5 Reasons Why Excel Inventory Management Won’t Scale
When you’re bringing your brand to market, Excel inventory management works: it’s easy to use, widely available, and inexpensive. But how far can it get you?
Understanding how to keep track of inventory in Excel is relatively easy: there is no implementation period, and you don’t need much training to figure out even some of the more complex formulas. However, as you continue to grow, the inventory management software in Excel will wind up costing you–literally.
Here at Stitch, we focus on giving high-growth brands the ability to scale. The importance of having an inventory management software that grows with your brand is a key factor in making the switch. The ability to maintain visibility into inventory analytics through dozens of different reports is imperative to a brand’s success.
Excel is not an inventory tracker: what inventory management Excel provides is not on par with updating dynamic information that flows through your sales channels. Inventory and order management systems are imperative to a growing brand, and here are five key reasons why transitioning to one makes financial sense:
1. Zero inventory tracking
Excel Inventory Management lacks the ability to track inventory in real-time which often translates to backorders and missed sales opportunities. This means that inventory management in Excel will not update inventory levels, and will not sync your sales channels accordingly.
When your customers are able to purchase items on backorders, they will be disappointed to learn that the item won’t be shipped to them either until you get the item back in stock, or at all. This negative customer interaction often results in expensive customer support hours spent fixing the problem and courtesy discounts and promotions that would not have otherwise been given.
Chances also are, this happens to more than one customer during that time.
With inventory management software like Stitch, you can set low-stock thresholds, safety stock levels, and ensure that you are never experiencing out-of-stocks, even during the busiest times of the year.
2. Inability to track historical data
When you are sending in purchase orders to replenish product, there are several data points that you’ll need to accrue accurate data. Historical data for evergreen items is an important component to maintain in your inventory as safety stock.
Understanding historical data is extremely limited in Excel inventory, and missing out on these otherwise easy sales due to out-of-stocks can be a huge loss to your brand.
As a consequence of poor inventory planning, customers receive a bad experience when items that you’re supposed to always have in stock are not, risking the loss of a returning customer, and missing out on first-time purchasers as well.
With the addition of inventory management software, historical data is automatically calculated and stored. Your “evergreen” items will remain in-stock, and you can pull numerous different reports based upon variant SKUs.
3. Difficulty tracking transferred stock
Inventory tracking in Excel can lead to a number of different errors. If you are transferring inventory from one location to another, your team will have to manually validate that move which is prone to error, and doesn’t take into account any extra costs that go into that move.
Brands wind up having issues when transferring inventory in Excel, since Excel inventory tracking does not support proper transfer orders, it cannot account for any line item differences that occur. This also results in improper accounting for inventory financials at year’s end.
An inventory management system acts as a central hub between your sales channels and fulfillment solutions, and is constantly syncing with your accounting software, to create an inventory accounting, such as Quickbooks inventory management or Xero inventory management. If you are transferring stock from one location to another, an inventory management system will ensure that each item has the correct financial information associated with it, and sync accordingly.
4. The necessity of staying competitive
The return-on-investment of an inventory management plays into more than what it might seem. “Small issues” like backorders result in missed sales which lead to time spent by customer service representative from your brand giving out additional discounts.
In order to stay competitive, your brand needs to be nimble and quick. The time spent working on manually adjusting workbooks in Excel is equivalent to the amount of money that employee is being paid. In short, errors due to these issues and more have ricocheting effects that can stunt your brand’s growth in the long- and short-term.
Inventory trackers in Excel are inaccurate as you scale, and it’s important to find a solution that fits your brand’s needs. Moving to inventory management software will serve your brand’s need to scale quickly.
At Stitch Labs, we’re built to grow alongside your brand and provide unique features to help you eliminate these time-consuming and error-prone tasks, allowing your brand to stay competitive by exploring new market opportunities and ideas.
5. Limited user access
When your employees are working on updating inventory and sales through Excel, you likely have a number of different workbooks with various users constantly in and out of the program at any given time. Excel restricts the number of users within a certain period of time. As your brand is updating important stock information, reconciling inventory, and accounting for financials, edits can go unsaved.
As you scale, the number of employees within your company will inevitably grow. Because Excel inventory management limits the number of users per workbook, your team can run into issues accessing the information needed to make purchasing decisions, track orders, and access financial information.
More than likely, the operations and financial teams will need to be working and editing on the same documents and inventory control spreadsheets at any given time, and inventory tracking in Excel restricts that.
If edits go unsaved, the likelihood of errors increases, which can lead to purchasing errors. Purchasing errors result in out-of-stocks (missed sales opportunities) or excess inventory (aging/dead inventory) which both contribute to lower profit margins.
By the time your brand has reached that point of growth, it’s time to retire Excel and use an inventory management system that allows an unlimited number of users, at no additional cost. From there, you will also be able to calculate what inventory to purchase when through sales velocity and robust reporting, saving you time and reducing errors associated with manual entry.