When I talk to customers about the technology tools they use to manage their supply chain, Excel is almost always mentioned. Excel is a great tool for presenting and analyzing data so it’s frequently involved in S&OP processes like forecasting and material requirements planning. It’s usually possible to pull ERP, WMS or TMS data into Excel, so the spreadsheet becomes a hack to fill in the gaps for those business systems.
Most knowledge workers are proficient in Excel and it’s almost always installed on the corporate PC, so it’s safe to assume all your trading partners have access to it. Due to Excel’s ubiquity, Excel has become the most common method to exchange data between buyers, suppliers and carriers. However most supply chain managers recognize that emailing spreadsheets all over the world on a daily basis is not optimal. If your organization is running its supply chain on Excel, here are 5 reasons you should reconsider this approach.
Lack of Accuracy
Maintaining Excel files requires a lot of manual data entry. Perhaps the order data is initially loaded from an ERP system but all subsequent updates are manual. This can be highly labor intensive which creates a cumulative cost overhead across all supply chain participants. It also results in highly inaccurate data. As I’ve discussed in several previous posts, there is significant value in improving your supply chain visibility. But if your visibility is based on inaccurate or latent spreadsheet data, you will lose many of these benefits.
Messy Master Data
Master data refers to data elements like product codes, supplier codes, customer codes, location codes, etc. When a business process is conducted within a single ERP system, each step of the process refers to a consistent set of master data. When an order is entered, the ERP system will ensure a correct product code was selected. With a spreadsheet there’s usually no way to validate master data and which often results in data quality problems. Since collaborators often accumulate data entry in spreadsheets over time, master data errors increase in severity over time. After you have 6 months of data, performing even simple analysis could be quite difficult due to these kind of discrepancies.
Loose Data Structure
To use a database term, the schema in Excel is loosely defined and hard to enforce. I can’t count the number of times I’ve been provided spreadsheets for a data integration project only to find there is no clean data set to work with. Often there are gaps or subtotals sprinkled throughout the data set. Sometimes there’s no clearly defined unique key, or the key is duplicated. Often I see multiple values entered into a single cell separated by commas. Each person that adds updates to the data does so in their own personalized way with little control. Often it requires a painstaking clean-up process before any kind of analysis can be performed.
Not Practical for Big Data Sets
I frequently see spreadsheets used for shipment tracking which gradually accumulate over time. Each day’s shipments are added to an increasingly larger file, and sometimes time periods like months, quarters or years are split data across individual worksheets in the workbook. This often works for a few months or quarters until the file becomes too big and slow to work with. Microsoft has done a good job at keeping the file size of xlsx optimized but I’ve still seen 5MB files being emailed a daily basis to large distribution lists. Some recipients complain that they only need to see recent transactions, but some require historical data for analysis. For medium to large sized supply chains, it’s becomes very difficult to manage these kinds of data size and scope challenges.
One of dangers of emailing the status of your global supply chain around in a spreadsheet is that you lose the ability to secure the data. There will be copies of this data on email servers, cloud storage, PCs, laptops, and mobile phones all over the world. Although your organization may take precautions to secure data, it’s difficult to ensure that your suppliers and logistics providers follow the same standards. It’s not uncommon for laptops to be left at airports, mobile devices to be stolen, or Dropbox accounts to be hacked. What if the data about your suppliers, product values, and order status information fell into the wrong hands? Every organization has its own tolerance for this kind of risk, but it’s something that needs to be considered if you are using unsecured spreadsheets for supply chain collaboration.
For smaller supply chains these challenges may be an acceptable compromise. However as complexity increases, the headache’s I’ve described here will become increasingly painful. That’s when it’s time to start thinking about using visibility software or some kind of supply chain trading network.