Tag: Stock Management

Most Pakistani businesses start tracking inventory in Excel spreadsheets—it’s familiar, free, and seems sufficient initially. But as your business grows, Excel’s limitations become painful. This guide helps you understand when Excel works, when it doesn’t, and how to transition to dedicated inventory software without losing your data or sanity.

Why Businesses Start with Excel

Excel is the default choice for Pakistani SMEs because:

• Familiarity: Most people know basic Excel from school or previous jobs
• Cost: Comes with Microsoft Office (or use free Google Sheets)
• Flexibility: Create any structure you want
• Quick Start: No implementation or training needed

For a small shop with 20-30 products, Excel honestly works fine. The problems start when you grow.

Setting Up Stock Management in Excel

If you’re starting with Excel, here’s a basic structure:

Essential Columns

SKU	Product Name	Category	Opening Stock	Received	Sold	Current Stock	Reorder Level	Unit Cost	Sale Price
SKU001	Product A	Category 1	100	50	80	=D2+E2-F2	20	500	750

Key Formulas

• Current Stock: =Opening + Received – Sold
• Stock Value: =Current Stock × Unit Cost
• Low Stock Alert: =IF(Current Stock<Reorder Level, “ORDER NOW”, “OK”)
• Profit per Item: =Sale Price – Unit Cost

Limitations of Excel for Inventory

As your business scales, Excel becomes problematic:

1. Manual Entry Errors

Every transaction requires manual typing. One wrong keystroke—entering 100 instead of 10—corrupts your records. With hundreds of daily transactions, errors are inevitable.

2. No Real-Time Updates

When a sale happens at your shop, Excel doesn’t know until someone manually updates the file. Meanwhile, you might order stock you don’t need or promise items you don’t have.

3. Multi-User Nightmares

When two people edit the same Excel file, conflicts arise. “Which version is correct?”—becomes a daily question. Shared drives help but don’t solve simultaneous editing issues.

4. No Audit Trail

Who changed what, when? Excel doesn’t track this reliably. When stock discrepancies arise—and they will—you can’t trace the source.

5. Limited Reporting

Creating reports in Excel requires pivot table skills and significant manual effort. Want to know your dead stock? Slow-moving items? FIFO valuation? Each report is a project.

6. No Integration

Excel sits alone. It doesn’t connect to your POS, accounting software, or e-commerce store. Every connection requires manual data transfer.

7. Scalability Ceiling

Excel files become slow and crash-prone as they grow. Beyond 10,000-20,000 rows with formulas, performance degrades significantly.

Signs You’ve Outgrown Excel

Time to switch to dedicated software if:

• You manage 100+ SKUs
• You have multiple locations (shop, warehouse, branches)
• Multiple people need to update inventory
• You experience frequent stockouts or overstock
• Monthly reconciliation takes hours instead of minutes
• You’re losing track of expiry dates (FMCG, pharma)
• Audit discrepancies are common and unexplained
• You want automated inventory reports

Dedicated Inventory Software Benefits

Feature	Excel	Inventory Software
Real-time stock levels	No	Yes
Automatic updates from sales	No	Yes
Multi-user simultaneous access	Problematic	Yes
Barcode scanning	No	Yes
Low stock alerts	Manual formula	Automatic
Purchase order management	Separate sheet	Integrated
Location tracking	Complex	Built-in
Batch/Expiry tracking	Very difficult	Standard feature
Audit trail	No	Complete history
Accounting integration	Manual	Automatic

Cost Comparison

Excel: Hidden Costs

Excel seems free, but consider:

• Staff time: 2+ hours daily on data entry = 60+ hours monthly
• Error costs: Stockouts lose sales; overstock ties up capital
• Reconciliation: Days of work for physical stock audit
• Lost sales: Customer asks for item you think you have but don’t

If staff time costs Rs. 300/hour, 60 hours = Rs. 18,000/month just on data entry.

Software: Direct Costs

Inventory software in Pakistan typically costs:

• Basic: Rs. 2,000-5,000/month
• Mid-range: Rs. 5,000-15,000/month
• Full ERP: Rs. 15,000-50,000/month

The math usually favors software once you factor in saved time and reduced errors.

