Why Supply Chain Spreadsheets Can Cause Major Supply Chain Issues
Updated: Jun 10, 2021
In recent years, supply chain technology has evolved immensely from tools such as ERP software to self service business intelligence tools, advanced planning software and more. There are many options available for keeping track of supply chain performance. Despite the advancements in technology, the most commonly used tool for supply chain performance are still excel spreadsheets. In fact, over 70% of companies around the world use spreadsheets as their primary solution for supply chain performance management and reporting.
With so many alternatives at ones disposal, why do businesses continue to resort to such an unsophisticated method to measure supply chain performance? There are many reasons why, but the primary reason is that this is the way that things have always been done. Often times, companies stagnate because they find it difficult to move past the status quo. If these businesses want to avoid headaches however, they must move past the status quo or it could lead to serious supply chain issues! Here are some of the reasons why using excel spreadsheets may not be the best choice in managing a supply chain.
They Are Error Prone
The problem with not just supply chain spreadsheets, but all spreadsheets is that they are incredibly prone to errors. About 88% of spreadsheets contain errors even after careful revision. Trying to fix spreadsheet errors can be incredibly costly, tedious and even embarrassing. One of the most famous examples of an excel error is during the 2012 Olympics when there were 10,000 tickets available to be sold for synchro swimming and an employee had wrote down 20,000. It was not until a few weeks before the competition that the organizers realized their mistake and made amends to those who they oversold to by allowing them to watch the 100-metre final instead. If errors can occur within such a simple process, how much more likely are they to occur when managing complicated supply chains? A single error has the potential to cost a company thousands if not millions of dollars.
Hidden Costs Due to Labour and Lack of Latency
Although supply chain spreadsheets themselves are cheap, they are very labour intensive and cost time and money to maintain. Companies will need to hire full time supply chain planners whose primary focus is simply to maintain these spreadsheets. The primary focus of supply chain planners should simply be to interpret and make decisions based on data that is collected. If they are expected to be involved in the day-to-day process of recording data, that can be a huge waste of time and money for the company.
Lack of latency and real time data is a major issue with supply chain spreadsheets as well. The supply chain process is constantly changing with new shipments, delays, turnover (etc). Having updated data is important in making effective decisions that ultimately save costs. Spreadsheets do not allow you to have updated data because a person actually has to update data into spreadsheets manually which takes time. Real-time data through spreadsheets are especially difficult to achieve in large companies where supply chains are more complex and require fast responses to changes. It is virtually impossible for planners within large or even mid-sized companies to keep track of things like lead times, change in demand, inventory turnover and more as soon as changes occur.
Difficult to Collaborate
Microsoft Excel and other platforms do not allow one to make changes to data while another person is editing and so people have to wait for one another to finish which delays the planning process. Chances of error increase when so many users are collaborating and making changes and it is difficult for people to interpret what the thought process was of the person who started the document.
Further, there is a large amount of interdependency between different areas of supply chain planning that spreadsheets are unable to account for. Demand planners who are responsible for analyzing data and predicting demand must wait for those responsible for recording data in order to create their plan. Similarly, supply chain planners who are responsible for decision making must wait for demand planners to estimate demand. Manual entry of data thus inevitably leads to delays in each cycle within the supply chain planning process. Alternatives such as The Owl software not only help in the collaboration process, but they provide their own analysis and interpretation of data that supplements planners.
Difficult to Maintain a Unified View and Supply Chain Visibility
To have transparency and continuity within the company it is important to have visibility among internal parties including those responsible for planning or procurement along with outside parties such as suppliers or customers. Supply chain spreadsheets are unable to provide a unified view which leads to inconsistencies. For example, with supply chain software such as The Owl, suppliers are able to be notified whether or not they have late shipments and can adjust accordingly. Supply chain spreadsheets make this process complicated as linking spreadsheets and making connections between different sets of data becomes extremely difficult. On the other hand, supply chain software can provide a unified view that not only links different parts of the supply chain process together but increases visibility for everyone.
Supply chain spreadsheets might be functional at first when a business is starting, but they lack scalability to larger volumes of data. Modern supply chains are already complicated and they become even more complex as companies grow.
Instead of sabotaging your supply chain through the use of Excel spreadsheets, consider adopting a full purpose solution. The Owl provides accurate and real-time data with a unified view across all parts of your supply chain that is very easy to maintain. Unlike other supply chain software, the Owl also provides support from supply chain experts that can help you interpret supply chain KPIs and performance metrics. Lastly, instead of having to manually attempt to collect data and information about your competitors, The Owl has already done so for you. Through its benchmarking feature, The Owl can contextualize your performance based on other companies within the same industry.
Click below to find out how our performance management system trumps excel spreadsheets and other inferior alternatives like BI tools, advanced planning software and even ERP reporting modules.