There is no question that spreadsheets are a powerful tool to leverage, even in our increasingly integrated and data-driven world. It’s hard to argue the ease of use and flexibility for data analysis and visualization that spreadsheets bring to the toolbox of the modern supply chain professional.
In the right hands, spreadsheets can do remarkable things. But just because we can doesn’t always mean we should. There is a slippery slope that can quickly become a landslide, and it’s sometimes not obvious you’ve gone too far until it’s too late.
It starts out innocently enough. Hey, we can do some basic production scheduling or performance reporting in a spreadsheet. We could even put it online for the shop floor to see. Or: I’ve just come up with a brainstorm! We just hook into this other database, and we can automate some of the data collection. And so on.
Before you know it, you have more links than a British golf resort and you’ve just been forced to hire a guy whose primary job becomes babysitting the file to make sure it doesn’t get corrupted. Then there’s the inevitable time when “your guy” takes a vacation, and nobody else knows how to fix the broken file and suddenly you are back to the Stone Age.
If you get really fancy, you realize Excel is a little too wide open and you end up moving it to Access. A past client had an enterprising engineer who built a really slick Access database to measure shop floor performance in his plant. Others got wind of this wonder and wanted it. But they had ideas to make it better, so he tweaked the version for plant number two just a little. Then plant number three had some more cool ideas. In a blink, they had six different versions. This engineer, whose primary responsibility was making sure machines ran effectively, was forced into the role of a full-time software developer who rarely saw the floor, because the plants had become so reliant on it that they couldn’t afford NOT to support it. Oh, and they still were dealing with forty plants that had nothing.
Of course, no one starts out with that vision. We’re wired to identify an opportunity and attack it. There’s nothing wrong with that. But we must realize what we’re doing, take a step back and consider the big picture and long-term consequences of these decisions.
If you’ve made the strategic decision to invest in a modern ERP platform such as SAP, this local spreadsheet mindset becomes even more damaging. SAP is a powerful solution with the ability to deliver a fully integrated, single-source-of-truth to drive supply chain performance. But it is a rules-based engine whose fuel is clean, high-octane data. When properly lubricated and fed, SAP will allow you to align your supply and demand in real-time, actively address exceptions, and provide the analytics needed to optimize inventory while maintaining high service levels.
Couple this with a well-trained team who under stands how to work in an integrated fashion, with SAP as the center piece, and you are looking at massive, tangible value opportunity. But as soon as you decide to start off loading some of those rules and data to spreadsheets, you immediately begin to diminish the value you’re able to achieve from your SAP investment. Did I mention S/4HANA? Many people believe migrating will finally put an end to the craziness, but it doesn’t work that way. If offline processes and functional siloes exist in your organization, no system will be effective. We consistently encounter clients who have reached this point.
They know they need to reverse course, but they don’t know where to start. Let’s talk about that.
Step #1: Admit There is a Problem
They say the first step to solving a problem is admitting and accepting that the problem exists. Are you here yet? Have you relegated SAP to the transactional system that helps Finance close the books, but all your key decisions are driven off spreadsheets or other locally built decision support tools? Do you feel like you’ve just wasted the money you’ve poured into your SAP implementation? Are you now contemplating more software investment to plug the gaps?
You are not alone. Surveys suggest that up to 40% of SAP functionality goes unused. I’d argue that a worse option is poorly using the functionality that is implemented. We see these situations day after day, eroding trust in the system and data, and creating a snowball of offline processes.
Step #2: Assess the Severity
You’ve admitted the problem, so it’s time to attack it. First off, put a moratorium on new non-SAP tools for the time being. Drag your IT team into a room with lots of pizza and drinks and do a thorough evaluation of your business processes to figure out how much you’re leaving on the table withSAP. Make sure your IT team is aligned with your strategic business direction and that the technology strategy compliments it.
