We’ve all been there: you’re just starting your business and you need to keep track of your inventory stock. You don’t need anything fancy, it’s not like you have a lot of transactions to monitor, you just need a way to record stock flowing in and out of your store. So you turn to Microsoft Excel, or Google Sheets, or Numbers, or LibreOffice Calc, or whatever other spreadsheet software you’ve loaded onto your computer sometime in the recent past. You take a couple of hours, set up a spreadsheet to manage your inventory stock, do a stocktake, voila! You’re all sorted.
Spreadsheet programs are an easy solution for small-scale inventory management. They’re good at recording basics like stock levels, stock arriving, stock leaving – they might even come with templates to help you to make all this data more intelligible to you and your employees. They’re relatively simple to use; if you’re unfamiliar with how they work, you can find all kinds of tutorials online that explain even the most obtuse of equations and processes your program can pull off. They also don’t ask you to come up with the cash to meet their exorbitant prices or subscription fees.
Spreadsheets may be a good fit for small operations, but you also want your business to grow, right? When your business starts growing, the volume of stock flowing through your inventory is going to grow with it. Suddenly, that easy inventory management solution is creating its own set of problems.
Here’s the problem: Unlike Online Inventory Management, Excel doesn’t scale up
The same goes for all the other spreadsheet programs. Excel stops being an efficient solution as your operation gets bigger and your inventory stock levels increase. This is because Excel isn’t automated: you need to manually update Excel every time stock moves in or out of your inventory. As higher volumes of stock flow through your inventory, managing your inventory stock through Excel consumes more time and more brain space. These problems are compounded if you diversify your inventory, meaning you have to track more discrete lines of stock.
The more things you have to track and the more places you have to pay attention to, the greater the likelihood of mistakes. Because Excel doesn’t update in real time, one person has to update the document whenever stock moves in or out of your business’ inventory – and it has to be one person because Excel doesn’t allow multiple people to access a document at the same time. Other spreadsheet programs like Google Sheets do, but there’s no way of guaranteeing that the multiple people entering figures into the spreadsheet are all correctly entering their inventory data.
To make Excel work in a large business with large volumes of stock flowing in and out, you’d need to have:
- One person (no more) sitting at the loading bay to the warehouse;
- Stopping each order coming in and doing a quick stocktake of the stock coming in;
- Stopping each order leaving the warehouse and doing a quick stocktake of the stock leaving;
- Entering that stock into the Excel spreadsheet; and
- Saving that data and distributing a report every time it changes.
It should be obvious by this point that managing your inventory with Excel isn’t sustainable: it’s time-consuming, demanding on your employees and prone to human error. But if it isn’t, if you still think you can pull this off – what happens if you add another location and if you have to track inventory flowing in and out of that location? What happens when it’s physically impossible for you to have one person in two places at once? With online inventory management, this is an easy problem to solve.
All of this eats into your profits. The more mistakes are made, the more likely you are to run out of stock you need for your customers or you are to overload on stock you can’t move. Programs like Excel don’t come with any tools necessary to analyse historical data, either, meaning it will be harder for you to make decisions about what to order when based on seasonal data.
Spreadsheets might look like an appealing, low-cost way to manage your inventory when you start out – they might even work for your business for a little while. But as your business grows, the costs are going to get bigger; it’s better to consider options like online inventory management than it is to stubbornly stick to spreadsheets.
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.