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3 Ways Excel Inventory Management Hurts Your Business

09 Sep, 2017 | Business Tips

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xExcel inventory management is good at the start but doesn’t end welExcel inventory management is good at the start but doesn’t end well.

Excel inventory management is good at the start but doesn’t end well.

Excel inventory management is good for one thing:

Running a small business with little growth.

If you’re just starting out or maintaining a small business without trying to expand it, then excel inventory tracking would work fine for you.

If you run a simple 1-4 person operation with little inventory and only 1-2 people inputting inventory information, an excel inventory system will give you what you need.

But if you’re trying to grow your business year after year, release new and exciting products, or expand into new markets and countries, then you’ll need a far more robust supply chain management (SCM) software.

Without a system that can handle increasingly complex orders, purchases, and stocktakes, you’re going to experience serious issues.

Problems with Excel Inventory Management


In a study of errors in 25 sample spreadsheets, Stephen Powell from the Tuck Business School at Dartmouth College found that 15 workbooks contained a total of 117 errors.

While 40% of those errors had little impact on the businesses studied, 7 errors caused massive losses of $4 million to $110 million, according to the researchers’ estimates.

Mistakes are easy to make, especially if you’re working with various spreadsheets and multiple people are manually inputting or copying information.

But sometimes the program itself is to blame for mistakes.

For example, a study of leading genomics journals revealed that Excel’s automatic functions were changing the names of genomes without the scientists’ knowledge.

The study revealed that one-fifth of papers with Excel gene lists contain erroneous gene name conversions.

This means Excel itself can cause errors in your reporting, and it can enhance the errors that humans naturally commit.

Lack of Real-Time Reporting

A lack of real-time inventory reports means that you are constantly behind in your inventory tracking.

Stock is being purchased and received, inventory is being sold and shipped, and your numbers haven’t been updated since yesterday.

If you think you have enough stock to cover a sudden spike in sales but find out you don’t, you lose customers.

If your assistant manager forgets a crucial part of your stocktaking process – like updating your data – and today is when you typically make purchase orders, you may order too much and run into the problem of obsolete stock or order too little and experience stockouts.

Even if you can update inventory information regularly every day, it will never be as instant or reliable as a cloud-based inventory management system.

Difficult to Scale

One of the primary reasons for keeping detailed reports is to generate accurate and useful business intelligence (BI).

To accurately forecast the future, you need to gather correct information in the present. Excel inventory management is subpar precisely because it is imprecise in organizing data due to its own flaws, and the errors caused by its users.

While Excel and Microsoft Office may offer BI tools, it requires you to learn how to use those tools and input the data without making mistakes.

According to “A Pilot Study Exploring Spreadsheet Risk in Scientific Research,” most spreadsheet errors don’t arise from mistakes in programming the spreadsheet – they arise from the misapplication of programming logic which is a result of most spreadsheet users having no formal training.

You’re an expert in what you sell, not in using Excel. Because you – like most users – aren’t an expert, you’re going to misuse or ineffectively use the program, leading to unseen errors and costly mistakes.

What’s the Alternative to an Excel Inventory System?

A program that automates the calculation of data and the generation of reports.

A system that keeps an up-to-the-minute account of your inventory.

Software that integrates with your eCommerce and accounting apps seamlessly.

In short:

DEAR inventory.

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