Excess inventory is a liability, even more so in the renewable or solar industry. We have...
5 Reasons Why Using Excel-based Inventory Management is Killing your Business
Every company strives to scale in an increasingly competitive, global economy. Hence, your inventory should be correct and aligned with supply and demand variations. However, companies persistently use outdated spreadsheets or Excel inventory management system!
Inventory is one of the company’s most valuable assets, and if managed inefficiently can have a significant impact on every element—from the customer, field users, to the boardroom.
For Instance, spreadsheets are commonly used across businesses of varying sizes to manage field inventory, and for a good reason: they allow anyone to perform ad hoc, custom analysis. But they end up employed frequently as a long-term solution rather than a temporary remedy, and their capabilities quickly get outgrown.
If your company relies on Excel or Google Sheets to manage inventory, chances are you are underperforming in areas of efficiency and profitability, even though you feel you are making progress!
That said, here are some key reasons why spreadsheets might be holding your inventory management back and why it may be time to replace Excel with an alternative.
Impractical and Time-consuming
You may think of spreadsheets as a perpetual inventory solution. However, your employees need to update inventory management spreadsheets manually and constantly. Employees spend more time adding, reviewing, and correcting data instead of working with insights to make effective decisions.
Spreadsheets can also create multiple versions of the truth, which can become hard to manage. It relies heavily reliant on manual input and more susceptible to human error. It becomes difficult to maintain real-time data, as you require a robust system in place to manage inventory changes, like updating shipments, use of material, destroying expired or obsolete products, and so on… all the time! This distracts your employees from value-added activities as they spend most of their time on admin tasks.
Manual Data Entry Results in Flawed Insights
Administrative errors such as data entry result in 15.3% of inventory loss for small to medium-sized businesses. These errors can also impact other areas of your business such as customer experience.
Because of limitations in Excel’s data import features, teams end up manually entering data. You can easily enter SKUs or quantities erroneously, and the incorrect amount may not stand out among hundreds of others. These errors can result in an incorrect analysis of data which may be hard to spot if the variations in data entry errors are small.
Without the ability to track, trace, and account for every inventory transaction moving through a company’s supply chain, inventory levels will become inaccurate, impacting operations and customer service.
Excel Inventory Management Causes Loss of Audit Trail
The enormous data that accumulates over time becomes a crucial aspect of inventory management software. Besides exposing your inventory to errors and flawed insights, you may also expose your company to potential fraud.
Key features such as user activity tracking or timestamps are not available in Excel and Google Sheets. It becomes difficult and almost impossible to trace products. It becomes a challenge in case a shipment needs to be recalled or when you are audited by authorities.
An effective inventory management software will allow you to establish an effective audit trail. For example, you can see when the data set was last updated and by whom, thus, boosting accountability and error prevention.
If you are serious about getting regulatory audits or securing funding, you should reconsider using spreadsheets for inventory management. Excel requires a manual intervention which makes it hard to manage and scale along with your business.
The Public Company Accounting Oversight Board (PCAOB) has guidelines for inventory audits, which may be difficult to implement with inventory management Excel or Google Sheets. The Internal Revenue Service (IRS) offers guidelines for the taxation of inventory that can affect audit procedures.
Without inventory audit, you have lesser chances with banks and investors. Worse, it may lead to massive losses like Barclays who bought unwanted assets because it was hidden in Excel. Or Fannie May who lost $1.1B because of spreadsheets.
The manual data entry and loss of audit trail can cause delays and issues during audits. These are features which are simply not present in tools such as Excel and Google Sheets.
Lack of Scalability
Inventory spreadsheets can be quite precise as they can perform calculations flawlessly. However, you need to constantly monitor and check calculation to ensure that crucial links are not broken or changed. This becomes a challenge as businesses grow and become more complex. Without automation, real-time inventory data is impossible to maintain.
These issues become even more complicated when you need to track inventory at multiple locations. Even more so when involved with a variety of processes that use different materials. With just an inventory management spreadsheet, maintaining these data entries would be next to impossible without external systems in place.
For industries that hold significant high-value stock such as Life Sciences & Healthcare, Solar & Renewables, Technology Enterprise Computing, consider changing Excel for an Alternative solution that can minimize risk while becoming a key enabler for growth.
Cloud-based Inventory Management Software: The Future of Inventory Management
Cloud-based inventory management solutions, unlike spreadsheets, can immediately provide an accurate running tally of goods. It allows you to centralize and track inventory data in real-time. With accurate data available, you can properly calculate reorder points, forecast trends, and source items.
A cloud-based inventory management software is efficient and effective. It shall help you manage inventory on the go while eliminating stock errors.
Cloud-based inventory management software recognizes the demand of today’s fast-paced world. Your inventory is accessible with cloud technology, becoming available to the most relevant people within your team or extended teams.
A smart cloud-based inventory management software allows users to access data remotely. You can access data whether in the office, warehouse or the field even in places without reliable internet. You can use Ventory as standalone or integrated with your existing ERP, WMS, and CRM. It is intuitive, quick to deploy, and simple to use.