For manufacturing businesses, inventory management in Excel is a big step from managing inventory on paper. It comes with many features for easy stock monitoring but has its own challenges. Excel is a powerful tool but you may face manual errors that can cause order delays and hold back sales and revenue.
In this blog post, we will take you through the key processes of inventory management in Excel and learn how to automate inventory in excel. We will also look at some advanced alternatives for inventory management to help you decide which tool is the best for your SME manufacturing business.
What Is Excel Inventory Management?
Excel inventory management is the process of managing, tracking, and maintaining records of all your inventory activities using Excel spreadsheets. Manufacturing inventory management in Excel can help your business monitor stock operations including storing, sourcing, and selling of items. Excel is a static tool, but it has easy access and a simple interface. This helps you get started immediately on inventory maintenance spreadsheets.
You can manually update the sheet in intervals to keep track of your inventory. This will also give you valuable insights into product performance. You can enter your inventory source details, stock levels, and sales-related information in the free inventory management software in Excel. Using this you can analyze basic stock data easily.
How to Do Inventory Management in Excel
Microsoft (MS) Excel helps with many business tasks. But to manage inventory in an Excel sheet, you need to be familiar with all of the tool's features. Here is how you can perform stock inventory management in Excel:
Products
The products sheet in your Excel spreadsheet will provide the complete list of your current inventory list. The product sheet in MS Excel will include the following information:
- Product number or Stock Keeping Unit (SKU) number
- Product category
- Name and description
- The selling price
- Location, warehouse and shelf number
- Product reorder levels
Read Also - What Is Agile Manufacturing?
Purchase Orders
You can keep tracking your existing purchase orders with the Purchase Order (PO) sheet. The purchase order sheet in MS Excel contains this information:
- Order number
- Item number
- Product category
- Purchase date
- Received date
Sales tracking
It helps you manage your inventory using an Excel spreadsheet without keeping track of your product sales. This sheet would typically comprise the following information:
- Order number
- Item or product number
- Product name and order quantity
- Sales date
- Shipping date
Read Also - Difference Between Manufacturing and Production Explained
How to Make an Inventory Spreadsheet in Excel
For inventory management in MS Excel, you need to create an inventory spreadsheet and track the correct inventory fields. Fully automatic stock management in Excel lets you choose from various inventory management templates in Excel that are easily available. Here are the important fields that you should track for managing inventory in Excel spreadsheets:
- ID: This is a unique ID used to identify any inventory item.
- Name: This unique field is used to identify the name of the inventory item.
- Description: It also contains a description of the inventory item.
- Price: This field indicates the unit price of each inventory item..
- Quantity: This displays the overall quantity of the currently available item.
- Value: This field is the multiplied outcome of the item quantity and the item price.
- Reordering: These fields typically comprise the reorder level
- Other: Stock maintain software in excel contains additional fields such as inventory location, vendor details, and item category.
Read Also - What Is Process Costing and Why It's Important?
Inventory Management Excel Template Alternatives
Although MS Excel is a reasonably affordable tool for inventory management, it can be challenging to manage inventory with it depending on the complexity of operations. In an inventory management Excel sheet, organizations are required to manually track inventory daily. Due to this, they may often lose track of their inventory flow and related data. It is difficult to perform fully automated stock management in Excel. There is no functionality to create automated invoice and stock inventory management in Excel. This means that an MS Excel inventory management system is not a complete tool.
To achieve complete inventory control, SMEs can opt for suitable, cost-effective inventory management software that is a good alternative to MS Excel. In addition to tracking functionality, it can also give you real-time reports.
Read Also : Types of Manufacturing Process
Inventory Management Solutions Apart from Excel
If not Excel, which expert inventory software can you trust your inventory operations with? Instead of using manual spreadsheets, SMEs can opt for an inventory management solution like TranZact. TranZact is a software specifically made for Indian SME manufacturers. It has simplified and automated inventory control and management.
TranZact integrates your inventory operations with other functions like production, sales, and procurement. This improves inventory control. You can also perform live inventory-related operations and plan your purchase and production capacity. With features such as barcode scanning, negative stock restriction, physical stock reconciliation, and auto stock adjustment you can gain insightful inventory updates and analytics. You can not get these features of stock maintenance software in Excel.
