How to Use Excel for Inventory Management

Excel is a well-known option for those looking to accurately track their inventory data. While advanced users may want a deeper understanding of the various formulas and features available to them on Excel, most just need a comprehensive guide to categorize and simplify their inventory data on a spreadsheet.

For larger companies with multiple warehouses, using Excel is no longer an option. Even small businesses have found that inputting data on a spreadsheet is labor-intensive with a high potential for human error. The preferred option for these users is a software solution that automates many of the tasks needed to address business needs and track inventory.

Whether a company chooses to use Excel or a software system, it's helpful to know the principal methods to manage inventory data. Here are the best practices to use Excel to track inventory data and some advice for those seeking an optimized software solution.

Start by generating three specific tabs on the tracking template- Orders, Sales, and Inventory Counts. All relevant data that applies to these categories should be inputted into the spreadsheet.

1. Product/Inventory Tab
The Product/Inventory tab should include a list of all business inventory-based data. Using this sheet will help track and manage all of the current products, discontinued products, and critical information needed to evaluate each item's performance.

Create a table and use the following data points as columns for this sheet-

• Item Number- List the SKU or serial number used for each specific item.
• Category- Input the sales category to keep an eye on performance and revenue based on category.
• Product- Name Put the name of each product to correspond with its individual item number.
• Description- Include a brief description of the product to help clearly remember the item.
• List Price- Document the price of each item.
• Stock Location- Record the warehouse or shelves where the product is stored so it's easier to find it if necessary.
• Quantity in Stock- Write the numbers of products currently in stock.
• Inventory Value- Calculate the total value of each item represented based on the price per product and the number of products in stock.
• Reorder Level- List the reorder points per item or the level of inventory that requires the company to reorder.
• Cost Per Item- Document how much is paid to the supplier per product.
• Vendor- Record the name of the vendor who supplies the item.
• Date of the Last Reorder- Input the last time the item was reordered.
• Days Per Reorder- Input the average time length between each reordering of the item.
• Stock to be Received- Record the number of products the business has ordered but has not yet received.
• Discontinued- Put a Yes or No in this column to verify whether the item has been discontinued.

2. Order Tab

The purpose of this tab is to track all of the purchase orders to help monitor the supply chain. Document each item from each order on a separate line, utilizing these columns as headers-

• Order Number- Include the number given by the vendor to track the purchase order.
• Item Number- Input the same item number as the one from the Product tab.
• Category- Document the categories for each ordered product.
• Product Name- Record the product's name.
• Purchase Date- Input the date the order was placed.
• Stock Received- Date Record the date the item was received.
• Vendor- Write the name of the supplier the company purchased the product from.
• Quantity- Document the quantity of each product ordered.
• Cost- Price input the cost of each item.
• Amount- Document the overall value of the product ordered.

3. Sales Tab

This tab is utilized to track the company's sales. Similar to the Order and Product tabs, the user should set up a table with these columns-

• Sales Order Number- Input the numbers utilized to track each purchase.
• Item Number- Document the same item number used on the Product and Order tab.
• Product Name- Write the item's name.
• Quantity- Document the number of products ordered by the customer.
• Sales Date- List the date of the sale.
• Ship Deadline- Input the date the product must go out to the customer.
• Ship Date- Include the actual ship date.
• Tracking Number- If possible, include the tracking number from USPS or other relevant shipping services.
• Client- Include the customer name or number for the order.
• Retail Price- List the amount paid for by the customer for the product.
• Amount- Document the total amount paid to the company for the item by the client.

Other Tips and Tricks

• Simplify- Try not to include too much information in the Excel spreadsheet as it makes it more difficult to maintain an accurate record of the inventory.
• Update- Continue updating the spreadsheet when new shipments or customer orders come in because Excel will not perform these tasks automatically.
• Store it in the Cloud- Allow users to access the spreadsheet from anywhere by storing it in the Cloud. Make certain to only permit specific authors to make updates to avoid confusion and inaccurate inputs.
• Perform an Audit- Review of the inventory data repeatedly to ensure everything is up-to-date and accurate. A single error can cause a chain reaction that wreaks havoc on the supply chain.
• Integrate a Barcode Scanner- If possible, integrate a barcode scanner with the Excel sheet to save time and improve the reliability of data.
• Use an Inventory Template- Search online to download free relevant inventory management templates that are industry-related. This will ensure all necessary categories and elements are covered in the spreadsheet.

If using an Excel spreadsheet is too meticulous and time-consuming, consider purchasing an inventory software solution. A software system will improve the accuracy of inputted inventory data and automate many of the labor-intensive tasks. Here are the best practices to find the top management solution-

1. Create a Budget
Take the following into consideration when picking a software system-

• Research the top vendors to find a suitable price range.
• Break down the cost savings opportunities by switching to a software solution.
• Create a limit on how much the company is ready to spend.
• Find 5-10 management systems in that particular price range.

2. Find a Flexible Solution

Choose an industry-specific solution that includes the features necessary to accurately track inventory data. Remember the following when selecting a system-

• Write down all of the problems the company has with its current inventory tracking system and what needs to be resolved.
• Contact one of the selected software vendors to schedule a demo or request more information.
• Ask the vendor how their solution will help solve the company's inventory-based problems.
• Determine if the vendor's software is capable of accommodating multiple warehouses, store locations, or sales channels such as e-commerce.
• Research the limitations of the selected vendors and narrow down the choice to three that best address the company's needs.

3. Choose a Level of Customizability

Some inventory solutions only offer a certain number of features while others are highly customizable to the needs of their clients. Take the following points into consideration-

• Document the number of modules and features that each selected inventory management system comes with and whether more can be added if necessary.
• Rank the three selected vendors by which provides the highest level of customization and flexibility.
• Research whether the software can integrate with mobile phones or other devices that management frequently uses on the job.

Here are the key takeaways to remember about using an inventory management system to track data-

• Use an Excel spreadsheet to organize inventory data into three primary categories- Product, Orders, and Sales.
• The product tab tracks all of the company's current and discontinued products, along with other relevant data that is necessary to accurately manage inventory.
• The order tab monitors all aspects of the supply chain and ensures orders are fulfilled promptly.
• The sales tab manages the company's sales data, including tracking numbers, ship date, and more.
• Best Excel practices are to simplify, update frequently, store in the Cloud, perform a regular audit, integrate with a barcode scanner, and use a customized template.
• Some companies find an Excel spreadsheet to be too cumbersome and prone to error. If so, it may be preferable to purchase an inventory software solution.
• To choose the correct software system, create a budget, research customizable solutions, and find a vendor that offers the necessary features.