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5 Ways Spreadsheets Undermine Your Forecasting and Planning Credibility

Supply Chain Planning  

It's a scenario many a supply chain planner has faced. And it’s one everyone dreads. You’re in a meeting when a key stakeholder asks, “Where did you get those numbers? They don’t match my calculations?” Your stomach flips. Your chest tightens. Your mouth goes dry. You stumble through an awkward explanation, the upshot of which is that you’ll have to go back through your work to answer that question. Your inability to answer prompts others in the room to start asking their own questions. You can’t answer those either. You’ve lost credibility. And spreadsheets are to blame.

If you’ve ever encountered any part of that scenario, you know the feeling it creates. Of being at sea, feeling unmoored because you don’t have the information at hand to share your forecasts with confidence.

But you’re hardly alone. Spreadsheets are a top go-to productivity tool for anyone managing a supply chain, especially forecasters and planners. And for good reason. If your organization is a small business or in start-up mode, spreadsheets can be an effective, low-cost tool for the job. But once your number of SKUs start heading north of 100 or 150, spreadsheet limitations become problematic—and compounding.

Spreadsheets can’t provide holistic views. Or handle scale. They lack ERP integration and security controls. These are all serious impediments to efficient supply chain planning.

But the shortcomings that really hit you in the gut are about credibility. And it’s not just your credibility as a planner that’s on the line. With spreadsheets, the credibility of your company’s entire planning effort is at stake.

Here are 5 ways spreadsheets erode planning credibility:

1. Inevitable Errors

The manual data entry in spreadsheets creates errors. Period. In fact, by some estimates, more than 90% of spreadsheets contain errors of one kind or another. It’s highly likely that your current forecasting spreadsheets contain multiple errors.

There are many ways to make mistakes in spreadsheets. Mistyped numbers, numbers entered or pasted in wrong cells or columns, corrupted or accidentally altered formulas, flawed logic, and missing cells are some.

Unfortunately, unlike a spelling error that a spellchecker can flag in real time, errors in spreadsheets go unnoticed until they cause problems. And those problems have a nasty tendency to cascade. The results? Miscalculated inventory levels, false demand assumptions, production delays, missed deliveries, and lost customers. The list of potential pains is truly endless.

2. Data Limitations

To be credible, an inventory forecast, demand plan, or supply plan must take into account a host of variables that spreadsheets can’t easily accommodate. For example, your planning might require the aggregation of large data sets that span multiple hierarchy levels and extended time horizons. Your plans might need to reflect demand volatility, fluctuating lead-times, or the implications of coordinating supply chains across multiple locations. This degree of data agility is not something you can wring from Excel.

And then there’s the whole issue of timeliness. Spreadsheets are so labor intensive that data becomes outdated as soon as you hit save. Do you have the latest numbers? From everyone? That’s nearly impossible to pull off with spreadsheets.

3. Dueling Spreadsheets—and No Single Version of the Truth

In business, spreadsheets are everywhere—as common as email and slide decks. When it comes to credibility, the very popularity of spreadsheets can work against you. Why? Because every stakeholder in the business likely has their own spreadsheets. Marketing, finance, sales, operations, etc. Multitudes of them. Each one highly customized for very specific purposes.

You know how extraordinarily difficult it is to merge data from different spreadsheet silos. You live that grind every day. Consolidating spreadsheets and reconciling conflicts from different internal departments and external suppliers is like herding cats in a hailstorm.

With no single version of the truth, reaching consensus is a major challenge. A lack of consensus leads to loss of trust and poor decision making. That’s the opposite of what you want from supply chain planning.

4. Lack of Analysis and Insight

Another way that spreadsheets can undermine credibility is by leaving you with no clear answers to business-critical “what if” questions. What if a news event creates an unexpected surge in orders? What if a key supplier suddenly runs into unexpected problems hitting delivery dates? What if a vital production line experiences prolonged unplanned downtime? An agile supply chain plan enables you to plan for the unexpected. But that’s simply not possible when you rely solely on spreadsheets as your primary planning tool.

Excel can perform only limited analysis and relying on it for scenario planning and “what if” analysis requires a high degree of sophistication. Any significant change to the model will likely require substantial adjustments—modifications that are time-consuming and error-prone.

In addition, analyzing data across multiple hierarchies, facilities, customers, and all supply chain nodes is not feasible with spreadsheets.

Without analytical insight, you’re forced to find your way in the dark.

5. Risky Single Point of Failure

In most organizations, one person is responsible for building out the spreadsheets that drive supply chain planning. Credibility issues arise when others in your organization need to work with the spreadsheets the planner created. Because supply chain planning spreadsheets are heavily customized, the only person who can effectively update and modify them is the planner who created them. That’s a very risky single point of failure to have in your planning process.

When it comes to planning, “many heads are better than one.” Individual spreadsheets hinder the comparison, collaboration, and consensus required to ensure that all stakeholders can trust your supply chain plans and make decisions with confidence.

There’s a Better Way—in the Cloud

Comprehensive cloud-based supply chain planning software can help ensure the credibility of your numbers and forecasts. Capabilities like those found in DemandCaster provide substantial advantages over spreadsheet-based planning. Automation, ERP integration, powerful forecasting algorithms and “what if” analysis, fluid collaboration across departments and disciplines, the end of spreadsheet silos, a single version of the truth, and no more single points of failure. And those are just for starters. Explore how DemandCaster empowers you to create supply chain plans everyone can trust.

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