Why Spreadsheets Are Poor Inventory Management Tools

Spreadsheets are a favorite tool in business and it's a rare company that doesn't use them.

However, it's these very qualities that cause businesses to get into trouble when spreadsheets are used in ways for which they are poorly designed. Spreadsheets are a single user tool for ad hoc analysis and small data set storage. When a business becomes dependent on specific spreadsheets, the business is vulnerable to a great deal of harm. This is described in more detail below:

Spreadsheets Create Version Control Difficulties

Unsanctioned version proliferation of the same spreadsheet is possible when a file is shared by sending copies to multiple recipients. Each person in turn can spread yet more copies of the file in the same way. If several recipients modify their spreadsheet, then multiple versions with the same file name exist.

Spreadsheets Create Data Silos

Data inside a data silo does not propagate to other applications that require it. The data is isolated, much like the grain in a farm silo. Transferring data from the silo requires manual reentry which can introduce errors. When multiple spreadsheets have data overlap, data change in one spreadsheet doesn't propagate to the others. This means the different spreadsheets produce inconsistent results.

Spreadsheets Are Error Prone

Spreadsheets are open to accidental changes every time they are used. Links get broken, data are incorrectly entered, and formulas accidentally altered. The more often a spreadsheet is used, the greater the chances for error introduction. Another source of error are bugs. When someone creates a complex spreadsheet, he effectively creates new software. However, this person is probably not a software engineer and may create the spreadsheet in an ad hoc manner. Hidden bugs are often the result.

Inventory management tasks such as inventory forecasting are complex and are best handled with proven and reliable software rather than homegrown spreadsheets. The larger your business grows, the more problematic your reliance on spreadsheets for inventory management becomes.

For more information on our inventory management and control consulting services, please contact us.

#software #consulting #Inventory #replenishment #Management #forecasting

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