering in the retail settings.
Inventory items, unlike assets, constantly deplete and replenish. This volatility in your warehouse makes the entire system too intricate to manage – depending on the complexity and size of the inventory. For instance, the amount of raw metals in an automotive factory or the consumer goods on a retail store shelves, etc., can vary extensively depending on the market conditions, sales, seasonality, discount promotion, and even on weather conditions.
Implementing Inventory Management System:
Inventory management solution accurately leverages the supplier data, including available supply of materials and parts, raw goods price, and also customer data such as sales history. This all information collectively helps improve inventory planning, material procurement, and forecasting for production and sales.
Additionally, it helps business owners to track consumables, locate items and replenish stock within their warehouses. Typically, an inventory or warehouse control system streamlines the receiving, picking, packing, restocking, and shipping of the required items targeted at the warehouses, retail stores, distribution centers, and other organizations that buy or sell, or consume raw and finished goods.
Asset Tracking:
Assets are everything that manufacturing companies use for internal operations and that are essentially part of their production throughput. Asset tracking usually focuses on the IT assets like computers and software, material handling equipment, tools, and even documents, etc., that businesses use internally for different processes.
Asset tracking software solutions help organizations shrink the auditing effort besides improving asset management accuracy to nearly 100%. Companies can have substantial savings in labor costs, duplicate purchases, and unnecessary tools and equipment losses.
If your tracked assets include tools or machines used in the production process and eventually in the sales process, the value turns out into improved end product, increased quality, satisfied consumers, and improved bottom line. The modern
Implementing Asset Management System:
Losing an important document could have drastic consequences pertaining to legal and financial penalties. Here, the value of modern asset tracking and management systems becomes obvious to that of quality assurance and control in manufacturing processes.
All these advantages result from a company’s ability to precisely determine where each asset is located, when it was last used, calibrated or serviced, or who used it last or when it was repaired, and in what condition it is currently present in the storage facility, and when it needs to be replaced.
The asset management systems generally use RFID tags, serial numbers, and barcodes to track the items, their location, and conditions in real-time – on a daily, weekly, monthly, or annual scheduling depending on the type of application. It could be straightforward like a small barcode application or a complex system like a large RFID implementation, which usually involves automatic real-time tracking and hundreds of fixed readers for multiple asset types.
Wrap Up:
Within the same enterprise, inventory and assets occasionally cross over despite being different in terms of operations and systems to utilize for their tracking and management. However, both help companies improve their bottom line, all while addressing and managing their unique challenges in a better way. Contact MWI Solutions to determine which system will suit the best for your business needs.