Three Reasons Why Inventory Spreadsheets Hinder The Growth of Your Business
Like most businesses, your operations probably started small.
Small enough that it didn’t warrant using inventory management software because you had the time and flexibility to track inventory on spreadsheets.
And you wouldn’t be alone. 43% of businesses with 11-500 employees do not track their inventory or use a manual process like spreadsheets.
Source: State of Small Business, Wasp Barcode Technologies
Why? Because at the start of your business, you may not be thinking about expanding sales channels, warehouse space, distribution, and securing preferred shipping rates. Your primary concern is on gathering the resources you need to get your initial orders out of the door.
This lean, shoestring management also means the tools used to order, fulfill, and ship your products were selected based on cost efficiency and ease of use. One of the most common tools to fit both of these qualities are spreadsheets, and many business owners opt to use them to track inventory.
43% of businesses with 11-500 employees do not track their inventory or use a manual process like spreadsheets.
As your company grows, however, those tools quickly become outdated and limiting.
If you want to experience long-term growth, you need to focus on automating your supply chain.
This includes developing a strategy and structure to automatically track sales channel inventory, warehouse space, distribution, and preferred shipping rates.
The earlier you incorporate automation into your business, the more ingrained it’ll be in your operations. One of the essential tools for automating inventory is inventory management software.
If you want to scale your business successfully, it's time to break free of the well-worn rows, columns, and cells of spreadsheets.
Shortcomings of Inventory Spreadsheets
Now, we're not here to disparage spreadsheets.
They are a useful tool for helping companies - particularly those in early startup mode with limited resources - complete simple financial or management tasks.
These tasks include developing straightforward budgets, sorting through uncomplicated data sets, manually tracking inventory, or producing basic charts and graphs.
The keyword, however, is simple.
If you’re still working out the finer points of your business model or are unsure where your future growth lies, spreadsheets help in keeping the smaller data sets in front of you.
When you transition out of the startup stage, it's a different story, as the complexities of your inventory management increase.
Your business might be booming on all fronts, and there aren’t enough hours in the day to update your trusty spreadsheets.
Expanding from one sales channel to several increases the number of spreadsheets you have to manage.
If you expand your product catalog, you have to keep a closer eye on their movement in an expanding distribution network. This can be more ground to cover than your spreadsheet has cells.
If you try to manage a business on the rise through the use of spreadsheets, it will prove extremely limiting. Here are three reasons why.
1. Time Consuming Process
Perhaps the most immediate issue with using spreadsheets in the midst of scaling your business is time. More specifically, the time it takes to:
- Input data.
- Update data.
- Exporting, importing, or merging multiple sheets of data.
- Review data.
- Reconcile data.
- Produce reports based on that data.
- Train someone well enough to understand all of the functions of a spreadsheet or inventory control template to manage your data.
Again, spreadsheets work great with a singular set of numbers. But as your business expands and the quantity of SKUs grows, the demands on you and your team's time multiplies.
It isn’t a wise investment to have several individuals spending their entire day plugging in numbers or trying to make sense of them. You want to be able to focus as much of your team on profit-driving activities instead of internal management.
Tedious data management isn’t the only time-sucking problem with spreadsheets. If you’re manually entering inventory numbers, it means you’re manually counting your inventory.
Whether it’s trying to locate lost boxes of inventory, verify what warehouse employees are reporting, or coming precariously close to stockouts, tracking products and stock on a spreadsheet keeps you from focusing on other critical aspects of your business.
2. Lack of Automation and Real-Time Reporting
Formulas, macros, and conditional formatting are useful when you need to "automate" a few calculations or graph building tasks within spreadsheets.
That usefulness falls apart when your business demands greater sophistication in:
- Deducting inventory any time an order is processed on a sales channel.
- Updating inventory for a product across multiple sales channels.
- Reordering of products when stock levels at multiple warehouses are depleted.
- Shifting distribution points to fulfill customer orders better.
- Alerting your team when there is an uptick in popularity for a product and stock is needed to cover it.
A spreadsheet can't readily track this information without manual input or data uploads. It certainly cannot report on it as it's happening. Long-term, this costs you the ability to make timely decisions and capitalize on changes in the marketplace.
Think of it this way; everything you enter into a spreadsheet regarding your inventory management is ultimately in the past tense. Sure, you can forecast benchmarks, but without any real-time data to influence that forecast, spreadsheets will always leave you a step behind.
On average, manual data entry will result in one error for every 300 characters entered.
3. Greater Chance for Errors
On average, manual data entry will result in one error for every 300 characters entered.
If you’re a bit above average, you’re hitting 250 characters per minute, which translates into 400 potential errors per eight hour day.
If you work about 48 weeks in a year, that’s 1,920 hours, and you start seeing the problem with manual entry. Each one of these mistakes can lead your inventory to be wrong.
