Mid-sized businesses know they have to carefully allocate resources to make sure their business can turn a profit and yet many aren’t sure if investing in inventory management software is the best way to use their capital. According to the State of Small Business Report, 46% of SMB’s with 11-500 employees don’t currently track inventory or use a manual inventory process such as tracking in Excel.
However, if you think inventory management isn’t a crucial investment, heed the advice of Marcus Lemonis, the star of CNBC’s The Profit, as he says, “If you have inventory just sitting around for years, it’s just like burning money.” And keep in mind that failure to properly track inventory can lead to lost orders, delayed orders, and even potentially losing customers.
Administrative errors, such as errors in receiving processes or accounting errors, account for 15.3 percent of inventory loss. Excel may have been a logical solution for inventory management when you first started your small business, but as you mature into a mid-sized business with multiple locations and warehouses, you need more sophisticated methods for tracking inventory and keeping your company growth on track.
Why Excel isn’t helping you excel at Inventory Management
Manual data entry will lead to mistakes. Studies show that a proficient data entry operator will make one error for every 300 characters. If you’re assigning a 12-digit UPC code to your inventory that means you’ll have an error in 1 out of every 25 manually entered codes – which will mean big problems for businesses that stock hundreds or thousands of products. And when you combine data entry errors with the inventory counting errors common in Excel-based systems, your accuracy takes another hit. The impact is really felt when it comes time for year-end inventory audits, these inaccuracies will lead to serious inventory write-offs.
Inability to comply with federal regulations for supply chain visibility. Your fast-growing small business is working across state lines and across the nation. This means you have to be ready to provide important product information about recalls, items lost in transit, or defects when needed. When using a spreadsheet-based system, it is almost impossible to get an end-to-end view of transactions across your enterprise, and especially your supply chain. Specific requests may take days or weeks for a user to manually track crucial product details.
Keeping track of supplies at various locations is difficult and stressful. Tracking a variety of items with different stock levels across multiple locations is a difficult endeavor when using spreadsheets. Excel limits the ability of multiple users to edit current stock levels – only one individual can update the master spreadsheet at a time. Additionally, there isn’t any way to know when orders are due for receipt or when customer orders are due for shipment. If one location has difficulty maintaining accurate numbers within a spreadsheet, managing stock counts across more than one location makes accuracy nearly impossible. An automated inventory system allows the tracking of the same item across multiple locations, all while monitoring orders (in & out) for that same item.
Wasted time and unhappy employees. Excel-based inventory tracking systems require employees to manually count inventory items and enter the data into a spreadsheet. Often, the process also involves using a printed count sheet, since stock is generally stored at various locations and not just the office. After data is recorded on a count sheet, it must then be transcribed into the spreadsheet. This duplicated effort wastes valuable time and can increase employee stress – time is money, and happier employees are more productive.
Inability to meet demand. Using an Excel-based system, tracking inventory turns and seasonality can be virtually impossible; which can lead to empty shelves and disappointed customers or excess inventory of items that just aren’t selling. Companies that switch from Excel to an automated inventory tracking system are able to cut their inventory levels in half. With less money tied up in your inventory, you can devote resources to other projects.
How to ditch Excel and accelerate your Inventory Management
Companies that make the switch from Excel to inventory management systems see great changes in their operations and a quick return on the investment. The first step is to choose the right software for your company and its needs. Then it is just a matter of implementing the system and reaping the rewards.
Lee Letawsky, purchaser for Precision Drilling Trust, explained how inventory control software helped his company. “If you’re not in control of your inventory, you don’t know what you have. There’s so much money tied up in equipment, you really need to know and track your inventory. This system has saved tens of thousands of dollars, improved the repair process and made my job much more enjoyable. It’s easily paid for itself in less than six months.”
Related Article: What is Inventory Management Software?
As your company transitions from small to mid-sized, choosing an inventory management system is one of the first steps you can take to streamline inventory processes, which will make both your employees and your customers happy. Stop your manual tracking process, and excel with an automated inventory system – you will accelerate your business’ growth in both profit and revenue.