4 Reasons Spreadsheets Make Inventory Stink

Just the thought of constantly updating inventory in a spreadsheet is enough to give one psychosomatic carpal tunnel syndrome. Why do companies endure this manual entry nightmare?

It makes sense at the start. Microsoft Excel is inexpensive and easy to use and so universal that a small business can find any number of templates and formulas to hit the ground running from its first sale. (Pen and paper is also accessible, so it’s no wonder that nearly half of small businesses in the US fall into the Excel/pen-and-ledger category, if they track inventory at all).

This may work for a one-person band selling a handful of SKUs, but as time passes and sales increase, accurate inventory tracking becomes a huge chore, especially when reconciling with accounting. And forget about extracting useable data for demand planning.

Growing companies at some point will find themselves outgrowing their spreadsheets. This is a common theme we hear among Cin7 customers.

“I’m quite handy with a spreadsheet, being a banker, so it was a pretty sophisticated spreadsheet, but at the end of the day it was just a spreadsheet,” Chris Durney, a co-founder of ginger beer brew brand Ranga, told Cin7 recently. “It was pretty clunky and it was hard to reconcile everything. Being able to keep track of stock and purchase orders and notices was very difficult and we actually came a bit stuck a couple of times. We ended up underestimating our expenses, which put us on a back foot.”

Unlike Ranga, a lot of small businesses don’t take control of their inventory quick enough. The US Small Business Administration says 50% of new companies fail in the first year; 95% destruct within the first five years, and the reason is commonly laid at the feet of poor inventory management, after lack of experience, insufficient capital and poor location.

So, what’s so bad about manual tracking in spreadsheets for inventory management?

Manual data entry is error-prone. The more times you have to key data into a spreadsheet and then into an accounting program, the more you have to type, and even those of us who type for a living will make an error every couple hundred keystrokes or so. Errors can turn into inaccurate inventory, which can lead to overselling, missed sales, and increased inventory carrying costs.

You can be a lot more productive doing almost anything other than data entry. If you’re not using a barcode scanner to enter inventory, you’ll be forever conducting cycle counts, entering a slew of skus. If you’re not using an inventory system that’s integrated to your accounting system, you’ll be spending even more time in repetitive, mind numbing work, moving data from your spreadsheet to your accounting software.

It’s hard to mine spreadsheets for useful data. Inventory management data are integral to the big picture, particularly for demand planning. Mining data from reams of spreadsheets to create reports can be costly and time consuming.

Manually entering inventory means you have no idea what’s going on right now. If you’re typing, you’re not seeing the whole picture of your supply chain in realtime. You might be recording a sale in your spreadsheet without knowing that you’ve run out of inventory because an employee sold the last widget at a POS, or a customer scooped it up online.

Click to find out how Cin7 can break you out of your spreadsheet prison.