What is Inventory Management?

Inventory management is concerned with identifying and tracking the stock levels available, both in stock and in use. Inventory management includes tracking IT asset inventory: tracking the location and stock levels of IT assets (vs. consumables), enabling an organization to know when more stock is needed.

Asset Management vs. Inventory Management

The basic difference between asset management and inventory management is their focus: primarily, asset management addresses the financial aspects of a specific asset throughout its lifecycle, while inventory management is focused on understanding the inventory levels of each asset model. Some differences are shown below:

Inventory ManagementAsset Management
  • Total number of a particular model available: in use, in stock, and in repair
  • Predicts expected consumption level and when to restock
  • Enables demand forecasting across locations, ensuring stock levels are adequate in each location or region
  • Financial aspects of each asset: total cost, age, depreciation
  • Asset performance and expected life
  • Enables prediction of when assets will become obsolete, enabling the budgeting processes

·       Reports on asset loss (missing assets)

To understand the full aspects of IT asset inventory management, its worth understanding that it includes inventory management, asset management, and configuration management, or at a more specific level, the roles of each of these processes include:

  • Inventory management to understand stock levels and need
  • Asset management to handle the financial aspects of budgeting, procuring, depreciating assets, and understanding the accurate financial picture of the IT asset inventory
  • Configuration management to effectively manage and maintain the use and serviceability of assets in the delivery of business services

The IT inventory process and knowledge of IT asset inventory support the asset management practice by enabling organizations to know where assets are expected to be and predict how many more are needed in the short and long term. This enables accurate financial reporting and budgeting. Said another way, this management enables organizations to understand how much of an asset is in each location and where it is, while asset management enables them to know how much they have invested in particular asset models and when they need to replace them, helping them manage the budgeting process.

Importance of IT Inventory Management

Why is it important to track inventory? Inventory tracking is of critical importance to an organization’s operations, security, and financial management.

From an operational perspective, IT inventory management enables IT to:

  • Manage Capacity: ensures IT has enough of each asset or model to supply new hire needs, as well as repair/replacement needs without incurring excessive equipment or storage costs
  • Manage Budgeting: Provide inputs to the asset management and budgetary process needed to maintain appropriate inventory levels
  • Manage the Enterprise: Within an enterprise, inventory management goes beyond IT inventory. Every department that maintains stock for assets or consumables has the same need to manage its inventory levels and can utilize the same practices and tools as those used for IT management of inventory.

While enabling IT to manage these areas, IT asset management also brings awareness of the cost of unused or lost IT assets and the cost of software licenses that are not recovered when their user leaves the company. This improved visibility helps the organization achieve financial audit compliance, support services adequately by ensuring the availability of required hardware and software and control IT spending by controlling loss while meeting the organization’s capacity needs.

IT Asset Inventory Management Best Practices

IT asset inventory requires a set of practices adopted throughout the organization to be successful. First, and most important, is having a plan: a documented process and the tools needed to manage the practice and work the plan. Second is determining the scope of the IT asset inventory practice: it should include all assets, including licensed software.

Finally, once the plan is in place, the program should include communication and adoption as well as enforcement policies to ensure it is followed.

Best practices that follow work equally for physical assets and asset licenses (software).

Inventory receipt:

With every delivery, each asset must be cataloged as received and moved to a particular stock room or storage area, with a record of its location created. The use of bar code scanners that interface with inventory management software reduces the manual effort involved in this practice and increases accuracy. Instead of writing down serial numbers and stock room locations, the person checking in the item can scan both the serial number and a bar code representing the stock room. These scans can then be uploaded into the inventory management tool, ensuring accuracy in the receipt process.

Inventory confirmation:

Once the inventory is received, it becomes easy to use dashboards and reports to ensure it matches the levels ordered and address shortfalls with appropriate vendors.

Inventory use:

Whenever an asset is provided to an individual, returned to stock, or disposed of, its location needs to be updated. This is typically performed using the same bar code equipment to scan the asset bar code and the bar code associated with the new location. It should also assign the asset to the individual, based on the service request to provision it.

Inventory status:

As the item moves around, its use type must also be cataloged: is it in use, in stock, or out for repair

Inventory planning:

IT inventory and IT asset management should be managed together, enabling the organization to know when it needs more inventory and ensuring it has the budget for the inventory to be purchased

IT asset inventory management process

The best practices described previously rely on an asset inventory management process that supports both the IT asset and inventory management practices and provides inputs to the service asset and configuration management process. The process flow below shows IT inventory process at a high level, including the point at which the asset enters the IT inventory management process and where it returns to IT asset management at retirement. When the asset is used for service delivery, its configuration and relationship to other assets used to deliver that service are added within the configuration management record.

Asset Management Flowchart

It should be noted that the process shown is the highest level of each independent process; organizations should take this further by detailing out each of the subprocesses down to the procedural level as this level of detail is needed by the people taking part in the operational aspects of these processes. Additionally, it is worth documenting a process flow for how the practice can be automated with an asset and inventory management system, as this will help with tool implementation.

IT Asset Inventory Spreadsheet

Many organizations start IT and IT asset inventory management using spreadsheets. While this is difficult to maintain over the long term and heavily manual, the work put into them is not lost when the organization is preparing to automate using an IT Asset Inventory Management system. These spreadsheets can be used during tool implementation to define the fields needed by the organization, create a spreadsheet template for import, and then gather/load the information about each asset, enhancing the asset’s record after discovery.

This may require the creation of several spreadsheet templates based on the asset types and the information to be maintained about each type: in other words, the information maintained for a server will be different than the information needed for the software.

IT Inventory Management Software

Ultimately, to achieve excellence in IT asset inventory management, a robust software suite is needed. At the highest level, the solution should support the following areas:

  • Audit and compliance: both from an asset tracking and reporting perspective
  • Security: by enabling the organization to know what assets are in use and apply required security measures to them, also for ensuring security policy enforcement across the environment
  • Cost optimization: from the perspective of appropriate capacity management and reduction of both waste and loss

data keyboard concept

It’s also important to consider the effectiveness of the combination of the IT inventory management system and processes on the employee’s experience: at the end of the day, an effective practice, supported by adequate tools, ensures the employee has the equipment and software they need when they need it: from the time they are onboarded until they leave the organization. It also ensures the asset is recovered when they leave. This is especially important today, as they may no longer be at a corporate site.

A good IT asset inventory management system enables the automation of each aspect of the process as well as the overlaps to/from the IT asset management process. When properly designed and implemented, a single end-to-end process can be used to manage each asset from procurement to retirement (and removal from financial records) as well as generate the dashboards and reports needed to manage each of the sub-flows within the two practices.

The solution must be a robust end-to-end solution that enables each of the requirements described, but it also needs several additional capabilities:

  • Ease of integration to other tools used for inventory and asset management:
    • Bar code scanning devices, software for receipt and location updates
    • Procurement and financial management tools to provide the required financial management capabilities
    • Service management systems, where asset and inventory management merge with incident and request management, change and configuration management practices, as well as repair history.
    • HR systems for asset deployment/entitlements based on roles and retirement during the offboarding process
    • Monitoring and system management software for updates to the asset’s state
    • Security Systems that support the overall health and safety of your infrastructure

Before selecting a tool, an organization should review their practice and unique requirements, building a list of capabilities and outcomes they deliver, as well as features they would like to see. These can be used to build a shortlist of products and aid in tool selection.

See for Yourself
Get a demo of our powerful Technology Management Solution.
Manage the lifecycle of all your technology portfolio assets, from onboarding to end of life from a single source of truth.