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Managing Inventory in Excel can Result in Disaster
Is Excel truly meeting your inventory management needs? Small businesses, with a small staff and a small amount of inventory, may successfully use Excel. However, as a business grows, the limitations of Excel become very real obstacles. Moving to a more efficient, cost effective inventory management system eliminates the negative effects of inaccurate inventory counts. These widespread, negative effects impact your profit and your customers’ experience. There are two, broad Excel limitations: data entry inaccuracy and forecasting inadequacy.
Keeping track of a large inventory in Excel increases the probability of data entry errors, especially if your inventory moves frequently from location to location.
You or your staff will waste more time verifying not only your inventory workbook totals but whether the inventory details (item, location, etc.) truly reflect what’s in your warehouse.
Additionally, if your inventory is currently tracked within a single Excel workbook, you are limited to one individual accessing and updating at a time. The likelihood that same individual is the one actually adding/removing/moving inventory is slim. Multiple individuals working with your inventory, when only one can edit your workbook at a time, only increases the opportunity for errors.
Case Study:
Wasp’s Inventory Control, an
inventory management solution built specifically for small to mid-sized businesses, solved this problem for Tommy Gugliotta, Operations Manager for Professional Cooling & Control Systems, Inc. According to Gugliotta, “We no longer are subject to missing inventory and have significantly cut down the amount of time spent looking for items. Now, it only takes one or two seconds to look up a certain part, versus scouring through pages and pages of spreadsheets.”
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Forecasting Inability Costs Money
At any time, your Excel workbook could be out-of-sync with your actual inventory count. If you haven’t updated inventory numbers, what you see in Excel may not reflect what you actually have on-hand.
Forecasters, such as supply and demand analysts or inventory planners, decide on the quantity of inventory to purchase with the information they have available. This information, which should include current inventory levels and the resulting decisions, can sometimes result in an overage, especially if the information is inaccurate.
Not only is money wasted when you have too much of a specific item; the problem is only compounded when you
don’t know you have too much. Effective inventory management requires you to know how much of a certain item you need on-hand at any given time – not just seasonally. The ability to forecast inventory need is essential to meeting your customers’ demands.
Case Study:
Bryan Bibeau, a senior air quality instrument specialist for Ambient Monitoring group, invested in Inventory Control and saved his company money quickly. Additionally, he was able to stream-line his business processes. “The product paid for itself in three weeks. Not only did I save money, I’m able to make more money without incurring the fixed costs of additional technicians. As a business owner, I’m pleased to have found a solution that positively impacts both my bottom and top lines.”
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How Do You Track Inventory?
Your answer to this question of
how determines whether your business is earning or losing money because of your inventory tracking method. How your business
accounts for inventory makes a difference in how it spends and makes money. If you fail to order enough inventory, your business risks losing customers. On the other hand, if you order too much inventory, you may have to discount inventories to get products out the door, a money-losing proposition.
So, why hesitate moving to something other than Excel? Analyze how much money you’re losing due to loss of sales or due to loss of actual inventory, and then compare that loss to the cost of investing in an inventory management solution. When you complete the analysis, you will have, on paper, the very reason you need to move away from Excel. Remember, administrative errors, such as errors in receiving processes or accounting errors, account for 15.3 percent of
inventory loss.
Continuing to use Excel to manage your growing business (just because it’s easy, convenient, and cost effective) will only cost you more money in the long-term. Individuals who have made the transition from Excel to an inventory management solution, like Wasp’s
Inventory Control solution, have seen a quick return on the investment.
- Have you outgrown Excel to track your inventory? Tell us in the comments.
Case Study:
Paul Huffaker, Vice-President of Racesource, adopted Wasp’s
Inventory Control solution to solve this problem. “Maintaining an accurate inventory count in Excel was time consuming and error ridden. Often I would reorder or manufacture parts I already had simply because I didn’t know I had them, which was an unnecessary cost.”
Is Excel truly meeting your inventory management needs? Small businesses, with a small staff and a small amount of inventory, may successfully use Excel. However, as a business grows, the limitations of Excel become very real obstacles. Moving to a more efficient, cost effective inventory management system eliminates the negative effects of inaccurate inventory counts. These widespread, negative effects impact your profit and your customers’ experience. There are two, broad Excel limitations: data entry inaccuracy and forecasting inadequacy.