Read Also : Difference Between Opening Stock and Closing Stock
Inventory Management Software vs. Excel Inventory Management
Excel can take over several aspects of your inventory but you can not get the functionality of a stock management software in excel. Here is a detailed comparison of both the tools:
1. Time Efficiency
Excel’s manual spreadsheet models are time-consuming and difficult to update as you need to manually enter inventory-related data. Inventory management systems can save valuable time using barcodes to update inventory data automatically. These solutions help you to track incoming and outgoing stocks without manual dependency.
2. Multiple Channels
Many manufacturing companies depend on many sales channels, including physical stores, online channels, and distribution networks. With Excel, companies find it challenging to fulfill customer orders from various channels. Inventory management software solves this problem by integrating multiple channels for smooth order fulfillment.
3. Operational Visibility
MS Excel provides limited visibility into the movement of inventory items and stock levels. With automated inventory management solutions, SMEs can gain real-time visibility into their operations, including multiple warehouses across regions. Every incoming or outgoing inventory item can be automatically updated in the inventory system.
4. Cost Efficiency
Inventory management solutions also save costs. For example, automated inventory solutions let you store the right amount of inventory items as per need. Through real-time notifications, inventory management tools help you avoid overstock or understock inventory and prevent any production delays.
5. Customer Service
Excel does not provide on-demand customer support for inventory-specific issues that users may have. This can be a major drawback when it comes to SMEs adopting stock management. On the other hand, a software’s customer support team is always available to provide valuable suggestions and insights into improving inventory management.
Read Also : ABC Analysis in Inventory Management
Elevate Inventory Management Using TranZact
While businesses may save initial costs by performing inventory or stock management in Excel, free inventory software in Excel may not turn out to be a long-term solution. Excel is not designed specifically for inventory management and is limited by its manual features. Here, a software like TranZact can be a cost-effective alternative for SMEs. It provides support for real-time inventory tracking, batch tracking etc. It is a user-friendly tool that is easy to learn. It comes with a free plan with base features and also a free trial option for advanced features.
TranZact is also a specialized platform for material requirements planning, quotations management, transactions management, and production. It also offers accounting integration with Tally and BUSY along with a top-notch customer support system. Get in touch to learn more about TranZact.
FAQs on Inventory Management in Excel
1. What is inventory management in Excel?
Inventory management in Excel refers to the practice of using Microsoft (MS) Excel spreadsheets to track, manage, and analyze inventory data and inventory movements.
2. Why use Excel for inventory management?
Excel is commonly used for inventory management due to its familiarity, flexibility, and affordability. This makes it a convenient option for small businesses with simpler inventory tracking needs.
3. Why choose inventory management software?
Inventory management software offers advanced features, automation capabilities, and centralized data management. It lets businesses efficiently control, and optimize their inventory processes for improved productivity, and decision-making.
4. Can Excel handle large-scale inventory management?
No. While Excel is suitable for small to medium-sized inventories, it becomes less efficient for large-scale inventory management. This is because of lack of automation and limitations in handling extensive data sets.
5. Can I automate inventory management in Excel?
Excel allows for basic automation through the use of formulas, functions, and macros. However, advanced automation features are limited compared to dedicated inventory management software.
6. What are the challenges of Excel inventory management?
Challenges of using Excel for inventory management include a higher chance of manual errors, limited scalability, and difficulty in real-time collaboration. Excel also lacks advanced features like barcode scanning or automated reorder alerts.
7. Can I use Excel for inventory management?
Yes, Excel can help with inventory management requirements for businesses. Companies looking to access basic inventory management capabilities can choose Excel. However, it's important to know that it comes with several limitations and high manual dependency.
8. What are the benefits of inventory management software over Excel?
With inventory management software, companies can monitor inventory more effectively than they would in Excel. Automation in inventory management solutions provides several benefits such as real-time inventory valuation, reports, and optimization of inventory levels.
9. How to create an automated inventory system in Excel?
For an automated inventory system in Excel, you need to create tables for product details and inventory transactions. Then you should use Excel functions like VLOOKUP, SUMIF, CONCATENATE, MID, IF, ROUND DOWN, and DATA VALIDATION to link tables and calculate data. Then, maintain sale and purchase records for a real-time stock management database integrated with these records.
10. What are the most inventory management Excel formulas?
Here is a list of inventory management Excel formulas:
- SUM
- SUMIF
- SUMIFS
- SUMPRODUCT
- VLOOKUPIF
