Asset Management vs. Inventory Management: Similarities and Differences

Joydeep Das

Joydeep Das

Senior editor

Parul Saxena

Chief editor

Last updated: September 1, 2021

The words inventory management and asset management are often used interchangeably, implying that they are the same. Though both technologies essentially track goods and valuables, there are significant differences between them. This article will explore how inventory management and asset management technologies are developed side by side and what separates them from each other.

Looking for Asset Management Software? Check out SoftwareSuggest’s list of the best Asset Management Software solutions.

While asset management involves tracking the equipment and supplies companies use to run a business, inventory management involves tracking the stocks going in and out of their warehouses. Thus, both technologies help keep track of different types of company property, and most companies require asset and inventory management software to safeguard their valuables. 

Inventory management solutions primarily focus on moving items that a company sells or the raw materials it needs for production. It checks how much stock is coming in and going out daily. Additionally, inventory management software are designed to find the right balance of stocks to satisfy customer demands and production needs.

Asset management is more straightforward as it only tracks items that a firm uses internally, typically not for sale. It focuses more on keeping the asset’s value intact along with its availability.

As evident from the above, both asset and inventory management go hand in hand to ensure that a company’s products, resources, and production remain intact. While asset management safeguards the tools and technologies that help in inventory production (such as machines, vehicles, IoT devices, etc.), stock management tools help in the smooth movement of inventory, which helps in generating revenues and removing bottlenecks.

The following image shows how inventory and asset management work in tandem to help organizations reach their production goals.

How Asset Management and Inventory Management Work Together

Source: NetSuit

To better understand the difference between asset and inventory management, we first need to understand what ‘inventory’ and ‘assets’ mean. 

Difference between Inventory and Assets

Companies sell or buy inventory/stocks to generate revenues. Onis the other hand, assets offer a company some value and often help them purchase or manage its inventory. 

Inventory can broadly be divided into four types: raw materials, work-in-progress goods, finished products, and MRO (maintenance, repair, and operations) products. Onis the other hand, assets include machinery, fixtures, equipment, and furniture that a company owns or leases. Assets can also constitute intellectual property like patents, rights, and even insurance policies.

Asset management also deals with ‘inventory assets,’ which are finished products, raw materials, or machine parts that a company wants to sell.  Since asset shortages directly affect revenues, inventory assets a crucial for any business to operate. 

Let us now decipher why asset and inventory management are essential for an organization.

Importance of Inventory Management in Business

Inventory management tracks the movement of stocks in and out of warehouses. Inventory management software also helps keep track of when to place orders for stocks and helps maintain a healthy ratio for inventory turnover, thereby helping organizations avoid shortages. 

Importance of Inventory Management in Business

Source: Cin7

By maintaining optimum stock values, such solutions help organizations run smoothly significantly reduce the chances of overselling. Inventory incurs many costs (like storage, cleaning, transport, maintenance, insurance, etc.) until it is sold. Inventory tracking also ensures that firms do not overproduce and rake up additional costs, helping organizations save money every quarter.

Inventory management software can also predict demand fluctuations and detect future trends, helping organizations purchase and produce efficiently. They also help understand which stocks fly off the shelves and in what volume, enabling you to negotiate more efficiently with vendors and suppliers. This improves the overall productivity of your processes and makes your company more stable and valuable to customers.

Role of Asset Management in Business

Asset management is used to oversee and secure assets that an organization needs to operate smoothly and efficiently. They may include machinery, devices, equipment, furniture, vehicles, and essential records that organizations require regularly. 

Asset tracking software tracks of all your (movable and immovable assets) across their lifespan and grants each one of them a unique ID for tracking. In addition, all changes, upgrades, or activities related to your assets are recorded by the software, ensuring that they can only be accessed by owners tagged to them.

Role of Asset Management in Business 

Source: Motadata

Besides ensuring that your assets are safe and sound, asset management software also tracks their location and surrounding conditions to offer you real-time information on their status and whereabouts. This helps organizations in the following ways:

  • Mitigating duplicate purchases
  • Increasing awareness about products
  • Enhancing Quality Control and Quality Assurance
  • Reducing asset audit frequency
  • Reducing equipment downtime
  • Easy tracking of compliance documents
  • Reducing repair and maintenance costs

Today asset management software can instantly inform you about the location, tagged user, location, condition, calibration, and scheduled repair date for an item. In addition, new technologies like RFID, GPS, and BLE have made asset tracking much simpler, cost-effective, foolproof, and flexible. 

Difference between Inventory Management and Asset Management

Both inventory and asset management help organizations improve their production efficiency and costs. However, there are significant differences between the two, which are mentioned in the table below:

Asset ManagementInventory Management
Manages items that firms need to retain, tracking them throughout their lifecycleKeeps track of stocks coming in or going out from the company/its warehouses.
Implements periodic repair, maintenance, upgrades, and replacements of assets Tracks orders, fills gaps in stocks, and replenishes items or equipment that would be sold to customers in the future
Users can borrow items from the asset pool and return themCustomers return goods if they are dissatisfied with them
Determines which of your assets actually adds value to your company and which of them are liabilities through careful examination and high-end technologiesInvolves minimal contact with stock items, primarily during their movement, where only basic details are recorded


The above chart clearly explains that asset and inventory management are created for different purposes and outcomes. 

Both inventory and asset management software is evolving rapidly to simplify the lives of business owners. In addition, the increased use of mobile telephony and IoT in both these technologies are also making them more mainstream, easy to use, convenient, and widely acceptable for organizations of all sizes.

Joydeep Das
The newest addition to SoftwareSuggest's writing armada, Joydeep Das has extensive experience with both technical and non-technical content. However, marketing and promotional topics have remained his true love since over a decade.

Recent Posts

No posts found.


Please enter your comment!
Please enter your name here

Captcha loading...