In the last year I have walked into at least 10 warehouses that are using Microsoft Excel inventory spreadsheets. Each company had an annual turnover of more than £10 million and their warehouse operations sat at the heart of everything they do.
For the majority of warehouse operations their inventory is the largest asset in the business and the biggest drain on cash flow. When you consider the facts, it can be difficult to understand why warehouse operations are still plugging away with paper based and manual excel inventory spreadsheets.
Warehouse operations unloved and mis-understood
Companies that are using excel inventory spreadsheets are usually doing so because their core ERP (enterprise resource planning, such as Microsoft Dynamics, Sage, Oracle or SAP) or business system is incapable of running their warehouse efficiently. The majority of these host systems only care about inventory quantities, not locations and tasks like electronic picking.
The reason for this is the companies that developed them, came from a business process perspective rather than a warehouse process perspective. Typically they have started life as accounting and financial systems, competing on who can do the minimum number of keystrokes to enter a purchase order. They have little or no understanding of warehouse processes and efficiencies, hence why more than $1 billion is spent per year globally on separate warehouse management software.
The lack of warehouse understanding by financial systems is reflected by many companies’ financial decision makers. This may explain why many large warehouse operations continue to operate without any investment in their warehouse IT systems.
Excel inventory spreadsheets require stock movements to be recorded on paper at the point of activity and then be input manually. This is time consuming and the process duplication also leaves a significant margin for human error. Think bad hand-writing and mis-types.
Serious warehouse operations can not afford the errors and clumsiness that comes with using spreadsheets for inventory control.
Spreadsheets do not record a history of inventory movements and warehouse processes. This lack of traceability can make ensuring compliance to storage regulations and responding to product recalls extremely labour intensive.
Low cost inventory systems, that are available on low pay monthly fees, can automatically track inventory history at no extra effort to the Warehouse Manager or Warehouse Teams. When they can cost less than £10K / $15K to get started or even pay monthly for quicker return on investment, it seems a reasonable investment as a proportion of revenue.
Author: Oliver Rhodes