Why Using an Inventory Excel Sheet is Inefficient for Small Manufacturers
“To err is human.” Alexander Pope
We all make mistakes, it’s what makes us human. It’s just sometimes you feel like you can’t afford a mistake, especially when your business’ growth depends on it.
Researchers found that on average we will make one mistake every 300 characters whilst inputting data into spreadsheets. Wow, that’s a lot!
If you’re a small business manufacturer who uses an inventory Excel sheet for inventory management, statistically speaking, this will eventually become an issue as you grow.
For example, lets imagine you want to calculate your reorder point, but there’s a pesky typo or a simple miscalculation leading you astray with wrong information. This in turn leads you to incorrectly ordering the wrong level of safety stock.
In the long run, this is going to cost you, and your business. Not to mention frustrate your employees and, worst of all, your customers.
You might be thinking to yourself “I’ve been doing my inventory through spreadsheets and I haven’t noticed any problems.” congrats, but it’s a ticking time-bomb.
Let’s delve into the issues that will eventually plague your business if you continue to use an Excel sheet for inventory management.
Inventory Management Using Excel
Maybe you’ve figured out how to maintain store inventory in Excel and haven’t noticed any problems.
let's look at the dangers lurking beneath one of the most used programs by businesses.
1. The Errors
A quote from the Journal of End User Computing's best explains the issues with spreadsheets: “88% of the 113 spreadsheets audited in 7 studies that reported the number of spreadsheets audited have contained errors.”
Spreadsheets are the business equivalent to a spaghetti strainer, except the water in this instance is potentially the company's revenue.
2. The Ol’ Ball and Chain. Literally
Having multiple employees' access and edit your Excel documents is certainly not the most efficient way of organizing your business. The most likely method of data keeping is to have one person chained to the spreadsheet.
This will mean most of their time will be lost to data entry when it could be utilized elsewhere.
Another issue with this is that your entire business is dependent on one person.
Here’s a horror story, how about only they can translate the information and then they leave the business? Uh-oh.
3. Resource Expensive
You’re potentially losing money because of errors which has led to dead stock being stored or duplicate orders being made from multiple employees.
Every entry must be manually inputted, which can be cumbersome for one or more employees. This burns into time that could be better spent elsewhere in your business.
4. Inefficient at Tracking Data
Let’s start with an example, you get an order for a customized product and after a quick scan of your bill of materials (BOM) you notice this product requires several different types of material, all of which must be manually entered to Excel to accurately track what materials you have or need to order. Depending on your product, you may have to make more granule entries when it comes to inventory planning which can be tedious and prone to mistakes.
5. Will Stunt Your Growth
Honestly, up until a certain point in your company's growth, Excel will probably serve you well.
However, when more orders, employees and maybe even different locations become factors, it will increasingly be more difficult to cope with the complexity of coordinating a business at larger scales.
Hence why most corporations will have their own intranet modules to cope with the amount of information that needs to be cataloged. An alternative which can be very expensive.
Are you getting cold feet? We’re not surprised.
At least by currently handling your inventory management with Excel spreadsheets you’ll be a step ahead of 43% of other small businesses who do not track their inventory at all. Crazy!
But, it’s one thing to be ahead of your competitors. The trick is maximizing your efficiency.
Unfortunately, managing your inventory via Excel only has short term benefits and might even become damaging to your business in the future as the company becomes bigger and more complex with the amount of inventory passing through.
If you’re a small business manufacturer who has noticed the similarities with issues mentioned above or possibly, you’re just on the verge of expanding and wish to upgrade your inventory management methods to avoid future complications, maybe it's time for you to upgrade to a cloud-based inventory manager.
Get Your Head in the Clouds and Out of the Excel Sheets
In the past, this expression might have meant to be disconnected from reality, but now it has taken on an entirely different meaning.
Unshackle yourself from those pesky and never-ending spreadsheets to focus on the manufacturing of your products. It’s the reason you got into this in the first place.
Here are five reasons why using a cloud-based inventory management software might be more beneficial for you, as opposed to sticking with Excel.
1. Access Inventory Dashboards Anywhere, Anytime
From a desktop, tablet or mobile phone. From location or the comfort of your home.
Monitor or edit inventory levels whenever you or an employee need to. You’re only limited by your connectivity.
2. Improved Integration
You can link up your e-Commerce and Accounting services to your inventory management software.
This will mean any sale orders placed through, for example, Shopify will appear in your software as a notification which means you can speed up your production to get the order fulfilled as soon as possible.
3. Visually Pleasing Production Planning
A streamlined and easy to read interface where you can calculate your company's production and compacity capabilities to maximize the availability of your resources.
Along with color coded features which notify you of stock and material availability.
4. Real-time Inventory Management
Material or products shipped out to a customer is automatically considered and removed from your inventory.
The only thing that is required from you is to set up the BOM of your products so when an order comes in, the software will alert you if your stock levels are too low or not.
5. All from One Piece of Software
You won't have to slog through multiple spreadsheets or have multiple tabs open. All your inventory needs can be accessed from one place with no fuss.
With this you’ll be being able to receive sale orders, track orders, maintain stock levels, establish reorder points and even complete production scheduling.
All this by just opening one program.
If you’re familiar with Excel, we can imagine you are already dreaming about how much more user-friendly and efficient this software can be.
It’s Time to Benefit from Cloud-Based Inventory Management
The faster you transition to a cloud-based inventory management software, the quicker you will reap the benefits.
Continuing with Excel as a method of inventory management is unsustainable. It’s too cumbersome and arguably even an outdated method of managing inventory.
The only reason it’s still so popular is that it's just used by everyone.
Here’s a scenario that might happen when using Excel. Your reorder point calculations will be dependent on up-to-date and accurate inventory evaluations. But unfortunately, a last-minute rush has meant no one has had time to update stock levels and now you’re having to order material and delay the shipping of customers products making them unhappy with your service.
Do you really need that extra stress in your life?
One thing is for sure, if you ditch the inventory Excel sheet for an inventory management system with an easy-to-use interface, autosaving features and live inventory updates, life becomes a whole lot easier once you start using a cloud-based software for your business.
Using Excel might be okay now. But eventually it will become a burden when your business begins to grow.
Just like the olden but golden bit of advice we’ve all received at some point in our childhoods. To grow, you must rip the band aid off.