Construction Inventory Management Paper, Spreadsheet, or Software
Construction Inventory Management Paper, Spreadsheet, or Software

Construction Inventory Management: Paper, Spreadsheet, or Software?


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Construction inventory management is all about organizing, ordering, and using your company’s inventory. Whether you keep stock of raw building materials, lightweight tools, heavy equipment, work-in-process, or finished goods or output, an optimized construction management system is critical to ensuring that your company runs smoothly and profitably.

Construction companies often rely on free, inexpensive, and traditional options to manage and track their inventory. Printed construction inventory lists— which are basically just sheets of paper— and conventional spreadsheets are classic approaches to managing inventory for companies looking to cut costs. The question is, in these progressive times, would that be enough?

In today’s blog, we will talk about all the basics of inventory management and dive into why the subject, at its core, is such an essential process to each and every kind of business, especially in the construction industry. Then, we will identify the most common inventory management terms like the cost of goods and safety stocks. After that, we’ll review various inventory management process methods, including inventory spreadsheets, written inventory, and construction inventory software.

What is Inventory Management?

Generally, inventory management is the process of organizing, ordering, stocking, tracking, and utilizing a business’s inventory— regardless of what the items could be. It is a complex and highly essential aspect of supply chain control and management, mainly when your business includes a broad category of inventory items in large quantities distributed in multiple locations or warehouses.

Even though inventory management may seem overwhelming at first glance, selecting a consistent and reliable inventory management system to track all your company’s possessions can save you huge chunks and resources, such as time, money, and even unnecessary stress. Always remember that there are various innovative tools and technology available that can cut you hours off your daily, monthly, and even annual activities— and inventory management is one of them.

Key Inventory Management Terms 

If you are overwhelmed with the whole concept of inventory management, knowing some of the buzzwords to talk about managing construction inventory can go a long way to boost both your knowledge and confidence in dealing with the subject at hand.

Below, we present you the most basic inventory management terms you should be familiar with:

Cost of Goods Sold (CoGS)

Cost of Goods Sold refers to the sum of all the direct costs accumulated by producing items sold by a specific business. It consists of all available resources, such as materials, equipment, labor, etc., but not indirect costs like marketing, sales, and distribution.


Deadstock is generally what you would think it is: a stock that is dead. It’s just idly sitting there, unsold and unused.

Lead Time

A lead time in inventory refers to how long it would take a vendor or supplier to deliver the inventory items you have ordered from them.

Reorder Point

Reorder point signifies the precise time when a company should replenish and reorder their inventory to meet the forecasted demand by the inventory team.

Safety Stock

Safety stock pertains to that little bit of inventory a company maintains, “just in case” a shortage may arise.

Stock Keeping Unit (SKU)

Stock Keeping Unit is an alphanumeric tracking code, quite similar to a serial number, that is unique for each item in your inventory that can be used as identification.

Related: Construction Inventory 101 – Common Terms You Need To Know

Inventory Management Systems

Ever since it has been widely known the importance of inventory management systems in any industry, there has been a rise in several types of the management process— at a variety of costs as well— available for companies of all shapes and sizes. From a high-level and professionally designed inventory management software to the traditional sheet and paper duo, there are many ways to track all the inventory items you have on hand.

1. Pen and Paper Inventory Management

Manually managing construction inventory using a little more than a sheet of paper is the oldest trick in the book that has been used for centuries by our ancestors. It’s old-fashioned but potentially can be an effective way of keeping track of the inventory that you have in stock. Of course, such a system is extremely limited in terms of the items you can manage all at once and works best for businesses that keep stock of just a few things and employ just a handful of people. 

Below are some of the pros of pen and paper inventory management:

  • Encourages regular, manual physical inventory counts and audits
  • Requires no training or any technical skills in general
  • Virtually free

Now, here are some of the cons of using pen and paper for your inventory processes:

  • Very time-consuming since it is manual work
  • No way to set alerts or notifications for low stocks and important dates such as reorder or deliveries
  • Cannot feature photos, visual presentation, and quick overview of the items
  • Only accessible to one person at a time
  • Requires constant updating and review
  • Impossible to automatically generate reports to gather inventory information forecast, or understand the figure
  • Once these paper documents are lost, no backup inventory is available. Your data is lost forever.

2. Spreadsheet Inventory Management

Generally, an inventory spreadsheet helps you keep track of all the details in your inventory, including little too critical information such as item name, category, SKU, location, condition, quantity, estimated value, purchase amount, condition, and expiration date.

You can easily access inventory spreadsheet templates online, or you can quickly create your own using products like the infamous Microsoft Excel, Google Sheets for online editing, and Numbers for Mac IOS users. If you opt to create your inventory in a spreadsheet in any of these applications, add a column for every little information you would like to track. Don’t forget to leave a few open-ended cells for random notes and reminders.

Ideally, you should save the template of your inventory spreadsheet in your first tab. This is so it can be easily accessed when you print it out and fill it in when you take the inventory manually. After this, create another tab every time you conduct a physical inventory and properly date the tab. This way, you will be able to gather information quickly about your overall inventory over time. Familiarize yourself with the essential formulas and ratios so you could easily calculate your date when needed.

But of course, an inventory management system via spreadsheet has its advantages and disadvantages too. 

Below are some of the advantages of using an inventory sheet: 

  • Basic and straightforward, easy to operate
  • Ultra-quick to begin
  • Applications are usually free to use
  • No equipment necessary
  • Most employees with basic computer skills can assist

On the other hand, here are the disadvantages of an inventory spreadsheet:

  • Extremely hard to add pictures of items
  • Tired eyes can carelessly input information in the wrong cells or jumble data
  • Difficult to distinguish between items that have similar names
  • Inventory data reports must be gathered manually
  • Spreadsheets not saved in the cloud can be outdated or impossible to access on gadgets
  • Spreadsheets saved in the cloud could be corrupted, altered, or worse, hacked
  • No way to set alerts or notifications for low stocks and important dates such as reorder or deliveries
  • Time consuming, as inventory must be taken first and then recorded later at the computer

3. Inventory Management Software

Ultimately, all inventory management software the most crucial information about a company’s inventory. This can include the item location, stock levels, minimum stock required, and purchase amount. Inventory management software also helps companies, both big and small, save valuable resources such as time, money, and even unwanted stress by incorporating modern technology and automated inventory management systems designed for your business needs.

There is a wide array of inventory management software available in the market that you can choose from. Some of this software is highly technical, very expensive, incredibly difficult to operate, and not industry-specific. However, most companies discover that inventory software that costs them huge bucks a year (or even more) still doesn’t work to make their inventory management much more bearable and less overwhelming.

Key Takeaways

Many construction companies want a simple interface simultaneously, intuitive web-based inventory software that streamlines the time-consuming parts of inventory management so they could focus on more important and urgent tasks at hand. At the end of the day, companies want a tool that would make their operations more straightforward and not more complex than it already is.

The latest versions of inventory management software that are being launched, which often feel like inventory applications, offer many of the same functions and features as the traditional management software at even less the price— all you need is to find the best one that will work for your company.

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