How to Migrate from Excel to Software

Step 1: Clean Your Excel Data

• Remove duplicates
• Standardize product names (no “Widget” and “widget” and “WIDGET”)
• Fill in missing information
• Do a physical count to verify current quantities

Step 2: Choose the Right Software

Consider your specific needs:

• Retail: POS integration, barcode support
• Distribution: Multi-location, route management
• Manufacturing: Bill of Materials, work orders
• FMCG: Batch tracking, expiry management

Step 3: Import Your Data

Most software accepts Excel imports. Export your clean Excel file as CSV and upload. Map columns to the software’s fields.

Step 4: Run Parallel Systems

For the first 2-4 weeks, maintain both Excel and software. Compare results daily. This catches migration issues before they become problems.

Step 5: Train Your Team

Everyone who touches inventory needs training. Resistance is normal—people fear change. Show them how software makes their job easier, not harder.

Making the Right Choice

Stick with Excel If:

• You have fewer than 50 SKUs
• Only one person manages inventory
• Single location with simple operations
• No expiry date concerns
• You’re genuinely comfortable with current system

Move to Software If:

• 50+ SKUs or growing
• Multiple people or locations involved
• Stockouts or overstock are hurting business
• You need integration with accounting/POS
• Physical counts regularly show discrepancies
• You’re spending hours on inventory management

Frequently Asked Questions

Conclusion

Excel is a great starting point, but it’s not an endpoint. As your Pakistani business grows, the limitations of spreadsheet-based inventory management become increasingly costly—in time, errors, and missed opportunities.

The right time to switch is before Excel becomes painful, not after. If you’re seeing signs of strain—frequent discrepancies, stockouts, reconciliation headaches—start evaluating software options now.

Ready to upgrade from Excel? HysabOne makes migration easy with Excel import, intuitive interface, and full inventory management features designed for Pakistani businesses.

Inventory management is the systematic process of ordering, storing, tracking, and controlling a company’s stock of goods. For Pakistani businesses—whether retail shops in Saddar, distributors in Faisalabad, or manufacturers in Sialkot—effective inventory management directly impacts profitability, cash flow, and customer satisfaction.

What is Inventory Management?

Inventory management encompasses all activities involved in maintaining optimal stock levels—enough to meet customer demand without tying up excessive capital in unsold goods. It answers critical questions: What to order? How much? When? Where to store it?

For Pakistani SMEs, where cash flow is often tight and storage space limited, inventory management is not just about tracking stock—it’s about business survival.

Why Inventory Management Matters for Pakistani Businesses

Cash Flow Impact

Inventory is money sitting on shelves. A typical Pakistani trader has 30-60% of their capital locked in stock. Poor inventory management means either stockouts (lost sales) or overstocking (trapped capital). Both hurt your cash flow.

Customer Satisfaction

Nothing frustrates customers more than hearing “یہ آئٹم ابھی نہیں ہے” (this item is out of stock). In competitive markets, customers simply go to your competitor next door.

Storage Costs

Rent in Pakistani commercial areas is expensive. Every square foot of godown space has a cost. Excess inventory means paying rent for goods that aren’t selling.

Expiry and Obsolescence

Especially critical for FMCG, pharmaceuticals, and fashion. Dead stock means direct losses.

Inventory Management Methods

FIFO (First In, First Out)

Oldest stock is sold first. Essential for perishables, pharmaceuticals, and any product with expiry dates. Most Pakistani retailers dealing in FMCG products should use FIFO. Learn more about FIFO vs LIFO methods.

LIFO (Last In, First Out)

Newest stock is sold first. Rarely used in Pakistan except in specific scenarios. Note: LIFO is not accepted under IFRS accounting standards.

Weighted Average

Calculates average cost of all units. Useful when dealing with commodities or items with fluctuating purchase prices—common in Pakistani trading businesses dealing with imported goods where USD rates change frequently.

ABC Analysis

Categorize inventory by value:

• A Items: 20% of products generating 80% of revenue (focus maximum attention)
• B Items: 30% of products generating 15% of revenue (moderate attention)
• C Items: 50% of products generating 5% of revenue (minimal attention)

Key Inventory Metrics to Track

Inventory Turnover Ratio

Formula: Cost of Goods Sold ÷ Average Inventory

This tells you how many times you sell and replace inventory annually. A ratio of 4 means you’re turning over stock every 3 months. Higher is generally better—it means less capital locked in stock.

