Tracking assets like raw materials and cash is usually straightforward. But what about the ones you aren’t sure how to categorize?
Assets look different for every company, and that makes them difficult to organize — especially when it comes to inventory.
Inventory assets are any asset you track value on. They include fixed assets (equipment), current assets (finished goods), raw materials, works in progress (WIPs), and anything else with a cost associated with it. That’s why managing them properly is so important. Too few assets, and you risk shortages, missed sales, and unhappy customers. Too many, and you tie up capital, spend extra money on storage, and risk obsolescence.
Here’s a guide to what inventory assets are and how to manage them.
Is inventory an asset?
Inventory itself is an asset. It refers to the goods your business holds for sale or production, including raw materials, WIPs, and finished goods. Most inventory falls under the broader definition of an asset — a resource with economic value that you expect to benefit the company. You can categorize assets as either current (converted to cash or used within a year) or non-current (providing longer-term benefits). Inventory is a current asset because of its relatively short lifespan.
Inventory asset examples
Let’s look at a few examples to see what inventory assets might look like in different industries and how to track them.
Microchips
These tiny electronic components are essential building blocks for computers, smartphones, and countless other devices. For semiconductor manufacturers, microchips in various stages of production — wafers, dice, or packaged chips — represent valuable inventory assets. They hold significant economic value, and the production of many in-demand electronic products stalls if they’re lost or damaged.
Tracking methods
Due to microchips’ small size and high value, manufacturers need to track them with extra attention. They often use technologies like 2D barcodes for accurate identification and real-time location tracking throughout the manufacturing process.
Flour and yeast
A bakery that can’t manage its flour and yeast inventory won’t be in business for long, since bread, pastries, and other baked goods can’t exist without these basic ingredients. These essentials are vital inventory assets, and they require careful management to ensure freshness, prevent spoilage, and maintain consistent product quality.
Tracking methods
Tracking the quantity and expiration dates of things like flour and yeast is key to avoiding spoilage. Large bakeries typically use inventory management software to group ingredients and finished goods by expiration date and get notifications when they may go bad. Businesses may also use physical inventory counts to verify stock levels and identify discrepancies.
Lumber
Lumber is a fundamental inventory asset for construction companies. It’s used to build homes, commercial buildings, and many other structures. Managing lumber inventory involves tracking different types of wood and their lengths, grades, and quantities to ensure sufficient supplies for ongoing and future projects.
Tracking methods
Lumber is expensive, and when construction companies have multiple projects on the go, it’s hard to juggle. Construction companies often use tools like barcode labels and lot numbers to follow individual pieces of lumber and make sure nothing gets lost. This allows for easy identification and inventory counts, and the company can also record the movement of lumber from the yard to the job site.
Buttons and zippers
In the apparel industry, mismanaging tiny components like buttons and zippers can have a big impact. These inventory assets are essential for completing garments — which are also inventory assets — that function the way customers expect them to.
Tracking methods
Bin tracking and kanban systems are two of the most common ways for clothing manufacturers to manage components like buttons and zippers. These systems visually assess inventory levels and replenish stock when quantities dip below a certain threshold.
The symbiotic relationship between asset tracking and inventory management
Asset tracking and inventory management work hand-in-hand to ensure smooth operations and maximize profitability.
Think of asset tracking as the eyes and ears of inventory management. It provides real-time visibility into individual assets’ locations, conditions, and usage, whether they’re raw materials on the production line, finished goods, or operational tools and equipment. This information is invaluable for inventory managers because they can make data-driven decisions about when to reorder materials, adjust production schedules, or perform maintenance on equipment.
Say your asset tracking system reveals you’re running low on one of your SKUs. You could proactively boost manufacturing to prevent shortages. Or, maybe a piece of equipment starts showing signs of wear and tear. Asset tracking lets you know it’s time to schedule maintenance before the machine breaks down and disrupts operations.
Track your inventory assets with Fishbowl
Asset tracking follows raw materials, components, and finished goods as they move through the production process, and that information helps the inventory management system have the right materials available at the right time and in the right quantities. The key to success from both sides is employing a system that does it all. And that’s where Fishbowl comes in.
Fishbowl is the all-in-one inventory management solution designed to help you track assets, improve inventory control, manage stock levels, optimize warehouse operations, and streamline manufacturing workflows. The platform also integrates with QuickBooks to promote financial visibility.
Want to keep inventory assets from becoming a liability? Schedule a demo of Fishbowl, the intuitive, scalable, and user-friendly asset and inventory management platform.
