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Risky Business: Using Spreadsheets for Key Supply Chain Activities

By Ed Elsbury October 8, 2017 by Kelly Kuhlman

Are you aware of one of the Biggest Risks to Your Business?

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Spreadsheets are 100% Risky Business when it comes to supply chain demand planning, S&OP, materials replenishment and value chain collaboration. “We pull the

information from our SAP system and put it into a spreadsheet. After we are done working with the information and putting it into the right places, we dump it back into

the SAP system.”

A sentence we at Reveal often hear when working with clients. The same clients that express their frustrations about how they don’t

have any faith in what the data is telling them and how much manual work is required to get useful information.

If you want the SAP system to work for you (vs. you working for the system), and you want to get reliable, real-time data to make decisions, then you must work in the system! Managing your supply chain, for example, with a series of spreadsheets is risky and cannot be scaled effectively.

Consider these statistics from various research reports:

  • 94% of deployed spreadsheets contain errors
  • 90% of spreadsheets that have more than 150 rows contain errors
  • 57% of spreadsheet users have never received formal training on the spreadsheet application they are using

It’s no wonder leadership cannot trust the data. You have a bunch of self-trained spreadsheet jockeys manipulating information that is fraught with errors. A lethal combination to say the least.

Other considerations to think about when using spreadsheets to manage your supply chain.

A spreadsheet typically is the work of one person and is only as good as the last person who edited it. Lack of adequate auditing and revision control makes it difficult to determine what, why and when someone changed a cell or formula. If the author of the spreadsheets changes roles or leaves the company, that spreadsheet becomes an unsupported single point of failure. If multiple spreadsheets in use, then there are multiple single points of failure. Sound a little risky?

Spreadsheets do not promote cross-functional collaboration. Even organizations that make their spreadsheets readily available find that each department, geographical location, or even individual workers may be relying on a separately managed and maintained a spreadsheet. When crucial supply chain activities like demand management, inventory management, production scheduling, and stock transports are all performed in isolation, it leads to everyone having their own set of numbers… and they never match.  Furthermore, sharing information between departments is cumbersome, translation is difficult and it’s only as strong as the weakest link.

All of this works against the ability to collaborate and run as an agile supply chain.

It takes much longer to gather, assess and evaluate information that is held in spreadsheets. Manual spreadsheet data updates are followed by manual examinations. This approach doesn’t lend itself to spot key trends, flag issues, or serve up real-time data to make timely decisions. We have found supply chain planners literally spending all day interpreting spreadsheets to manage their business.

With spreadsheets, the risk is 100% that critical supply and demand balance conditions will be missed or major adjustments made late. Crucial business decisions should be based on real-time access to up-to-date supply chain data, and management reaction times should be driven by automated alerts that planners prioritize efficiently and manage by exceptions.

Given these findings and shortcomings of spreadsheets, it begs the question; why are supply chain leaders relying on spreadsheets to handle mission-critical activities like demand planning, S&OP, capacity planning, materials replenishment and value chain collaboration?

The answer could be a combination of reasons.

First, most managers know how to build spreadsheets in Excel or something similar and these applications are found on almost on every workstation or PC. So, it is the tool they know and it’s available.

Second, despite owning the world’s most powerful planning tool, SAP, management, and users often have not been educated on how to use the system to manage data and thus how to manage the ever-changing demands of the business.

Finally, many supply chain stakeholders have a “hero” mentality. They jump at the chance to provide a relatively quick “stop gap” solution to a problem. This approach often addresses the symptoms of the problem but does not correct the root cause.

What Can the Supply Chain Do?

At Reveal, we transform SAP-centric supply chain-driven businesses to run better. Our focus is to challenge the traditional thinking of the modern supply chain to ensure sustainable and successful businesses. We change the way people think and operate by revealing the hidden value in existing processes and deploying the smart use of technology. One of our key principals is educating organizations on how to use the system as a catalyst to improve business results.

Moving organizations from spreadsheet reliance to leveraging SAP’s capabilities to manage the business is a big change, but one that provides huge benefits. Benefits include reduced business risk, better real-time information, and users that are more effective planning and analyzing data to create a more agile supply chain.

To learn more how Reveal can help you take advantage of these benefits, contact 630-571-1730, and set up a Wellness Assessment to enables an in-depth analysis of how well your supply chain is truly functioning.

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