In your equipment rental business, you may have two types of inventory (things that you track by “quantity” and things you track by “asset”). In this article, we will explain the difference and help you understand the benefits (and drawbacks) of each method.
Quantity-tracked items:
These are rental products where you can pull from a pool of your inventory and you don’t really need to know specifics about the item (or you don’t care to manage the item individually). Picture a warehouse full of folding chairs. When someone books 100 chairs tor an event, you probably pull just the chairs that are closest to the loading dock, paying no attention to which specific chairs you grab and load on to the truck. It doesn’t matter to you when the 22nd chair you loaded was purchased, you don’t care how much (exactly) you paid for the 22nd chair, nor do you care to know the last 15 events that this chair was delivered to. This is an example of a “quantity” tracked item. Certainly, you will still need to know how many chairs you have available at any time, and if you offer online rentals, you will want the available quantity to be exact (to prevent overbooking), but the particular item’s history is not worth your time to track.
Asset-tracked items:
These are inventory which you care to report on the items detailed history and/or the item is important enough to your operation for which you would like to view reports on the particular item’s performance/earnings over time. Imagine a situation where you rent electronics (like drones, iPads, phones, POS Systems, etc.). You may have dozens or hundreds of the items in inventory, but when fulfilling an order, you want to know the specific item which you are providing to your Customer. It’s your way of knowing that if anything were to happen to the item while on rent, you can track back to which Customer had it last (for example, you notice the item is damaged after it has been returned to stock). An item that is tracked by a specific asset offers many additional insights that a quantity-tracked item does not, like the item’s:
This information is helpful when reviewing the key performance indicators of your rental business, but it can be an invaluable source of information should the worst situation arise: a lawsuit by a previous Customer claiming that the item was defective or not properly maintained prior to assigning it to a rental order.
Below are the Pros and Cons of Tracking Inventory by Quantity and by Specific Assets:
Tracking Inventory by Quantity:
Pros:
Cons:
Tracking Inventory by Specific Assets:
Pros:
Cons:
Both quantity tracking and asset tracking methods offer distinct advantages and challenges for your equipment rental business. The choice between the two depends on the nature of your inventory, the level of detail you require for reporting and decision-making, as well as your budget and resource constraints. For businesses dealing with high-value, critical assets, asset tracking can provide invaluable insights and protection. On the other hand, quantity tracking is more suitable for businesses managing large quantities of non-specialized items where individual item history and performance are of lesser importance.
Ultimately, adopting a comprehensive inventory management system that accommodates both tracking methods can be a viable solution for businesses seeking to optimize efficiency, profitability, and customer satisfaction. By understanding the pros and cons of each approach, you can make an informed decision and tailor your inventory management strategy to suit your specific rental business needs.
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