Inventory Planning Blog

Inventory Planning the Hard Way

Posted on Tue, Dec 11,2012@10:00 AM

inventory planning, Valogix, Saas, SpreadsheetsThe vast majority of companies that own an inventory invariably use spreadsheets to control, manage and report. The types of companies vary from manufacturing, to wholesale distribution, to retail, to aftermarket services, to maintenance and repair operations.  And this is true geographically and for companies from the very small to the largest.  So, why the fascination with spreadsheets?

In most cases, companies already own the software as part of a suite or as already installed on the computer they purchased. They are relatively low cost and have an abundance of features that make them attractive. It is also a case of “you don’t know what you don’t know” – meaning people are unaware of the availability of easy–to-use, affordable, automated inventory planning software.

The dangers inherent in spreadsheets are:

1.  Lack of Control
2.  Errors from:
          Formula and data entry mistakes and typos
          Cell formatting and range definition mistakes (or errors)
          Data exporting problems
          Cell referencing problems
3.  Complicated Calculations using incorrect assumptions
4.  Potential for fraud

Lack of adequate training can result in poor to mediocre spreadsheet results, such as improper referencing, linking to other spreadsheets, or using inaccurate formulas to master complex calculations.

inventory planning, Valogix, Saas, spreadsheetsIf the policies and procedures to mitigate spreadsheet risks are inadequate, errors will become more common and lack of consistency will show up in internal control audit reports.  Therefore, the style, content, and accountability for spreadsheets should be documented in the organization's policies and procedures or in the spreadsheet used.

People are creatures of habit, which is one reason why spreadsheets are reused from year to year.  Unfortunately after cutting and pasting information, the spreadsheet might not work the way it did before — formulas can be damaged, links can be broken or cells can be overwritten.

Many disruptions to the daily work day are common reasons personnel make data entry errors such as skipped entries or transposed numbers.  A 2004 PricewaterhouseCoopers study shows that up to 91 percent of sophisticated spreadsheets contain errors.  Unfortunately, if auditors know there are spreadsheet errors, so do fraudsters.  For example, inadequate spreadsheet controls may lead to errors, misstatements, and possibly fraud.

Failure to back up data is a common and sometimes fatal error that may result in the loss of hours of data entry for computer users, which applies equally to all software tools including spreadsheets.  Hardware and software breakdowns do occur from time to time, and backing up regularly and frequently is the best prevention for the spreadsheet user.

Keeping track of reorder points and safety stock for hundreds or thousands of items is becoming an overwhelming task. The time involved to update and maintain these spreadsheets can take hundreds of hours every week. Plus, demand is constantly changing which can make the data stale and behind the curve for the most recent trends. This can lead to under-stocking causing lost sales and overstock -creating excess inventory.  In both cases, a loss and a waste of valuable cash.

Do your company a favor and search for inventory solutions that:

  1. inventory planning, Saas, cloud, Valogix, spreadsheetsAutomate the planning processes: forecasting, planning and replenishment at the item and item\location level

  2. Includes genuine optimization

  3. Are built on management by exception principles

  4. Contain alerts for potential stockouts and customer order shortages

  5. Can show you the real ROI of your actual inventory the first day you go-live

  6. Are web-based, if you are interested in software-as-a-service (SaaS)

  7. Come from companies that only do inventory planning solutions (best-in-breed)

  8. Publish many customer case studies that demonstrate the true results companies have attained

  9. Are partners with key ERP & technology providers like SAP, NetSuite, Sage, IBM, MYOB and others.


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Tags: Inventory Planning, SaaS, Valogix, Spreadsheets