Are ‘Somebody’s secret Spreadsheets’ Killing Supply Chain Advancement ?
If we all moved to real time collaborative web based or SaaS based supply chain systems how many supply chain risks could be spotted and mitigated earlier ? How many opportunities could we capitalize on? How much money would the industry save? How much more advanced and innovative would supply chain as a whole become ?
We have all heard the expression “Somebody over in the Supply Chain dept has a tool that does that”. Hence my expression “Somebody’s secret Spreadsheets”. The secret part I will expand on later in the article 🙂
Within Supply Chain Management there is a particular over reliance on spreadsheets to gather data relating to a companies Suppliers. While I agree that there are times when spreadsheets make the most sense. However, if the data within “somebody’s spreadsheet” is for any form of supply chain collaboration either internally with fellow colleagues or other departments then they have limitations in terms of how quickly they can communicate as a reporting tool.
Worse still if spreadsheets are being used as a collaboration tool with your suppliers then they are really ineffective and will slow down or even kill your supply chain initiatives. So much so that by the time the information in the spreadsheet is distributed its already out of date, and your ability to take advantage of it has diminished considerably. Add to that the risk of not being able to quickly act on opportunities or problem areas has increased resulting in most probably negative business impacts.
Don’t get me wrong I am a keen user of Spreadsheets for data analysis and interpretation. From my early years I loved building spreadsheet programs to gather and report on data. Slice and dice, complex formulas, macros etc. Every version of my masterpieces from version 1 through version 72 came with a sense of pride and fulfillment on the saving of each new version (Save As, Save As…).
That’s the other problem. A spreadsheet tool is never complete. There can be 4 of 5 iterations a day , and in the eye of the owner each is better than before. Its often a never ending cycle. Upon reaching version 81, the problem is Bob in Contracts now has version 34 and Mary in Category Management is running version 65. Worse still suppliers got it by email 5 weeks ago when it was version 42.
While my role is mostly within the Supplier Relationship Management (SRM) and Supplier Performance Management (SPM ) space and s such I will use spreadsheets to do some early mockups of Scorecards / KPI reports but after that the spreadsheet is put too bed (as the intended use is to encourage collaboration) and the SRM or SPM initiative is deployed at the web layer where suppliers can access and contribute real-time to its success.
Another problem is that Spreadsheet errors are often widespread within supply chain management, leading to flawed decision-making. Moreover, because just about anyone can come up with a spreadsheet report, just about anyone does come up with a spreadsheet report. So instead of the fabled ‘one version of the truth’, you wind up with multiple versions—and arguments about whose version is correct , the suppliers version or your version.
A good analogy I often use is that there exist people who have reasonably good spreadsheet knowledge but that don’t want to become a real programmer, yet still want to develop supply chain tools”. A bit like an experienced gardener deciding to run a commercial farm without undertaking a farming qualification. Yes they can do it, yes they can have some short term wins, but long term it’s not that effective, especially when real time collaboration is an essential factor of the initiative.
The problem is that there are many little spreadsheet farmers working on maintaining acres and acres of spreadsheets, complex formulas , pivot tables , colour coded cells, yet over the longer term yielding very little real time harvest for the rest of the organization. Or put another way : when they do yield a harvest (good information) its “not in season” with the demand from the user base, ie old info and past its sell by date, or of little commercial use. Spreadsheet farmers exist in all organizations, they have a great idea or concept to help the supply chain yet don’t know when to pass it on to the software team to build the proper commercial system. It does get some exposure…”look what Freddy developed for supply chain..its fantastic”..but seldom gets passed on to the IT team as “its mine…its mine, I grew it”
Spreadsheet farmers often work in isolation assimilating information and then love attending meetings to show off their ware to the others. If they are an “SPM spreadsheet farmer ” doing analysis of supplier performance” some even love surprising the suppliers with data facts on poor performance at QPR meetings. The problem here is that this data presented by our friendly farmer (eager to impress upper management) is often months out of date. Was the element of surprise worth keeping this from the supplier, could the supplier have taken actions to improve if they had assess to info in real-time. They might as well have kept the data and tool a hidden secret as present the info.
Spreadsheet farmers are growing spreadsheets everywhere in your organisation and more often than not they are not having the desired positive impact on your supply chain they simply keep a lot of folk busy. Consensus is that there are now more spreadsheet systems in your organisation than people. Is it time to realign the roles of so called spreadsheet farmers to focus on supplier collaboration efforts in a real time environment.
Many people that have developed these spreadsheets that perform wonderful data analysis have no real means of sharing them in a collaborative way, so they remain secret hidden works of art. Hence the secret part of my article title. Its not that they are deliberately hiding them it’s just that they don’t have the technological knowledge on how to disseminate the information in a timely manner. Another reason I classify them secret is that they are often the work of a single sole not a spreadsheet developed by a team.
Finally, being a fairly low-level tool, spreadsheets are time-consuming to create and maintain. At a rough guess, over 90% of time spent on spreadsheets is time spent building and maintaining them, and not time spent on thinking about what the data is telling you.
The main problems with “somebody’s secret spreadsheets” within supply chain management are as follows.
- Timeliness of distribution and access to the data.
- Formula Errors – and the Impact on critical supply chain decisions
- Ownership, Roadmap, and Version Control / Distribution.
