As many supply chain professionals will attest, Excel is a life saver. It picks up most of the analytical slack from ERP, whether planned or as a stopgap measure. So as much as most ERP vendors say they can do everything, users continue to flock to Excel to manage, analyze, and plan their supply chains, or to query data to answer financial or statistical questions. Organizing and displaying data in Excel is a hit with users, with years of training and use, putting the tool squarely in their comfort zones.
With its arsenal of capabilities, some still position Excel as the unspoken ERP module. Even my own colleague, John Westerveld recently published a blog entitled, Yet Another Excel Blooper. When Will We Learn? John sites a column error on a Eurozone Crisis study that fundamentally changed the results, causing some skewed decisions. John also quoted Forbes, who called it “the most dangerous software on the planet”. These “bloopers” are not a problem with Excel, the software is simply doing what it is told. If there is an error, it’s a human one.
Excel was the first supply chain planning tool I ever used. Although we were only doing some simple demand supply balancing, it was still easier, faster and more effective than our legacy ERP system. I continue to use it today for data analysis and as a measurement system. If you haven’t guessed already, I’m a fan of Excel. It’s a great personal productivity and analytical tool.However, managing a global supply chain may expose areas where Excel just doesn’t fit.
To use a favorite golf analogy, what club would you rather hit, that expensive driver or your nine iron? The right answer depends on what shot you need to make. If you’re standing on the tee of a short par 3, the answer is obvious. Even the best golfers in the world will have a difficult time making a great shot with the wrong club. It’s the same with your supply chain decisions, and it is critical for a supply chain professional to understand when a challenge requires a more sophisticated tool. John’s blog post offers up some requirements that can’t be met when attempting to manage more sophisticated supply chains with Excel.
Here are some of those common signs:
- You have multiple data sources, in different locations, coming from different participants including customers and suppliers.
- You’re looking for a single source of the truth for your planning organization.
- You spend more time collecting data than working with information.
- Your supply chain has become more complex beyond simple demand and supply balancing based on due date. You allocate materials based on priority or customer, you aggregate and disaggregated forecasts sometimes with different planning ratios, you use alternative sources, substitutes, materials expire or unchecked inventory policies could cause excess and obsolete conditions. In short, you have a substantial amount of analytic requirements.
- You react to problems rather than being alerted of future potential shortfalls.
- You find you can no longer respond to demand variability and supply chain disruptions effectively and profitably.
- It’s becoming necessary to conduct what-if simulations in minutes or seconds versus hours, days or weeks.
- Your S&OP cycles are too long and it is difficult to reach consensus before the next cycle starts.
- Your IT department is resource constrained and thoughts of offering supply chain solutions in the cloud seem attractive.
- Multiple people need access to the same information, sometimes in locations where it would be better served up on a mobile device.
- Your supply chain KPIs – on time delivery, margin, revenue and inventory turns – are not where you want them to be
Do any of these situations sound familiar? If you have applied Excel as a stopgap tool in any of these situations, I think you will agree it can only provide limited value. Back in the early 80’s I don’t think anyone imagined they were getting a global supply chain solution the first time they opened a new spreadsheet, but that’s the pattern many organizations have fallen into. If the symptoms above do sound familiar, you may have outgrown what Excel was intended for. So all you software bullies, stop picking on Excel. It will continue to remain a powerful analytical tool. You may just need to change clubs to tackle the tougher supply chain shots.