Is your Inventory Management Done by a Spreadsheet?

Most of us realize that spreadsheets, while popular, are fraught with potential errors. As business requirements grow, customer expectations increase, and the supply chain becomes more complex, using a spreadsheet for inventory management becomes risky. The potential for multiple data errors – from input to formulas - will impact your efficiency and your bottom line.

There are a number of potential problems that could occur to your business when you allow one (or a team) of people to create, adjust, and manage your inventory spreadsheet/s. Ultimately you also place an increasingly complex risk upon a person who more than likely does NOT want that risk.

While we know the data and information that you get from this spreadsheet are necessary to running your business, it is also taking away productivity from that person (or team) that is responsible for ensuring that the data contained is accurate.

Review the inventory management process

Start with where the data is coming from and how the data is being inputted and updated. The accuracy of the information going into the spreadsheet is critical to the output. When you begin to dig in you will uncover:

  • How the information is getting into the spreadsheet
  • Which people are responsible for data entry
  • If multiple spreadsheets are being linked together and creating silos of data
  • If you are changing the spreadsheet logic – things like rules and formulas in order to keep up to date with your changing needs
  • How much time it takes your team to validate that the information is accurate

Once you go through the steps above, you will likely discover how far removed the information you are counting on is from being “real-time.”

Effective inventory management requires an integrated ERP system. You might tell me that you have that perfect numbers/spreadsheet person that gets passionate about making sure “Your Spreadsheet” is accurate and complete. He or she may even look forward to data entry and validation days. However, as more complexity enters into the business cycle it increases the risk for mistakes. I am sure you’ve seen the (alarming) statistics on spreadsheet errors – so I won’t bore you with those here.

More importantly, if this person is a senior-level employee, at some point you have to begin to look at time and cost versus outcome. If a senior employee is spending 50% of his or her time patching together the data you need – well, just do the math. You’re probably ¾ of the way if not 100% of the way towards covering the cost of the right ERP/Inventory Management System based on their salary expenditure. The right ERP system will not eliminate their role in the company, but it will give them an opportunity to refocus efforts on other growth initiatives.

As a leader, you must also look at your continuation planning. What happens if this person gets tired of being bogged down in spreadsheets and takes a job with a competitor who uses a modern and efficient ERP system? How will you replace them? Onboarding a new employee is costly and time-consuming and the knowledge transfer will never be 100%.

We already know that millennials seeking careers in manufacturing and distribution WILL choose employers using modern business software, which has adopted automation best practices. It’s just that simple.

How do you do streamline Inventory Management?

First, sit down with your employee and/or team members and analyze what needs to be automated. While you’re at it, tie in the amount of time spent and the employee cost to the analysis. You will probably find that you can get a tremendous amount of ROI on simply allowing your employees to be productive doing other meaningful tasks associated with growing a stellar organization. Plug that future save into selecting the right ERP/Inventory Management system so they have a fully integrated solution and it’s a win-win.

Want to chat further about economic outcomes and how an ERP system can make your business more profitable? Connect with me or email joeh@em-powered.com.