6 Reasons Why Excel Doesn't Work For Inventory Management | TranZact

Feb 25, 2021 in Inventory Management



Spreadsheets are everywhere… They are probably the most frequently used tool in the majority of firms and business processes. Most small manufacturing businesses start off by using registers to track inventory. Then as the data increases, they start spreadsheets for sales order tracking, manufacturing planning, and inventory management.

And it works fine but only at a micro-scale.

As your business grows, you will quickly run into all sorts of trouble if you continue managing your inventory with spreadsheets.

Read More - Inventory Management: Ultimate Guide for SMEs

Inventory Management

Spreadsheets are not scalable. You will soon lose sight of your inventory levels on-hand, amounts expected from suppliers, slow-moving inventory, and so on.

And this will end up costing you a lot of money.

    1. missed delivery deadlines mean unhappy customers;
    1. cash is tied up in excess inventory; and
    1. material purchasing is out of sync with manufacturing.

Thus maybe it's time to move to the next level.

Read More - Ways To Improve Cashflow In SMEs During Pandemic

Here are 6 reasons why you shouldn't use spreadsheets of inventory management-

1. Error-Prone and Time-Consuming

The thing with Excel is that the employees would enter the data there manually. That’s the reason why mistakes most certainly will be made. We think you have also been there. Data entry errors can result in making mistakes in business decisions.

When you enter information by hand, this is going to lead to a lot of errors. This particular approach is also rather time-consuming. This is what makes it inefficient.

2. Less Scalable

This is also something that you should consider.

As soon as you start to track hundreds or even thousands of items through Excel, you will quickly realize that it can be overwhelming. Even the 'Excel expert' in your company can only deal with a limited number of sheets and tabs at the same time.

Also, the whole reason why you want to track inventory is that you want to find it on demand. But you won't as you'll be maintaining a large number of sheets as it is.

3. No Real-Time Information

A spreadsheet is simply not capable of tracking real-time stock flows.

Your current stock levels are only going to be as real-time as your most recent data entry. This is why you wouldn’t be able to track and know where your stock currently is.

Stock tracking is something crucial for your overall stockroom, and if you can’t rely on the software to handle it, you'll have to do it manually which will be error-prone and time-consuming.

4. Data all over the place

Drawing insights from data is an important part of any business.

Spreadsheets will crunch and provide numbers for you. But what about analysis and reporting? Excel can never show you the big picture. It’s just numeric data scattered all across, despite categorizing them in sheets. Because there is no centralization, you can’t analyze your entire stock and its flow, from all of the portals, together.

This is why you might want to consider your options once again.

5. No Analysing or Forecasting

Excel hardly prepares you for the future and rarely ever takes past data into consideration. This makes it a bad option for analysis.

Excel graphs and trendlines are very basic and ineffective with growing market complexities. The forecasting formula in excel uses 2 variables only, whereas, in real life, there are many additional factors that are supposed to be considered which Excel, of course, doesn’t. That is why it doesn't work for inventory management

6. No Automation

Excel is the antonym of automation!

It’s all about manual data entries, except for very basic conditional formatting.

Inventory spreadsheets do not update automatically when you purchase materials, manufacture your products, or sell them to your clients.

Spreadsheets require continuous manual updating, which is time-consuming and stressful. This means that your inventory spreadsheets are generally out of date.

So maybe it's time for you to move to another solution for inventory management.

Read More - 5 Ways Inventory Management Software Increases Sales & Profit

Way Forward

As you can see, there are many drawbacks of using Excel when it comes to stock management. You need to consider all of them.

Worry not. There’s a large and established market that provides ready-made inventory management software solutions. They are tailored for businesses of different sizes and industries. It's important for you to choose one that is affordable and easy to use.

TranZact, for example, is geared towards SMEs to streamline their business processes. These are typically small manufacturing companies who have traditionally relied upon paper records or spreadsheets to manage their stock and now want to go digital solution.

Get rid of cumbersome Excel sheets and check out how TranZact helps SMEs manage inventory for free.


TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.