Days of Inventory (DOI)

Formula: (Average Inventory ÷ COGS) × 365

How many days would current stock last at average sales rate? For most Pakistani retailers, 30-45 days is healthy. More means overstocking; less risks stockouts.

Stock-Out Rate

Percentage of time items are unavailable when customers want them. Track this carefully—each stockout is a potential lost customer.

Dead Stock Percentage

Items with no sales in 6-12 months. This is trapped capital. Aim to keep dead stock below 5% of total inventory value.

Setting Up an Inventory System

Step 1: Categorize Your Products

Group items logically—by category, supplier, location, or any system that makes sense for your business. Assign unique SKU codes to each item.

Step 2: Calculate Reorder Points

For each item, determine when to reorder based on lead time and average sales. Learn the formula in our reorder point calculation guide.

Step 3: Set Safety Stock Levels

Buffer stock to cover unexpected demand or supply delays. Critical for items with long supplier lead times or unpredictable demand.

Step 4: Choose Your Tracking Method

Options range from manual registers to Excel spreadsheets to dedicated inventory software. For businesses with 100+ SKUs, software becomes essential.

Step 5: Establish Audit Procedures

Regular physical stock counts catch discrepancies between records and reality. Monthly cycle counts are better than annual marathons.

Manual vs Software-Based Inventory Management

Aspect	Manual/Excel	Inventory Software
Cost	Low/Free	Rs. 2,000-15,000/month
Accuracy	Error-prone	High accuracy
Real-time Updates	No	Yes
Multi-user Access	Limited	Yes
Reporting	Manual	Automated
Scalability	Poor	Excellent
Best For	<50 SKUs	50+ SKUs

For detailed comparison, see our guide on Excel vs dedicated inventory software.

Multi-Location Inventory Management

Pakistani businesses often operate from multiple locations—a shop in Main Market, warehouse in Industrial Area, and maybe a second outlet. Multi-location inventory management requires:

• Central visibility of stock across all locations
• Inter-branch transfer tracking
• Location-wise profitability analysis
• Optimized stock distribution based on location demand

Industry-Specific Considerations

Retail Stores

Focus on fast-moving items, manage display vs backroom stock, and integrate with POS for automatic updates. See our retail software guide.

Distribution Businesses

Handle larger volumes, multiple warehouses, and complex pricing (different rates for different customers). Distribution software is essential.

Manufacturing

Track raw materials, work-in-progress, and finished goods. Bill of Materials (BOM) integration is crucial. Explore manufacturing ERP options.

FMCG

Expiry date tracking is critical. Batch management helps trace products. FMCG distribution software addresses these needs.

Common Inventory Mistakes in Pakistani Businesses

• Ordering Based on Gut Feel: Use data, not intuition, for reorder decisions
• Ignoring Slow-Moving Stock: Dead stock doesn’t disappear—actively manage it
• Poor Organization: Messy warehouses lead to lost items and inefficiency
• No Regular Audits: Records diverge from reality without physical verification
• Mixing Personal and Business Stock: Keep clear separation for accurate tracking
• Not Training Staff: Everyone handling stock should understand the system

Inventory Management Software Features

When evaluating inventory software for your Pakistani business, look for:

• Real-Time Stock Updates: Know current levels instantly
• Low Stock Alerts: Automatic notifications before stockouts
• Barcode/QR Support: Speed up receiving and dispatching
• Purchase Order Management: Track orders from creation to receiving
• Inventory Reports: Stock valuation, movement analysis, aging reports
• Integration with Accounting: Automatic cost of goods sold calculations
• Multi-Location Support: For businesses with multiple godowns/shops

Frequently Asked Questions

Conclusion

Effective inventory management is the difference between a struggling business and a thriving one. For Pakistani SMEs operating in competitive markets with thin margins, getting inventory right isn’t optional—it’s essential.

Start by understanding your current situation: What’s your turnover? Where’s dead stock hiding? What’s causing stockouts? Then implement systematic improvements—proper categorization, calculated reorder points, regular audits, and eventually, proper software.

The businesses that master inventory management free up capital, satisfy more customers, and ultimately, earn more profit. Ready to optimize your inventory? Try HysabOne’s inventory management features designed for Pakistani businesses.