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For any business, staying on top of inventory is extremely important. The data and information gathered are used to track profits and sales and make data-informed decisions.
For small businesses, in particular, the lack of or inadequate inventory software can affect your ability to keep up with demand when growth depends on it.
There comes a point in every business’ lifecycle where inventory management becomes a necessity. Solutions abound, but choosing the best one depends on your needs, budget, and available time.
Excel spreadsheets to track inventory are ideal if you have budget constraints and are in the early stages of your business.
While they require a bit more work than using apps and software, you can track and analyze your inventory just like you would within a program, albeit with a few more manual headaches.
But, once you’ve outgrown spreadsheets, what then?
First, we’ll cover how to use Excel. Second, we’ve prepared an inventory software checklist, especially for small business owners.
Microsoft Excel is one of the most versatile business tools available, and one that most of us already have. Utilizing it for inventory tracking and stock control is an easy way to cut costs, save time, and organize inventory … provided you’re willing to learn a few new tricks.
While not a perfect fit for growing SMEs — or anyone with more than a hundred different items in their inventory — Excel is excellent for startup businesses requiring inventory tracking, stock management, sales, data, ordering, and more than a dozen other functions.
If you know how to utilize Microsoft Excel correctly, you can generate a variety of inventory formulas that will help you keep track of stock, sales, orders, and more.
With built-in formulas, you can automatically tally sales figures, organize based on the number of sold products, or based on sales value to integrate with your accounting and profit/sales reports. Creating running inventory totals and sales data based on time periods is also possible.
One easy method for warehouses to incorporate Excel is using a barcode scanner to track incoming and outgoing shipments and packages to automatically log data into your Excel. This reduces human error but can be difficult and fairly technical to set up.
Excel inventory management can become overly complicated, if you don't organize it or if you have too many products.
Dedicated inventory tracking software will get you over hurdles created by spreadsheet Olympics. They can also help you grow your business by managing sales on multiple channels and in different international markets.
With it, you can wipe out problems like manual errors, double counting errors, and master day-to-day operational pain points, like matching or sorting through backorders.
Whether you’re managing inventory for your eCommerce store or tracking sales and assets across multiple consignment shops and marketplaces — like Amazon or eBay — inventory management software helps you to track and control your supply.
While inventory control software can seem intimidating at first, you can get into it fairly easily, especially if you start early.
Below you’ll find 10 categories with pointed questions specifically designed to help small business owners assess their inventory management needs before you start looking at solutions …
Briefly list and describe your top challenges with inventory management: for instance, keeping inventory accurate and up-to-date, tracking inventory and fulfillment across multiple locations, or deadstock, spoilage, and waste.
If you work with a team, be sure to share this checklist with them to get honest answers.
What special considerations matter most to managing your product inventory: spoilage, complex variants, bundles, seasonality, product customization, safety stock, large catalog, turn-over speed, etc.?
What elements of your supply chain must be controlled from within your inventory management system: reorder points, optimizing landed costs, purchase orders, pipeline inventory, sustainability, separate sourcing and production locations, etc.?
What sales channels do you currently use and what channels do you plan to expand to in the future: eCommerce, storefront, retail POS, marketplaces, mobile app, B2B wholesale (online or via sales team), native social commerce, online communities, third-party distributors (retail or other), etc.?
What additional tools and platforms will need to integrate: warehouses, customer relationship management (CRM), logistics providers, barcode scanners, credit card readers, accounting, bookkeeping, email software, product subscriptions, etc.?
How do you currently fulfill orders and what are the most uncomfortable pain points in that process: manual entry and editing, in-house, single location, multiple locations (owned or rented), logistics providers, domestic versus international, reverse logistics, etc.?
What data is most important to your business and where are you lacking clear, up-to-date insights for making decisions: cost of goods sold, customer histories, lifetime customer value, individual and aggregate performance of channels, locations, products, etc.?
Given your current lead time for production and historical sales, how far out do you need to forecast demand? Does seasonality — for either customers or suppliers — play a large role? Do you need to carefully monitor competitors as well?
How many employees will need access? Will you need different permission levels for different users? Will devices travel in and out of internet access? How should offline data entry be synced to avoid errors and duplication?
In addition to your accounting and book-keeping software, what inventory-related formulas and metrics do you need: turn-over, economic order quantity (EOQ), days inventory outstanding (DIO), reorder point, safety stock, etc.?