4 Reasons Why Excel for Inventory Management Doesn’t Work


Why do you track inventory? If you are like every other business owner, for the very simple reasons of knowing the products you have on-hand; your current stock levels; and whether you are going to meet your customers’ needs. The answer to the question of why is fairly simple. It is your answer to the question of how  you track inventory that determines whether your business is earning or losing money because of your chosen inventory tracking method. “How your small business manages its inventory can mean the difference between a profit and a loss. Unused inventory costs money, as does not having enough inventory to meet customer demand.”

Excel’s Limitations: Ineffective and Inefficient

If you are using Excel, it’s time to move to the next stage. Yes, using Excel is relatively easy, convenient, and cost effective –- in the beginning. However, as your business grows, you will quickly leave those benefits behind. Continuing to use Excel to manage your growing business will cost more money than investing in an inventory management solution. Why will using Excel cost you money now when it didn’t before? Imagine the time

Inventory Control Software Results in ROI for Small Business

and money investment needed to address the following limitations of Excel:

  1. Tracking large quantities of items in Excel increases the likelihood of data entry errors, especially if your inventory moves frequently from location to location.  This requires you or your staff to spend an inordinate amount of time validating the amounts in your workbook. Wasp’s Inventory Control, an inventory management system, solved this issue for Jemima Spare, IT Support Officer for The University of Oxford’s telecommunications department. According to her, “Before Wasp, each person was probably wasting 2 to 4 hours a week tracking inventory…When someone comes in looking for a piece of equipment, we can instantly look at the database, see what we have, where it is and what we need to order without taking hours to locate something.”
  2. Having a single Excel workbook limits user access.  If you have multiple individuals touching inventory, only one can edit your workbook at a time –- again increasing the probability of errors.
  3. Excel lacks real-time inventory data.  At any time, your Excel workbook could be out-of-sync with your actual inventory count.  If you haven’t updated inventory numbers, what you see in Excel may not reflect what you actually have on-hand.  Bryan Harej, Inventory Analyst at TopGolf, experienced first-hand the negative impact of trying to manage a large inventory, across multiple locations, using manual spreadsheets.  Brian shares, “We never had a true handle on inventory and keeping the sites running at full capacity was stressful.”  After evaluating a few inventory management solutions, Harej adopted Wasp’s Inventory Control system.  As a result, Harej stated, “I was immediately able to see reports to determine the usage at each site.  From there I can see what we have in stock and what we need to order.  I no longer have to guess inventory usage and spend hours a day updating spreadsheets.”
  4. Lastly, Excel also limits your ability to quickly analyze historical data.  Effectively managing inventory requires you to know how much of a certain item you need on-hand during different seasons.  The ability to forecast inventory need is integral to meeting your customers’ demands.

Related Article: 5 Lean Inventory Principles: Ending Inventory Waste

How Are You Tracking Your Inventory? 

When you first opened your company’s doors, Excel met your inventory needs.  If you were like most small businesses, you had a small staff and a small, relatively easy to manage inventory.   However, as your business has grown and will continue to grow, the Excel limitations detailed above will prove to be very real hurdles to overcome.   It’s time to move to a more efficient, cost effective system; one of those milestones each small company needs to achieve.  Remember, inaccurate inventory counts have far-reaching, negative effects that impact both your customers’ experience and your bottom line.

Use an Inventory Management Solution

Although the reasons detailed above should cause you to pause and ask, “Should I use something other than Excel?” you may still hesitate.  Why?  Simply put, change is difficult. Until you analyze just how much money you are losing (whether that’s due to loss of sales or loss of actual inventory) and compare that loss to the cost of investing in an inventory management solution, you’ll probably find a way to keep doing what you’ve always done.   However, please keep in mind “administrative errors, such as errors in receiving processes or accounting errors, account for 15.3 percent of inventory loss”.  Over time, that loss impedes your company’s ability to compete.

“Maintaining an accurate inventory count in Excel was time consuming and error ridden.”

Individuals who have made the transition from Excel to an inventory management solution, like Wasp’s Inventory Control system, have seen a quick return on the investment.  For example, Lee Letawsky, parts technician and purchaser for Precision Drilling Trust, stated the following, “If you’re not in control of your inventory, you don’t know what you have.  There’s so much money tied up in equipment, you really need to know and track your inventory.  This system (Wasp’s Inventory Control) has saved tens of thousands of dollars, improved the repair process and made my job much more enjoyable.  It’s easily paid for itself in less than six months.”

Case Study:

Paul Huffaker, Vice-President of Racesource, adopted Wasp’s Inventory Control solution to solve this problem.  “Maintaining an accurate inventory count in Excel was time consuming and error ridden.  Often I would reorder or manufacture parts I already had simply because I didn’t know I had them, which was an unnecessary cost.”


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Paul Trujillo

Paul Trujillo

Paul Trujillo is a Product Marketing Manager at Informatics specializing in Inventory Warehouse Management and Supply Chain product lines. His nearly 15 years of experience has put him at the forefront of industry technology and developing trends.
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  • David

    sorry but what a nonsense.. this is just to plug your own system. We’ve been using Excel for over 3 years now and no errors so far. just hire people that know how to use it.

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    Rating: 5.0/5 (3 votes cast)
    • Jason Sentell

      Thanks for your feedback David. It is great that Excel is still meeting your business’ needs – we agree that it is “easy, convenient, & cost effective”. Our customers seek our solutions when they are outgrowing the scope and capabilities of Excel.

      For instance, our Inventory Control solution allows you to quickly pick or recieve stock, in the warehouse, & update your records via wi-fi on-the-go as well. The reporting also allows you to make informed business decisions about your inventory turn-over & when items are running below pre-defined stocking levels. Want to integrate with QuickBooks – no problem – the list goes on & on about how automated inventory management systems offer more functionality than Excel.

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  • Gareth Phillips

    Whilst the solution you’re suggesting here is your product, you make some valid points that apply to the general use of Excel – http://blog.skyron.co.uk/the-hidden-costs-of-excel-to-your-business/

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  • Fehera

    I developed few inventory systems in VBA Excel. Knock on wood there no issues or complaints what so ever. It can generate reports, making suggestions and devide what really the business need to do… Compare Excel and Wasp I can only say there is lots of money invested in Wasp. Yes a stand alone system always be better than Excel, but in these days all businesses focuses on one thing! Cut costs, saving money! I will not say that Excel better than Wasp, BUT, reading the “advert” above make Excel image bad. You try to compare a Ford to Ferrari.

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  • Frank

    i would recommend using a SaaS solution like http://www.sohoassets.com to manage the inventory online. they’ll allow you to import your initial excel inventory and manage it that way. it’s very simple to use

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  • Fred

    The size of the company, amount of inventory, type of inventory, rate of turnover, need to integrate with other systems, etc is the relevance and also the risk management.
    If you are using vba and your guru who set it up leaves or is sick, you could be exposed.
    It’s not a cut and dried argument.
    If Excel works and isn’t causing headaches, then you’re fine.
    If in doubt get a consultant in for a quick assessment.
    And not one that is aligned with any software vendors :-)

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  • https://www.cyberstockroom.com/ Emad Hanna

    I think Frank is right, SaaS is definitely the way to go for small businesses. I’d like to throw in a shameless plug of our software : cyberstockroom.com. Our main goal is to make it super easy to use and efficient for business owners and managers.

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