By Donna Woronka
Many businesses start up so modestly that they can fit their full inventory in their garage, a slice of rented warehouse or in that dark, cobwebby storeroom in their building—and easily keep track of it via a spreadsheet. But as businesses grow and inventory expands, all that manual input catches up with them.
In the first place, spreadsheet inventory management is a laborious operation that takes key people away from what they should be doing. And manual input is ripe for the kind of human error that can prove disastrous for businesses.
From my own experience, I’ve seen a food production line come to a halt because one of ten ingredients were in scant supply and no one on the floor notified Purchasing. With the proper inventory management system, your Purchasing Department would be automatically flagged for reorder when inventories reached a specified point.
I’ve also heard of a flooring company that had to track carpet inventory by batch numbers so customers wouldn’t end up with slight color variations due to mixed batches. But they were tracking by spreadsheet and the only way they could figure out how to distinguish batches was to identify each as a separate product. In time, harried employees spent endless hours manually inputting hundreds of new “products” before they converted to an inventory management solution that could separate out batches and automate the process.
Once you see the need for upgrading, here are a couple preliminary steps that explain how to proceed.
Identify your needs
Just as every business is different, so are their inventory management requirements. For instance, our food industry clients must have serial numbers so they know shelf life and can trace lot numbers in case of recall.
Businesses that purchase raw materials or manufacture their products overseas face the challenge of calculating per-unit landed costs, which may include customs, duties, taxes, insurance, currency conversion and transportion fees.
Ecommerce companies must be able to keep track of inventory and notify shoppers if an item is out of stock. And a retail business may need an inventory system that integrates with a customer point-of-sale system.
Figure out how—and where—you want to work
Some inventory management systems operate from company servers while others are in the cloud. This second type of system can be most valuable if it will be used by indivduals working in various locations, or for employees and business owners wanting the flexibility to work from home or while on the road. Today, online inventory systems have become just as powerful in features as the traditional desktop versions. The point is, you no longer need to be tied to your desk in order to have the inventory information that you need at your fingertips.
We can help you figure out the inventory management solution that will best integrate with your current accounting system with minimal disruption, fill your needs now and support future growth. If you’re a start-up company, we’ll help you get on top of your inventory management process from the get-go for zero disruption.
There are plenty of excellent uses for your company’s spreadsheet program. Just don’t let it be the engine that runs your inventory management system.
As Director of the Business Advisory Services Group at Wiss & Company, Donna Woronka helps young and established companies identify and implement accounting systems and inventory solutions. If you would like to speak with Donna, you may reach her at 973.994.9400 or at email@example.com.