Inventory management is essential for any retail business. Even non-retail business models require internal inventory management to track tools and equipment. Excel is exceptionally useful because it offers a cheap means of effectively tracking inventory. A large, complex store will benefit from an end-to-end management software program but Excel is sufficient for simple inventory management needs.
Inventory Management Basics
Inventory management is a system that tracks items as they come into the business and logs them out when they sell. For example, a clothing store will log 100 shirts into the system after they are ordered and stocked on the racks. When a customer purchases one of those shirts, the item is checked out of the inventory and the sale is accounted for with the profit margin attached. When 80 of those shirts have sold, the manager or owner can consider placing a new order to restock the inventory.
Without a management system in place, the inventory is not tracked and the store does not know how much of each item is stocked. This disrupts ordering systems, financial accounting and the ability to monitor sales and make educated purchasing decisions based on the best and worst selling items.
Excel is less automated than software programs that link up with the point of sale (POS) system. These POS systems are used to log the transaction and process credit cards. Many are designed to track inventory as well. The store enters new inventory manually and each item is removed from inventory when the sale is completed. Store inventory software in Excel is not common but many programs do allow for an export into Excel for record-keeping.
Excel Inventory Spreadsheet Layout
Creating the spreadsheet is a fairly simple process. Inventory management Excel formulas are also useful for tracking the total value of the inventory logged into the system. To get started, create the category headings for each individual column.
Use the heading Item for the first column, Quantity for the second and Unit Price for the third and Total Value for the fourth. While multiple different systems for tracking inventory exist, this one keeps an accurate count and shows the total value of all inventory in stock.
For the Total Value column, multiply the Quantity by the Unit Price to determine this number of each row. The formula to track value for each item in stock is =sum(b*c). Apply this to every row so each inventory item generates a unique value based on the quantity and unit price. For example, a t-shirt listed in the third row would use =sum(b3*c3) to determine the total value on your inventory sheet in Excel.
Other Inventory Tracking Options
Excel is useful but is not always the best option. The spreadsheet system works well for companies dealing with only a few items. For example, a company selling medical devices may only have a few different big-ticket items in inventory. An X-Ray machine model with 20 units is easy to track regardless of the value of each unit. It's a low count, low inventory situation that makes tracking much easier.
A medical company selling everything from gauze pads to ointments will, however, require a more robust system to track inventory. Excel is still a possibility but accessing the correct space on the spreadsheet when thousands of items are listed makes the process inefficient. A software program with a search function can quickly pull the item while displaying all relevant information regarding inventory available, sales made, the value of the sales and the total value of the remaining inventory in stock.
Consider using Excel as a starter program for basic inventory tracking and upgrade to a more serious system when appropriate. Inventory tracking software is expensive but is well worth the cost when tracking numerous units with high turnover.