In my previous blog, I had provided a framework for an organization to adopt a systematic planning process for their supply Chain (S&OP and S&OE) and get all the data on a unified platform. We observed that many of our clients are using spreadsheet modelling for their supply chain planning and have been asking us “why do we need dedicated software when we can manage with simple spreadsheets?” Let me attempt to show what are the undesirable business effects, which are invisible, because of the prevalent usage of spreadsheets for planning.
Let us first examine why, to begin with, organizations use spreadsheets. When the organization is building any new planning system and trying to understand the data, a spreadsheet provides a very cost-effective platform to carry out iterations and build models and scenarios. These models are good, but when we try to grow this model in terms of data points and increasing business complexities, the efforts required increases exponentially and organizations are stuck with a sub-optimal planning model.
Challenges faced with spreadsheets
Spreadsheets are a good tool for a point in time resolution of challenges and supply planning with static variables. We must bear in mind that spreadsheets are also driven manually, the knowledge of which resides with one or few individuals in the organization, making it prone to talent risk. We have put together 5 challenges; organizations typically face with spreadsheets.
- Complexity – Generally, spreadsheets are used for Demand Planning, Sales and Operations Planning, Inventory Planning, or any other type of planning that one can think of. Supply planning, inherently being a complex and collaborative process, needs to take 100’s of parameters into consideration. When the organization planners build a siloed, static model, it won’t deliver an ecosystem where all the organization’s supply chain objectives are optimized.
- Dynamism – By nature, the spreadsheets are static, and hence its ability to create a dynamic response, continuous re-forecasting, and simulating the alternative scenarios is very limited or absent. The assumptions are constantly changing and keeping the planning model dynamic is an enormous challenge for spreadsheets.
- Scalability – Spreadsheets are not built to handle large volumes of data streaming from multiple sources and deal with global objectives. In addition, complex conditions such as transforming production schedules and multiple product configurations are difficult to manage by spreadsheets. It is also a proven fact that spreadsheets are less accurate and are prone to errors. The decisions based on these can be very costly sometimes.
- Real-time – Spreadsheets cannot track key data and raising alerts in real-time. Without a seamless data flow from ERP to planning models, the planner takes monthly download and carries out spreadsheet modelling. With the changing customer demand patterns, the supply chain will then be bound to increase the lead time, inhibiting one ability to quickly react.
- Analytics – Spreadsheets are calculating tools, not analytical tools. Carrying out analytics, require a need for human judgment based on the limited information available. We have now reached a stage whereby analyzing patterns in large data sets, complex algorithms have been developed in software to identify trends and interpret data with far greater precision.
So, to manage your Sales and Operations Planning (S&OP) and Sales and operations execution (S&OE), you need to have dedicated software with enhanced functionalities.
ADEXA is one such platform that addresses the shortcomings of spreadsheet-based planning. ADEXA is a global leader in supply chain planning and can enable you to,
- deal with real-time data
- unify data structure on a single platform
- implement executable and accurate plans
- access deeper insights and enable decision making based on analytics
- predict and forecast disruptions through deep learning capabilities
- carry out multiple ‘what if’ scenarios
- collaborate and get visibility across the E2E supply chain
With the right planning tool and a preventive plan, organizations can quickly react to the changes and take necessary measures to avoid these issues. Clean, insightful data, measured over time enables scaling up planning capabilities quickly.