When was the last time you used a typewriter to produce a document? It was probably a long time ago, if at all. It’s a time consuming, manually intensive activity and lugging around a typewriter isn’t exactly the most convenient thing to do. With word processing applications widely used and available now, it wouldn’t make sense anymore to use archaic technology like the dear old typewriter.
There’s another technology which people are still using daily, even though there’s a newer solution available which offers huge increases in efficiencies, can reduce your time and costs and empowers better business decision making. But many businesses out there haven’t yet made the upgrade.
A lot of start-ups and small businesses begin their operations keeping track of their stock using good old spreadsheets. Spreadsheets one of those ubiquitous office tools that most people will have some familiarity with and be able to use at a basic level without too much training. But are spreadsheets the right tool to be managing your inventory? Or is it like trying to use a typewriter to manage all your business documents?
Spreadsheet Errors Can Be Costly
Inputting data manually – whether it’s on a typewriter or into Excel – is prone to human error. This can end up being time consuming to identify and fix errors, and also attracts a good deal of additional cost. Firstly, there’s the cost of someone’s time to fix the issues. This is time they could better be utilising to process more orders, get more stock turned around, or be working to provide a great customer experience.
Secondly, there’s potential cost to your customers. When you’re dealing with stock, it’s not looking at numbers on a piece of paper. It’s real, physical product that you either do or don’t have in your warehouse. Could there be anything worse for your customer than ordering an item they’re told is in stock, only to find out later that, due to an error, they’ll need to wait for more of that item to be ordered in and shipped out to you?
Reducing or eliminating manual entry errors can be done just by implementing an inventory management system with solid pick, pack, ship and receipting processes. Using regular or randomised spot checks can give you a quick and simple way to ensure your records are always accurate. Reduce the manual input, do the occasional check and you’ll reduce the chance of errors that could end up affecting your customers.
Formulas or Frustrations?
It’s true that using spreadsheets can be quick to pick up and use at a basic level. But as soon as you need to start managing inventory and lead time calculations, you’ll need to become familiar with a library of complex formulas. You’ll also want to consider making templates of your spreadsheets if you want to re-use them – whether it’s for separate locations, warehouses or just for keeping records of different reporting periods.
Sometimes what seems like a shortcut can lead to a long journey in the end. Especially when you want to get everyone using your spreadsheets the same way, with the same formulas and following the same processes. What initially seems like an easy tool for recording inventory information can end up costing a lot of everyone’s time, which in the end, is a cost to your business.
One Source of Truth
Data integrity, or lack of it, can cause major problems for any business. Often, businesses who are using spreadsheets for stock tracking will save those spreadsheets locally on their desktops or laptops. When someone else needs to make an update, it’s usually emailed or put on a USB drive to transfer it from one computer to the other. This almost always causes splintered data.
Multiple people work on multiple copies of the same spreadsheet, making their own changes and causing data chaos along the way. Are everyone’s changes accurate? And are they up to date? Trying to remember who performed the last update or even checking whose version is accurate can get complicated very quickly.
Cloud based inventory management systems like NetSuite allow your employees to work from the one, central source of truth and see everyone’s updates and changes in real-time. There’s no confusion about what is or isn’t accurate or which data is the most recent. Everyone works from one data set, which is always up to date.
There’s also no confusion about who has made each change. Each action made to your inventory is automatically tracked with full reporting available on every single field of data that’s changed, by who and at exactly what time.
Alerts & Automation
No matter how many spreadsheet formulas you get the hang of, you still won’t be able to receive automatic stock level alerts in real-time, set automate re-ordering points or see intelligent stock forecasting information. That’s because spreadsheets simply weren’t designed for these types of advanced inventory management functions.
This is where inventory management software gives you so much more. Using a cloud based inventory management system such as NetSuite, you’ll be able to leverage intelligent alerts and automation, and have real-time KPIs and dashboards to provide concise snapshots of your warehouse and inventory position. You can set up automatic re-order points based on your desired stock levels to ensure you’re never short of stock. You can get intelligent data on inventory demand fluctuations and trend reporting that will help you plan your stock purchasing better and reduce wastage. And by matching your purchasing to demand, you’ll reduce the amount of stock obsolescence and write-offs due to slow moving and unsellable stock.
The Pay Off
Having the right tools to manage your inventory more effectively can mean the difference between being highly profitable or struggling with cashflow. Making an investment in inventory management software that’s designed to reduce manual input, provide the business intelligence you need to make better decisions and increase your overall profitability can pay off sooner than you think.
So is it time to retire the typewriter and invest in the latest technology to continue building your business successfully? If you’ve recognised some of the difficulties with using spreadsheets discussed in this article, why not get in touch to talk about the benefits of cloud computing like a NetSuite ERP solution which could be helping your business streamline your processes, make better business decisions and grow faster.
If you’re after more ideas on how to reduce your operational costs, manage your warehouse more efficiently and increase your profit, also check out our eBook – The Ultimate Guide to Inventory Management.