How you manage inventory and execute inventory control in your SME can mean the difference between a profit and a loss. If you find yourself with inadequate stock levels you will fail to meet customer demand, leaving your business at risk of losing sales and potentially customers. Any excess inventory stock costs money to carry and will also lead to waste and obsolescence.
When first starting your SME business, spreadsheet software probably met your inventory needs. If, like most SMEs you had a small staff and relatively easy to manage inventory stock.
What you get from using spreadsheets
Using spreadsheets to track inventory is relatively easy, most people already know the basic functions of spreadsheets and how to use them. Spreadsheet templates are pre-built into software suites that you most likely, already own, making them a practical solution that is cost effective for a start-up SME.
However, tracking large quantities of inventory items in spreadsheets increases the chance of data entry errors. Staff are required to spend considerable time updating and validating the stock quantities in these workbooks.
Spreadsheet software provides a number of integrated tools and features including the ability to sort by product type, size, colour or purchase date. The functionality of formulas in spreadsheet programmes allows you to automatically calculate information for totals’ figures or to calculate taxation percentages.
The limitations of using spreadsheets
Spreadsheets can start out as a cost-effective way for new SMEs but as your business grows, the limitations of using spreadsheets for inventory control will prove more and more challenging to overcome. Spreadsheets don’t have the capacity to grow with your business and become both ineffective and inefficient.
Using an inventory spreadsheet to monitor inventory stock levels is a largely manual process. The spreadsheet won’t automatically update whenever a sale or purchase is made. This means if inventory numbers have not been continually updated the spreadsheet may not reflect what inventory stock you have on-hand.
Updating stock movements is difficult when user access is limited to only one person at a time having the ability to edit the information. If you have multiple personnel moving inventory, you once again increase the likelihood of errors.
The use of an inventory spreadsheet to track inflows and outflows of inventory provides you with details of inventory stock quantities, batch numbers, descriptions, purchase price and reorder levels. It doesn’t however automatically alert you to when stock has reached its reorder minimum or consider delivery lead times.
What you are missing using spreadsheets
The administration and tracking of inventory control activities is a manual task. If you continue to use spreadsheets for your inventory control then you are missing out on the holistic, accurate view of inventory stock that alternate online inventory management solutions provide.
Spreadsheets lack real-time inventory data, so at any given time, the inventory workbooks could be out of sync with the actual inventory count. If you’re not in control of your inventory, you won’t know what inventory stock you have. By ditching the spreadsheets and investing in integrated software systems you can track stock as it moves into, through and out of the business.
Online inventory management systems will quickly analyse historical data. This is important because effective inventory control requires you to know how much of a certain product you need on-hand during different seasons. The forecasting ability of online inventory management software is integral to meeting your customers’ demands.
Maintaining an accurate inventory count using spreadsheets is both time-consuming and error-ridden. Online inventory management systems can save thousands of dollars and make the job of inventory control far more efficient and cost-effective.
Many SMEs that have made the transition from spreadsheets to an online inventory management solution report that they have experienced a quick return on the investment.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.