Often, IT teams are filled with talented people who are very familiar with your company and how SAP is deployed there, but they may lack a broader view ofSAP’s capabilities. It would probably be useful to bring in external help with experience across a wide range of industries and SAP installations.
Reveal can help by performing an assessment. Over the course of five days, you’ll get a comprehensive health check-up of your SAP system, a maturity rating, and a clear roadmap to improvement, along with some pretty staggering potential value opportunities. However you do it, it is imperative that you performa comprehensive assessment of how you’re using SAP.
Understand that SAP has been built over decades, across dozens of industries. If you hear someone say SAP can’t do that, it’s time to ask for a second opinion.The reality is it can do most of the things you need it to do. That’s especially true if you are currently low on the maturity scale and heavily reliant on offline tools to support the business.
Step #3: Go After Data Integrity Issues
If you are like most of our clients, you have thousands of exceptions and supply/demand elements that are potentially years overdue in SAP. You cannot align your supply chain until you achieve data integrity, and that means a focused effort of first educating your team on the mechanics of identifying and addressing exceptions and over due elements in SAP. More importantly, your teams must understand how to work collaboratively across functional areas to clear those exceptions and align all aspects of the supply chain.
This step can be painful, because often the task seems impossible. You may ask, “How can we possibly work through literally thousands of materials and exceptions?” We are fond of the saying, “Eat the elephant one bite at a time.” It's cliched, but true. It starts with making a commitment and knocking out the first one. Early on, we usually find that we can eliminate big chunks of exceptions just by making minor master data changes or moving obsolete items out of active MRPControllers. We find many companies know what materials are obsolete, but don’t have good processes to mark them as such in SAP, and therefore get tons of exception messages on items they don’t even make anymore. These can often be cleared with mass changes early in the process and provide a jump-start on the clean-up.
In a typical Reveal engagement, we see reductions in exceptions of 50%+. Those exceptions continue to fall over time because the team has now made this part of their daily cadence of work; exception-mindedness has become embedded in the culture.
There are standard tools in SAP to help you achieve this goal; no need to develop custom reports. Find your overdue supply and demand elements, close out the ones that aren’t relevant, and adjust dates on the active ones to reflect the current reality. If a PO has a date six months in the past, it’s impossible for production to plan properly because they have no idea when components are going to be available. Further, if production orders don’t reflect realistic dates, there’s no chance of providing an accurate promise date to customers. You will be amazed at the impact these process changes will have on your performance.
Step #4: Optimize, Optimize, Optimize
We want to optimize everything in sight! But it starts with understanding the standard SAP tools to evaluate performance, of which there are many. The MC-series of transactions, and our favorite, red line graphs, tell the story of your performance overtime. Do you have high dead stock values? Ask MC50. Do you know how many days of coverage for a given material you typically hold? MC42 and 43 will probably scare you a little the first time you look at them. Stop by MC.9 to find what we call the “movers and shakers” -- those materials with high average inventory and high levels of consumption. These are ripe for tweaking master data settings to achieve optimal performance. We routinely see. companies achieve 15%+ inventory reductions through this effort. Turns accelerate and service levels generally increase as well.
Check out the LIS reports around production planning to see how well your SAP master data aligns with your manufacturing reality. Do you have large gaps between planned dates (determined by MRP based on master data rules) and your actual execution? This likely means routings are not accurately reflecting what it takes to produce your products. Look at the standard capacity transactions. Do you see lots of red, or are your work centers under-utilized? If you are scheduling in SAP, do your actual dates align well with your schedule, or are there big discrepancies? Do your produced quantities align with plans, or are planners manually manipulating quantities in production orders? Are you consistently producing higher or lower scrap quantities than expected? These are all indications that master data rules do not reflect reality.
