Using Excel Spreadsheets: A Double-Edged Sword for Distillery Management
Welcome to the first in our three-part blog series exploring the common system options available for young and growing distilleries. We’ll compare and contrast the benefits of 3 key approaches:
1) Using (often multiple, unconnected) Excel spreadsheets (this post)
2) Industry agnostic off-the-shelf systems; and
3) Industry specific software options
In the increasingly competitive world of craft distilling, coupled with an age of data, efficiency is key. Many distilleries are turning to more and more sophisticated software options, hoping to find the best distillery management software to provide a robust platform for everything from scaling their brand, satisfying lender requirements (there’s a lot (!) of capital tied up in whisky) up to ensuring an investable or sellable business with suitable controls and processes in place.
So let’s get to it with the first of this mini-series…
Old Faithful – Microsoft Excel
• I’m comfortable with Excel, but is it capable of supporting my distillery’s growth?
• What are the risks of relying solely on spreadsheets for distillery management?
• How many spreadsheets is too many spreadsheets ?! How do I link together the different teams spreadsheets?
• We’ve got so much on Excel already, how would we ever move away from it?
These are all valid concerns and common questions we hear. Let’s take a closer look at the advantages and limitations…
Many craft distilleries begin their journey by managing operations with Excel spreadsheets. This approach offers a certain flexibility and a low barrier to entry/cost – after all, most people have some experience with spreadsheets and us accountants feel comfortable and at home with it’s user interface and functionality. We know distilleries ranging from 200 casks to over 10,000 casks with decades old spirit re-racked multiple times managing their production, maturation and bottling all on Excel spreadsheets!!
First up, a caveat – Excel is great. It’s got vast functionality and is probably only used to 20% of it’s full capability by most users, we’re assuming a generalised base level of working knowledge here. We recognise there will be some reading this that are Excel guru’s that can address some of these challenges with advanced functions – and we salute you!
Advantages of Spreadsheets
• Cost-effective: Excel is readily available and relatively inexpensive to use
• Customisable: You can tailor spreadsheets to fit your specific needs (but watch out for point 2 in the challenges section below!)
• User-friendly (to a point): Basic spreadsheet functions are relatively easy to learn
• Familiar: As we say above, most accountants in particular have spent their career using and training on Excel – it looks and feels familiar, a value not to be under-estimated!
Challenges and Limitations
• Data fragmentation: As your business expands, tracking inventory, sales, margins, production schedules, and compliance data across multiple spreadsheets becomes cumbersome, error-prone and anti-growth. With data scattered across multiple spreadsheets a holistic view of the business becomes impossible. This is where distillery ERP software can help.
o Example: What are my product margins per channel? Ah ok, well our dry goods are in spreadsheet ‘x’, our liquid cost is in spreadsheet ‘y’, our sales information by channel is in our e-commerce system for product level detail, and in our sales system, then our A&P costs are in the finance ledger…..give me a few weeks and I’ll come back to you !?!
• Customisable / Data Validation: Now yes, Excel has data validation functions and workbook protections but we often don’t see them used, and they can easily be circumvented. So Excel is super customisable to what you want – but many others can also change it, sometimes accidentally.
• Data input: Any system requires data input – whilst some use OCR to help on this ultimately solutions for smaller companies and most larger companies often need information typed in by staff – the more systematic the better, and Excel is at the open-ended and riskier data entry side of the spectrum.
• Limited automation: Without complex functionas spreadsheets lack the built-in workflows and automations of dedicated software solutions. This can lead to bottlenecks and inefficiencies in processes on everything from recipe formulation, production planning, to order fulfilment and invoicing.
• Scalability: As noted above there are some surprisingly large distilleries out there surviving on Excel. Generally however it struggles to keep up with the increasing volume and complexity of data as your distillery and customer base grows, making analysis harder and often increasing overheads and staff count in order to make informed and timely business decisions.
• Collaboration challenges: We’ve all been there – “are we on V.1? Or V1.1? Did you update LIVE file, or is the “Sent for review” draft we’re working off ?!? . Sharing spreadsheets among team members can lead to version control issues and difficulties in ensuring everyone is working with the most up-to-date information, not to mention the loss of time and cost re-updating the right version once you realise it’s LIVE V1.1.3 that’s actually the right file !
• Lack of process / prompt / systemisation: As your business scales and training needs broaden for new staff in order to fuel that growth then the variation seen in Excel models built by different individuals for different purposes, using different data structures across even a department, never mind a full business can hamper efficient scalability.
So, is Excel Right for You?
Ultimately, the decision of whether to stick with Excel or explore other software options depends on your individual circumstances. If you’re a very small operation with simple processes, Excel might be fine for now. But if you’re facing any of these challenges or are looking forwards towards growth, it may be time to explore other options.
Don’t delay the inevitable. Addressing system limitations early on will save you time and headaches down the road. System change can be far easier than you think, when your goals are clear, well-communicated, and your data is organised.
In the next post, we’ll explore the middle ground: off-the-shelf software options. Stay tuned!
