Over the past 17 years I have worked with numerous companies and a wide spectrum of supply chain issues. One common theme I’ve seen is that most companies have spent a significant amount of money implementing ERP and Best-of-Breed software solutions, but when it comes to tactical and operational planning (4 to 52 week horizons, demand, inventory & supply planning) there’s one software tool that stands out. Any guesses? Yes, it is Microsoft Excel. This is true primarily of small/mid-size businesses but also many large, global companies. Everyone starts planning in spreadsheets but there is a point where spreadsheets break down. This breakpoint is driven by complexity of planning, business growth, data size, domain expertise or maybe the planning team simply had enough of it.
Today's supply chain planning
Where does it all begin?
Companies implement multiple systems or one single ERP to handle fundamental functions like finance, CRM, PLM, MES etc. These functions are relatively well defined and have fairly well-defined processes and data standards. However, when it comes to planning it is not ‘one-size fits all’ solution. Either the solution is too generic or it is too complex to meet the company’s planning requirements. This results in the birth of an excel planning tool. It works well at the start because there is collaboration by a small, close knit planning team. Typically such solutions are layered with visualization software to provide graphical outputs. As the planning complexity grows the data collection, tool update, verification and reporting outputs from the tool take days rather than hours and soon it becomes a (brutal) monthly ritual. One fine day, the owner of this spreadsheet leaves the company or changes his/her role and a new owner is found...and the cycle continues.
In more than 90% of cases, planning data is discarded or lost due to constraints of spreadsheet planning. Everyone in the organization recognizes the problem but 'urgent' takes priority over 'important' and the fire fighting continues. A shift away from spreadsheet planning is important to leverage the historical planning data for subsequent planning cycles and business planning. Planning is supposed to be smart, automated, scalable, fast and objective, but reality is far from that. The Excel planning tools are not optimal and this impacts the company's top and bottom line.
Digital business era requires
So what can be done?
For this post, let's start with few basic principles that need to be followed:
One of my favorite book is "Think Big, Act Small" by Jason Jennings...applies to supply chain planning excellence journey too.
I welcome your thoughts, questions, comments.