Adjusting those settings can hugely impact the amount of manual work production planners are required to perform daily. Get the rules right, and planned orders come out with accurate quantities and dates that can flow directly into production orders when the time comes again, leveraging standard SAP transactions to streamline the process. Your planners can then focus on making sure the schedule is realistic and achievable for the shop floor and dedicate more time to further optimizing the process. If you are not performing capacity evaluation and finite scheduling in SAP, strongly consider taking advantage of the functionality that comes standard. Instill a consistent daily cadence of planning and scheduling within your team. You will find this improves process efficiency and lowers stress levels for everyone.
The same goes for Procurement. Look at the standard lead time evaluation transactions. They will tell you if your actual performance aligns with your material master, and purchase information record. If not, update the master data to reflect reality, and supply chain alignment becomes easier and the amount of manual work on buyers goes down. Do you have low value parts that take a lot of buyer time to manage? Maybe these need to be switched to re-order point planning and set on auto pilot. Do you really want your buyers spending hours manually converting purchase requisitions to purchase orders for nuts and bolts that cost pennies? Or would you prefer their time is freed up to better negotiate with suppliers, improve lead times, and ensure optimal stock levels to serve business?
Do you have chaos in your warehouse? Do you have spreadsheets to track materials because you erroneously believe SAP isn’t telling the truth? Are you relying on local knowledge of where stuff is stored? Are your people having to run all over the place to put away or pick product?
This is another area typically ripe for efficiency improvement, since many don’t fully understand how to use Warehouse Management (WM) in SAP effectively. Leverage the Warehouse Activity Monitor to identify exceptions specific to the warehouse. Clear out old transfer requirements and orders, make sure interim storage types are kept clean, and make this part of the daily cadence of work.
Further, evaluate how well SAP reflects the physical reality of your facilities, starting with ensuring storage types, sections, and bins properly represent your facility. Are you utilizing bin capacities and pick and put away strategies to automate and optimize the flow of materials? Are you cycle counting effectively to ensure accuracy of both quantity and location of product? Get this right while you’re still using ECC, and the move to S/4HANA and EWM will go much smoother. You’ll be able to more quickly take advantage of new capabilities in EWM because your data and processes are already solidly in place.
Step #5: Institute Robust Governance
The only way to ensure the efforts described here are successful and repeatable is to institute robust governance right from the start. How often do “inventory reduction campaigns” end up successful in the short run, only to see stock levels explode higher not too long after? Much like a crash diet vs. lifestyle changes that become daily habits over the long haul, the goals you set can’t be a one-time effort and then business as usual. Rather, the mindset must become embedded in the culture. Leadership must demonstrate total buy-in to this cultural shift. Then they must support it with clear escalation and accountability structures that empower team members throughout the organization to highlight issues with the confidence that these obstacles can and will be cleared. Cross-functional communication and collaboration must become the new business-as-usual, which often requires patience and coaching when teams are accustomed to working in silos and throwing problems over the wall. You don’t have to figure it all out on your own either. In a Reveal engagement, you’ll learn how to do this with our advisors walking beside you through the whole process.
There you have it. Simple, right? Of course it’s not. Transforming your organization is hard. It takes a strong commitment, a lot of trust, and a belief that SAP can be the single-source-of-truth for your business. It requires a major change management effort to help people learn how to work in a different, more integrated, and collaborative way.
The good news is we have led our clients through this process and seen it succeed over a couple of decades and across numerous industries. The improvement in both business performance and quality of life for people is what drives us. There’s nothing better than hearing from a client how much their stress levels have dropped as a result of truly understanding how to use SAP the right way, in collaboration with their colleagues across the supply chain. When someone makes the leap and stops using their trusty spreadsheet because they recognize that SAP tells them the truth, we celebrate.
You won’t eliminate spreadsheets and other analytical tools completely. But you will find you’re using them more intelligently. You’ll discover they support your new business processes as a complement to SAP, rather than instead of. Ultimately, we’re talking better business results for your organization, happier team members, and happier customers. Ready to get started? Reach out and hear more about how an assessment from Reveal can jump start the process.