- Cost and complexity to maintain
- The Somebody / Farmer Leaves the Organization factor.
One of the biggest challenges to making the move to a SaaS offering is convincing the spreadsheet farmers that it will make them more efficient and effective at doing the data analysis in a real-time environment. Yes taking away their home grown tools is often a threat to their job security but most of them see the light and end up moving up the ranks as a result of their successes when running the supply chain systems on a SaaS architecture.
Key Questions to ask before using spreadsheets for supply chain apps.
- Who is my audience ?
- How quickly does the audience need the data ?
- Is it collaborative tool / system ?
- Can it reside within our network or do suppliers need to access it?
- Who will build it and maintain it.?
- Does it need to be integrated with other systems ?
- Do my intended users all have Excel, will formulas work in different spreadsheets?
Probably the most important of these are numbers 1 through 4 as supply chain is by its very nature collaborative ..excel is not the answer.
I don’t for one minute propose you write off your investment in the spreadsheet work effort to date as its a great starting point. I have worked with many clients that started their SRM initiatives in Spreadsheets. Its a relatively easy task to take the good work done in spreadsheets and import this data into a SaaS based SRM system.
SaaS based Supply Chain Management Applications
With web or SaaS based supply chain systems data is held in the Cloud—and critically, not squirted into multiple spreadsheets. ie one source of the truth? That’s it: And reporting? Couldn’t be easier. Pre-written reports are run as required, and circulated around the organization and to suppliers. Dashboards, too, can be built from the same data source. And as for those ad-hoc reporting requirements, self-serve reporting takes care of those, with users creating reports as and when they like, with simple ‘point and click’ tools.
Moreover, there’s the affordability factor to consider, too. Once a business accepts that spreadsheet-based reporting has to end, there are only two alternatives—traditional ‘on-premise’ reporting solutions, and SaaS reporting.
One takes twelve months or so to implement, and involves capital expenditure in the form of software licenses and possible additional server capacity. The SaaS offering takes eight to ten weeks, and involves a fixed setup cost followed by a simple monthly subscription—paid for out of operating expenditure, not capital expenditure.
As choices go, it’s not difficult.
Advantages of SaaS based Supply Chain Systems include:
- Real Time Data distribution (including to and from suppliers)
- Collaborative Features (Working internally and with suppliers)
- Ease of User Access (control what the user can see, restrict suppliers to their own data)
- No Firewall considerations (as located in the cloud)
- Scale-ability ( cloud power the SaaS service can scale to tens of thousands of simultaneous users)
- Security – User Access Roles
- Roadmap by a team of qualified programmers.
- Single Source of Truth (what you see is the latest and greatest)
- Cost / Quick ROI (No capital expenditure, all operational cost at a lower rate than internal staff salaries)
- Business Value of timely information. ( information now gives us ability to manage risks sooner)
Supply Chain Systems better suited to SaaS than Spreadsheets
There are so many different supply chain systems that operate on spreadsheets, so here are a few that due to their need for supplier collaboration are better suited to a SaaS environment:
- Supplier Relationship Management
- Supplier Performance Management
- Supplier Procure to Pay / E-invoicing
- Supplier Qualification
- Inventory Management
- Demand Forecasting
- Logistics Management
- Supplier Risk Management
Web or SaaS based supply chain applications are gradually replacing spreadsheets, but we still have the “somebody’s spreadsheet” problem until we have a culture shift awakening on the opportunity costs and supply chain risks of spreadsheets.
I welcome any comments, or experiences good or bad, that would help us all speed up the move to SaaS based Supply Chain Systems
Also keep any eye out for the other adhoc articles I post on SRM, SPM, e-Procurement, and Data Management. See List below.
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View a list of all our SRM / SPM / P2P Best Practice Articles on the OutPerform Best Practices Blog
About : Daryl Fullerton
Daryl is a Supplier Performance and Relationship Management Specialist at Outperform SRM. He provides guidance and consultancy on the design, development and Implementation of various Supplier Performance & Relationship Management Systems for Global Oil & Gas Operators and Service Companies across Upstream, Midstream and Downstream Sectors.
Specialism’s include Supplier Performance & Relationship Management, Supplier Risk Management, Supplier Enablement, Operational Risk Management, Contract Compliance Management, Scorecards, KPI’s, P2P Process Automation, PIDX Standards, and Management Information & Reporting Systems.
A keen promoter and believer of the importance and focus on his ‘partnering to solve approach‘ in improving Operator / Supplier Relations in 2015 Daryl was awarded the honor of “Supply Chain Pros to Know” in recognition of the leading supply chain professionals and experts worldwide.
About : OutPerform SRM
OutPerform SRM is a management consulting firm that helps leading Oil & Gas businesses establish value added solutions for effective Supplier Relationship Management (SRM). We help our clients reduce inefficiencies, reduce costs, and make lasting improvements within their Supplier Relationship Management (SRM), Supplier Performance Management (SPM), and many more important business critical Supply Chain Initiatives . Through our hands on experience with Major Oil and Gas Operators over the last 17 years we’ve now built a firm uniquely equipped to this task across all Major Category Lines.
Our Experts have Experience of working with a wide range of internal and external stakeholders with the ability to build relationship and influence outcomes. Our Experience of supplier performance management includes detailed knowledge of processes and frameworks including commercial performance management of contracts and knowledge of supplier risk management techniques.
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