Case Studies

Why you shouldn’t rely on spreadsheets for your inventory planning

When you’re a new e-commerce retail business with a burgeoning product range, it makes sense that you’d log your inventory into a spreadsheet. After all, at this early stage there’s likely a manageable order volume; maybe you’re repurchasing with less frequency, and fewer team members are required to contribute to inventory tasks. But the fact is, most companies want to grow, and as your business scales, product range expands and order volume rises, using a spreadsheet for your increasingly complex inventory activity is highly likely to land you in hot water.

Here are 5 major drawbacks to a spreadsheet-based inventory which proves it simply isn’t scalable when it comes to inventory planning.

1. High potential for human error

When a spreadsheet becomes mammoth and complex, as is common with inventory planning, the staff members who manage and manipulate the data need to be highly knowledgeable in how everything works. Not only is it unrealistic to put it on one or two individuals to ensure total accuracy across every inventory data set; inviting the uninitiated to contribute to the spreadsheet becomes a burdensome training scenario, and human error becomes increasingly commonplace. Quite simply, so much data shouldn’t be managed by humans alone; when a business scales beyond manual tasks, automation is the only way to go.

2. There are too many factors to consider when sales forecasting

When it comes to accurately predicting sales demand, it’s nearly impossible to design a spreadsheet that factors in every variable that could impact the figures. There are risk factors to consider, safety stock calculations, periods of comparable sales history, promotions and seasonality, and ever-changing supplier lead times and market shifts – all of which will affect the optimal purchase order amount. This requires advanced calculations that go far beyond a simple spreadsheet formula. Were you to manually work it out, multiple spreadsheets would be needed, only heightening the likelihood of mismatched data and errors.

3. Disconnected systems mean higher inaccuracies

On that same note, when multiple spreadsheets exist to cover various inventory metrics, the chance of outdated or mismatched data is dangerously high. The labour-intensive job of ensuring every spreadsheet is matched and reflective of current inventory levels is almost impossible to do manually. An accurate, reliable inventory should be integrated with all sales channels, ordering systems and warehouses, and should update in real-time from one central source of truth. Multiple spreadsheets only means multiple places for mistakes to be made, resulting in lost revenue through stockouts, inaccurate forecasting and overstock.

4. It doesn’t automatically update or notify

A spreadsheet is simply a static document that carries data – it’s unable to automatically update to reflect activity elsewhere in the business, give warning notifications when your best-sellers are about to go out-of-stock, or use your historical sales information to offer optimal replenishment suggestions. With intelligent inventory software such as Inventory Planner, you’ll be notified of exactly what you should purchase next and when – enabling you to keep optimal stock levels that keep your cash flow moving. With a spreadsheet, there is little in the way of support to make those kinds of data-driven decisions.

5. It takes forever 

It almost goes without saying, but manually entering everything from your SKUs, warehouse and supplier information into a spreadsheet, then calculating which stock is linked to potential revenue gains and losses, forecasting sales demand and creating purchase orders is a hugely time-consuming experience. It takes hours of staff power to pore over spreadsheets each day, which could be better spent on product expansion and innovation. Using a dynamic, intelligent inventory planning tool such as Inventory Planner, you’ll receive dynamic, data-driven insights using hundreds of custom metrics to suit your business – and won’t need to sweat over manual spreadsheet calculations again.

Book a 14-day free trial with Inventory Planner to see how it can transform your business today.