• Promosoft

Time to switch Excel to a "real" system?

Even today, many people make calculations of the stock using Excel. It may work if you have a small number of products in your warehouse, and very simple supply chains. But for most people, there is a lot to be gained from investing in a "real" system for inventory planning and management. Excel is simply not done to make reliable forecasts . On the contrary, it makes room for it to go wrong, because it leaves a lot of space for something as treacherous as the human factor… Not infrequently we see that several people are in and working and making changes in the same file , and this makes it becomes very vulnerable. An error in one place will affect all calculations.

All manual work is also time consuming. Many people who work with inventory planning testify to the amount of working time that is devoted to entering data and correcting manually generated errors.

By using a system that is created for calculating purchases and inventory, you run a much smaller risk of human error. Everything is gathered in the same system, and thus you avoid the situation with a large number of versions of the same document, which are sent back and forth. Everyone has access to the latest version with updated figures. Systems that use artificial intelligence and machine learning "learn" from previous experience to produce more accurate forecasts over time. These systems also have automated processes - based on machine learning, which in turn are based on a large amount of data - to handle this type of task. In this way, working hours are freed up, while avoiding human error. Buyers can instead engage in more strategic work , and thus become more productive and profitable.

When you cannot predict the future

When making your plans in Excel, the calculations are based directly on actual values, ie there is no room for uncertainty and probability calculations. The system cannot make calculations based on sudden changes in demand, but only on the basis of historical data, which often results in the wrong goods being in stock.

Many of the cloud-based software available today for inventory management has been specifically developed to calculate optimal service levels – which makes it possible to have different service levels for different products at different times. Many of these systems work with advanced algorithms and machine learning. In this way, a number of possible scenarios and outcomes can be calculated, based on which one can then obtain the most probable.

Better calculations of optimal stock levels

Difficulties in calculating optimal stock levels mean that you often take the safe before the unsafe and buy too many goods - this in turn means that many are sitting at an unnecessarily high stock value, while the goods risk becoming redundant or even outdated and therefore can not be sold. It does not get any better when it is difficult to ensure that you have the right information in front of you, when you sit and work in Excel. There is a risk that you base your calculations on incorrect figures.

With a modern procurement planning system, optimal service levels and restrictions as lead time, minimum order, quantity, and order intervals are going to be considered automatically. The result is improved service levels and lower inventory levels. These systems can also keep track of when the stocked goods is outdated, and can thus help to avoid the need to sell below purchasing cost, alternatively the need to dispose the goods.

So what do you say? Is it time to discard the old spreadsheets and make room for a more modern, secure and accurate system for calculating and optimizing inventory?

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