Even the most seasoned, well-trained data entry professional is going to make mistakes - a lot of them. It's the nature of manually entering thousands of lines of data into a spreadsheet.
The question becomes, can you afford those errors?
Or the time it takes to verify row after row, column after column of the info going in and coming out of the spreadsheet?
If you're trying to scale your ecommerce business into something bigger, the answers to both are no.
Beyond the pitfalls of manual data entry, if your business utilizes a multichannel structure, attempting to corral that data through spreadsheets is a no-win situation. Not only is it overwhelming, but the complexity of data would overrun any spreadsheet.
Consider a 2018 report from the National Retail Security Survey. It shows administrative, and paperwork errors account for nearly 20% of inventory shrinkage, behind only shoplifting and employee theft.
Paperwork errors are magnified for ecommerce companies due to the virtual nature of the business. Suppliers delivering stock to warehouses, logistics teams picking and packing inventory, shippers delivering orders - all without you or a large portion of your team coming into contact with any of those processes.
Each of these touchpoints has the potential for inventory to get misplaced unless you are using a proper system to track them. Manually counting and tracking them in a spreadsheet creates another touchpoint for errors.
The Bigger Picture of Inventory Management Software
Thoughtful inventory control can help you become more profitable by as much as 50%. When your business expands, you need solutions that will help your company evolve.
Inventory management software such as Skubana moves your company beyond arduous and time-consuming spreadsheets. It connects all aspects of your inventory management - sales channels, marketing initiatives, stock levels, product purchases, warehousing, and distribution - into a cohesive inventory management strategy.
How? Let's consider some of the key benefits:
1. Automation and Time Savings
Although spreadsheets might make sense for small companies with small footprints, there's little question that spreadsheet use turns laborious when that footprint grows.
Inventory management software eliminates tedious manual entry through barcode scanning or other inventory tracking procedures. You can track your incoming stock and outgoing orders in mere seconds.
Automation also improves your scalability - processing and fulfilling more orders in a shorter amount of time and requiring fewer employees to do it. Sophisticated software also automates the inventory replenishment process, calculating how many units to order and when to keep sales flowing.
The result is more productive inventory procedures and team members with time to focus on your company's front-end growth instead of its back-end logistics.
Skubana's automated PO feature
2. Coordinating Multiple Channels
A large part of managing business growth is successfully navigating economies of scale.
Whether its multiple sales channels - web store, affiliate sites, marketplaces, brick and mortar shops – or a distribution network that features multiple warehouses or international fulfillment – inventory management software equips your growing operation to coordinate across segments.
Cross communication comes courtesy of software integration with your brand's management software. Regardless of where orders are purchased, or where their fulfillment originates, the entire system provides real-time tracking of products purchased, the price paid, and the resulting deduction from inventory.
Skubana sales channel configuration
3. Greater Visibility
Spreadsheets, at their best, provide a limited window into the movement of your inventory. And even then, its cursory data that must be entered and tracked manually.
Inventory management software monitors the comings and goings between sales channels and warehouses. The collection of these data points, in real-time, affords you greater visibility into your business.
The real-time visibility is critical to see what's being purchased, by whom, and in which geographic locations. This helps you build strategies around increasing production, improving marketing, broadening sales channels, or evaluating inventory levels and warehouse management.
Having all this data sitting in one place instead of in multiple spreadsheet exports allows you to generate comprehensive reports on your business instantly. Ultimately, the better your data and the quicker you can access it, the more advanced your business intelligence.
Skubana inventory view
4. Improved Cost Efficiency
From automation to making use of better data, inventory management software helps your business in numerous ways. It also enables you to cut costs and save money.
Automated software dials in your inventory to avoid carrying too much or too little stock, both of which can impede your bottom line. As the software also increases accuracy, it minimizes the time spent either addressing or auditing errors to ensure manual data points are accurate.
In addition to reducing the time your team spends on manual data oversight, inventory software improves your general overhead. Automation and integration mean you can reallocate employees to more vital tasks.
5. Better Customer Service
Inventory management isn't limited to providing you insight into your business. The software is capable of delivering more comprehensive service and insight to your customers and your support team.
It streamlines the order process for customers, and not just from the standpoint of quicker order confirmations or orders shipped out faster.
- They can see accurate item availability on whichever sales channel they are shopping on.
- They receive real-time updates from the point of sale to final delivery (and check the status whenever they choose).
- Seamlessly process returns - all without having to speak directly to an employee.
By allowing customers more dynamic engagement in the order and tracking process, it reduces the time your team spends addressing customer questions.
However, if a customer does need to speak to a service rep, the inventory management system streamlines that process, too, providing employees instant access to the customer’s order status.
Perhaps the best way to realize the benefit of employing an inventory management system is to see how it helped other companies evolve their own business.
