The Pitfalls of Using Spreadsheets in Supply Chain Planning

Line Art

There are over 200 million spreadsheet users worldwide; a third of those users utilize spreadsheets for over half of their workday. Microsoft reports that well over 1 billion people use Office, the suite of applications that includes Microsoft Excel. Roughly 1 in every 6 people on Earth use it. While spreadsheets once seemed to be the top-tier way of conducting business, there are many pitfalls when using them for supply chain planning.

User error

While spreadsheet tools have limited accuracy, user error is the most common issue with the use of spreadsheets. It is estimated that spreadsheets over 150 rows have errors in the 90 percentile range. Almost 95% of deployed spreadsheets contain errors.

Errors are not good for any company. If they continue to occur, clean up and repair becomes a major issue.

According to Market Watch, almost 90% of spreadsheet documents contain errors. “Spreadsheets, even after careful development, contain errors in 1% or more of all formula cells,” writes Ray Panko, a professor of IT management at the University of Hawaii and an authority on bad spreadsheet practices. “In large spreadsheets with thousands of formulas, there will be dozens of undetected errors.”

Supply chain maturity

As the supply chain matures, there are risks of integration, fragility, siloing, scalability, and more. Often, organizations simply outgrow the use of spreadsheets.

Following are signs that you are ready to move to supply chain planning software:

  • Multiple users: While you can share spreadsheets, a master spreadsheet is still typically a single-user scenario. When multiple users share a master spreadsheet, the chance of human error increases drastically.
  • Real-time data accuracy: Depending on the size of your operation, real-time data accuracy is not always possible using a spreadsheet. Smaller businesses may have an easier time tracking data in real-time. However, larger businesses need software that gives them real-time data accuracy; no spreadsheet can do this. Spreadsheets do not have the capability for key data tracking in a real-time.
  • Uncertainty: Spreadsheets have one distinct role and that is to calculate data; they are not tools for analytics. Most companies need modeling, forecasts, ranges, what-if scenarios, and planning. To identify trends and interpret data, supply chain planning software is the best solution.
  • High data volume: If a company has many products or SKUs and long lists of historical data, a spreadsheet simply cannot handle it with precision. The capability and intelligence are not there. There are areas like rapidly changing production schedules that spreadsheets cannot accommodate.
  • Process extensions, control, and insights: Of course, you have can duplicate a spreadsheet, but this does not allow process extensions, workflow, audit histories, and true collaboration. Spreadsheets do not offer process control or insights either; only a sophisticated supply chain planning software has these capabilities.

A better solution

Vanguard Predictive Planning offers a better way. Cloud-based supply chain planning provides efficiency, performance, and data analytics that spreadsheets cannot compete with. To see how Vanguard Software can improve your supply chain planning, contact us today.