Imagine running a business without an inventory system in place. How do you know which items to restock? How can you determine which products are doing good in the market? Aside from that, you’d also have to worry about perishable goods that may end up going to waste, along with static items that need to be addressed before they go out-of-date. Running a business with the absence of an inventory-control system is basically a recipe for disaster.
Generally, the main purpose of a management system is to prevent an excess or shortage of inventory, considering how both cases can cause negative effects towards business operations. As one of the most adaptable and professional software tools in use today, creating an inventory in Microsoft Excel allows quick and easy management for effective inventory control. And considering how the application is readily accessible in nearly every mobile device, tracking your goods won’t be a problem. Excel offers a variety of features and formulas for users to conduct daily or routine inventory management activities with ease. It reduces manual labor, and takes away the challenging task of data entry and control.
In most cases, an inventory indicates the goods available for sale as well as the raw materials used to produce these goods. This may be categorized into various groups, such as raw materials, those that are still a work-in-progress, and most importantly, the finished goods. It’s a complete list of merchandise that is intended to be sold for the sole reason of earning a profit. The inventory is also composed of items that are held for sale by the business, those that are in the process of being produced, along with the supplies or materials meant for consumption in the process of production.
As for businesses that offer services as opposed to actual products, the inventory may consist of service costs for which the related revenue has yet to be recognized. In the world of business, this generally comes in the form of an asset inventory, but may also be employed as a home inventory in an everyday scenario.
As a business owner, monitoring an inventory level that’s bound to change constantly can be an exhausting (not to mention time-consuming) process. Despite its tedious nature, it’s still a task that needs to be done in order to track the current supply of goods. Fortunately, thanks to the works of technology, creating an inventory does not need to be done manually anymore.
Although something as efficient as Microsoft Excel can’t provide you with all the handy work, it does offer a document structure composed of rows and columns that allow quick and easy recording. With this, you can create your very own inventory spreadsheet that is tailored according to your exact needs. You could also prepare an inventory template to save extra time and effort when constructing different types of inventories, such as an equipment inventory or a property inventory.
Designing an inventory spreadsheet on Microsoft Excel is extremely easy to do. Due to its advanced features and user-friendly tools, creating an inventory from scratch is as easy as pie. Follow this step-by-step guide and you’ll be done before you know it!
Launch any Microsoft Excel application available to you (for these steps, the MS Excel 2010 version would be suitable). Once you have opened the app, a blank spreadsheet for your inventory would immediately be displayed.
Click the cell “A1” and type in “Item Name” or “Product Name” to label the cell. This column will be responsible for holding each item name in the inventory.
Click the cell “B1”, specifically the cell that follows A1, and input “Item SKU.” This column shall be used for numeric or alphanumeric product numbers to track individual items accordingly.
Proceed to “C1” and type in “QTY” to indicate the current inventory levels of your goods.
Continue across the top row of the spreadsheet to add column headers that are necessary for your business. This can include shipping dates, cost and retail prices, item vendor or supplier, item location, comments, and other additional information that is essential to your inventory’s purpose.
For column headers to appear even as you scroll through your list, click on the “View” tab, followed by the “Freeze Panes” menu, then select the “Freeze Top Row” option to enable this function. This way, you could easily scroll down to the deepest part of your inventory without losing sight of these column headers.
Now that you have completed the basic parts of your inventory, you can then save the spreadsheet with a relevant filename. Be sure to secure the inventory spreadsheet in a folder that’s easy to find to prevent the file from being misplaced or lost.
If you’re in a rush, using a template would be the best alternative to creating a spreadsheet. The following steps will guide you through this process:
After launching MS Excel, click on “File,” then select “New.”
Click on “Inventories” for the list of template types that appear on your screen. From here, a list of inventory template options will come into display.
Scroll through the list of template options and choose one that best fits the nature of your business. A larger preview of these templates would also appear on the right side of the screen once it has been clicked to make it easier for you to decide.
Once you have selected a template, click on the “Download” button, and then the spreadsheet would automatically open in a new Excel window.
Now that you’re satisfied with the inventory spreadsheet, you can then save it with an appropriate filename.
Inventory management is considered to be the backbone of every business that centers on product selling to make a profit. But if you’re starting out with a limited number of products will only little variants to deal with, Microsoft Excel serves as the perfect platform for beginners to create an inventory list. Apart from its integrated tools and state-of-the-art features and formulas, MS Excel is an application that we’re all relatively familiar with. While it might not be the most ideal system to use for inventory management, especially when handling large-sized inventories, it does consist of valuable features that you can make the most of.
As mentioned before, there are a few elements of an inventory list that must be reflected on your template. This includes the item number, product name, description, cost or value, retail price, current stock, quantity to reorder, and in some instances, the quantity sold. Additional data may also be added to your list, as long as they’re completely useful to your main purpose.
Another advantage of using Excel spreadsheets is that it allows you to calculate information for total sales and profit, and organize the inventory based on the most salable and profitable products on the list with the help of a few simple formulas. This reduces the headache and stress that comes with calculating numbers for a smooth and carefree experience. Listed below are just some examples of these functions:
Now that we’re familiar with the spreadsheet formulas, here are some guidelines that could help you successfully manage your Excel inventory:
As humans, we’re prone to making mistakes no matter how hard we try. Hence, many professionals avoid using an Excel for inventory to try and steer clear of any potential pitfalls and mistakes. But for anyone who does employ an Excel inventory, self auditing and daily reviews is the best way to minimize errors in the system.
Ensure that the entities or employees responsible for managing the inventory updates the spreadsheet immediately to prevent further issues. Keep in mind that Excel isn’t quite ideal for real-time management, which is why manual updates need to be handled as soon as possible to circumvent problems that involve overselling or overstocking items.