Below are three instances of small to mid-level startups that faced hurdles in scaling their business.
One struggled with an unwieldy level of inventory.
Another was unable to meet sudden, astronomical demand.
The third had to bridge the gap from a Kickstarter project to a fledgling startup to a global brand.
All three were able to leverage the Skubana inventory management platform not just to meet their goals, but surpass them.
MoonGlow crafts unique jewelry pieces that align the phases of the moon with the most important dates in the lives of their customer base.
As a business that trades in creating custom wearables - their selection of necklaces alone features nearly 100 different styles - the individual components that comprise each piece proved burdensome, and in many instances, impossible to track.
The MoonGlow warehouse consists of nearly 700 individual components from which they produce approximately 175 styles. The potential for sellable combinations approached 5,500. They accounted for it all via a spreadsheet.
An audit showed the company was overselling some products and had little visibility into the sales of other items. Attempting to keep tabs on their inventory manually left the business unable to pin down exact sales or forecast for the future. At this point, MoonGlow was selling only 60 units per day.
They wanted to grow their business but lacked insight into how best to expand.
In conjunction with a switch over to Shopify, the team at MoonGlow chose Skubana as their inventory management platform to help make sense of their diverse inventory. Skubana responded by introducing MoonGlow to the concept of bundles and kits.
By utilizing a bundling workflow, MoonGlow was able to account for all component SKUs and, when a custom piece was sold, accurately deduct those components from their stock.
MoonGlow achieved ongoing, real-time insight into inventory and sales. They also streamlined their fulfillment team's workload. Printing orders and labels, troubleshooting, validating addresses, and shipping is now more efficient since moving to Skubana.
The year before integrating Skubana's solution, MoonGlow closed its Q4 with less than a million dollars in sales. The following year, after onboarding, they closed their Q4 with over $2.5 million in sales.
Death Wish Coffee has curated a repetition for producing robust, well-crafted java. From its days as a small coffee shop in Saratoga Springs, NY, the brand has built a loyal following.
In 2015, Death Wish Coffee won a small-business contest that gave the brand a 30-second commercial during that year's Super Bowl. What followed was an avalanche of attention, which promptly resulted in a wave of overselling across their two sales channels.
Suppliers seeking more reorders, customers questioning product delays, to the logistics team and friends and family members of those on the payroll working 24/7 to keep up. It was an uphill battle that the company was losing.
Death Wish Coffee was not prepared for the response to the ad. What should have been a boon for the company was beginning to put the business at risk of failing.
After several weeks of swimming against the tide, Death Wish Coffee Googled "Shopify inventory management" and found Skubana. From an initial conversation and a few convincing screenshots, Death Wish Coffee onboarded with Skubana.
From that day, Death Wish gained greater insight into its inventory - knowing exact numbers versus random guesses. That helped them to forecast better and gain greater control over orders coming in and the product being shipped out.
The overselling stopped, and orders are now being received and fulfilled across eight channels. The Death Wish team went back to doing what it does best - making great coffee and growing its brand, which is now available on store shelves across the country.
Nomad Goods grew from an initial idea to provide fellow travelers and adventure seekers a small, thoughtful charging device that was easy to carry and use.
Nomad Goods succeeded in its initial Kickstarter project, raising $162,000 to create a slim, credit card shaped USB cable charger that fits into practically any wallet. The product gained the company notoriety and, in the ensuing years, helped them to grow their product line to include over 30 different items.
Far from a smooth expansion, however, the same growth that landed Nomad products in such stores as Best Buy, Urban Outfitters, and Staples (as well as selling from their popular web store) also generated strife within the company.
As the business grew, so did the miscommunication between internal teams and the inability for the company to effectively manage their various product lines, warehouse network, and different sales channels.
Most distressing was the lack of understanding of their inventory numbers. It reached a point where the company's co-Founder and COO combed over spreadsheets (with data fed from three different logistics platforms), attempting to navigate how much inventory they had and where it was going.
Nomad Goods wanted to maximize selling its products across multiple channels but required a system with the capacity to adjust to its needs.
Through Skubana, Nomad Goods found a platform capable of providing the insight they needed to organize their fulfillment.
After a short, four-week implementation, Nomad Goods could finally track their inventory across every fulfillment point - from stock in multiple warehouses to orders placed across numerous channels to the product being in transit and on to final delivery.
Skubana provided Nomad Goods the transparency of product movement they wanted as their company scaled. Now, when Nomad Goods aims to expand into an even larger marketplace, such as selling on Amazon, they do so with the same inventory insight as they had in their early Kickstarter days.
Since adding Skubana as its inventory management platform, Nomad Goods did indeed expand to Amazon. The extended reach boosted sales considerably. On their own Shopify site, orders are increasing at a rate of 15% every month. On Amazon, Nomad's order volume has grown 125% each month.