Since a traditional Excel application only offers offline solutions to its users, using OneDrive Excel or Google Sheets is highly recommended to allow multiple people to obtain and edit the sheets simultaneously. Not only can this speed up the process, but it also enables automatic backups and syncing across every device used to access it.
Regardless of how busy you are, it’s always good to consolidate your data monthly and quarterly to track sales based on a given period, as well as different seasons. This might be a time-consuming procedure to begin with, but this is necessary to help enhance inventory optimization in the future.
While Excel might be an effective tool for monitoring inventory, you still need to make sure that data are inputted, tracked, and calculated properly. Going over these figures multiple times might be a daunting procedure, but making sure that everything is correct can save you a lot of resources in the future.
Excel often requires data to be inputted manually by users, unless a barcode scanner has been incorporated into your system, but even then, not everything would be automated. Human error can negatively affect operations in different ways, which can then lead to under- or overestimate of profits, as well as reordering too much or too little stocks to replenish your current storage system.
To manage this properly, implementing a policy that will guide employees in tracking everything on paper and on an Excel file at the end of each working day will be the perfect strategy. This will allow them to pinpoint any mistakes that need to be corrected before this causes any more problems in the long run.
Implementing an inventory management system within a business is essential in controlling the movement and storage of goods, along with the related flow of information for the organization to benefit from. Simply put, many of these product inventories are created for the purpose of tracking the current inventory levels of a business. Given how this plays a crucial role in achieving business success, what are the primary objectives of inventory management?
For one thing, proper inventory management can prevent possible stock-outs that might have been overlooked. If inventory levels reach a critical point, the business must then replenish their stocks to make sure customers and clients are catered to accordingly.
On the contrary, an excess in inventory will also be a problem, especially in maintaining the quality of these items along with the storage space available. Carry too much inventory among retail stores and distribution centers can be a costly strategy. Not only does this take up a significant amount of space, but perishable products with expiration dates are likely to go to waste if they aren’t sold immediately.
Other objectives of inventory management include the following:
Inventory control, which is also called stock control, refers to every aspect that involves managing a company’s inventories, including the process of purchasing, shipping, receiving, tracking, storing, and reordering these goods. Inventory control is a vital part of the company’s operations that one wrong move could cause a major effect to the organization. For this reason, many companies have invested in inventory control systems that properly manage every single component of the organization’s inventory. This increases profitability, guarantees that there is enough stock on hand, reduces or eliminates inventory write-offs, and allows audits to be conducted more efficiently than usual.
For companies that handle several warehouse locations or otherwise larger stocks in their designated distribution centers, employing a conventional approach to inventory control might not be the wisest move. Keep in mind that a Excel file can only do so much for a business of a medium scale, but when handling a much larger quantity of goods, conducting proper inventory can be more complicated than you think. So instead of opening doors to potential risks, a computerized inventory system would be your best option.
There are numerous inventory control software solutions that are ten times more effective than manual ones, granted its flexibility and efficiency in retrieving information. This allows you to retrieve real-time data regarding your current inventory value. And considering how innovative these systems have become, you can expect these tools to offer more than just a vast database to store important information. Say for example, an advanced version of a supply inventory system could not only display real-time data to users, but it can also alert suppliers or distributors regarding critical stock levels that need to be addressed before they run out. This may also enable automatic inventory monitoring, batch control, and a barcoding system to improve the ordering process and speed up the inventory management procedure.
Apart from implementing a modern inventory control system, there are other practices that are worth considering to help enhance your business operations.
These days, the words stock and inventory are basically used interchangeably in the business world. But in actuality, these two terms have separate meanings that make them distinct from one other. While the difference is rather subtle, from a corporate standpoint, knowing this ‘difference’ can be very important to your business. For us to understand the variations between stock and inventory, we must first define them individually.
An inventory is comprised of an organization’s finished products, along with the raw materials used to produce these products, the machinery involved, and the building or establishment where the products have been manufactured. In other words, the business inventory includes everything that goes into producing the items offered by the given company.
Stock, on the other hand, refers to the finished products that are sold by the business. This may also include raw materials, depending on the nature of the business being managed. For example, many car dealerships sell automobiles as part of their stock, but they may also offer tires, engine parts, and other car accessories to their target customers.
So what makes the two different from one another?
Based on their given definitions, a stock simply deals with goods that are sold as part of the company’s day-to-day operations, while an inventory includes sale products, along with the goods and materials used to produce them. Taking a further look at these two terms, the inventory takes into account every single asset that a business uses to produce the products it sells, and is also used to determine the selling price of each stock. The stock would then determine the amount of revenue the business is likely to generate based on what’s available. So the more stocks that are sold, then the higher the revenue.
But due to how complex this whole process can be, counting inventory items is typically done annually, while stock numbers are tracked on a daily basis. This is because the inventory is only replenished as needed for the business to secure an adequate amount of stock to carry on with its operations. Keep in mind that there are some considerations that must be analyzed as well. Take for instance: a convenience store with several stacks of goods. It’s nearly impossible for staff members to monitor the number of items found in each section on a daily basis. While it might not be necessary to count the total number of canned goods left on a single shelf, knowing how many boxes of these items are available in the storage room is important. This will help determine which items have been doing well in the market, and those that need to be restocked.
An inventory plays a principal role in any type of business. For retail companies, using a store inventory can be a tremendous help when tracking items that come and go from your outlet. But compared to using an ordinary inventory checklist to monitor your goods, using an Excel version of such can be beneficial for many small-scaled businesses. As for medium to large-sized companies, investing on an inventory software system is a great way to manage your inventory items effectively. From optimizing your inventory for better sales to growing your business and expanding it to additional outlets, when used and managed correctly, a good inventory system offers numerous benefits to its users.