How Do You Identify Tomorrow's Supply Chain Paupers?
They still use paper today.
Although I don't understand how any supply chain focussed business, and a logistics carrier in particular, could still be paper-based. It blows my mind that the WT 100, in their recent article on Rounding the Optimization Curve, reports that there are still a significant number of carriers that keep their records on paper. How can you survive in today's cost-competitive, just-in-time, value-conscious supply management landscape and work on paper?
And while we're at it, let's talk about how you can identify the dead men walking of the day after. They use Excel. We've known for years that errors in spreadsheets are pandemic. Needless to say that it boggles my mind that Microsoft Excel continues to be the application of choice for supply chain and logistics management around the world. Fidelity lost 2.6 Billion as a result of a spreadsheet error, Fannie Mae made a 1.13 Billion honest mistake, and RedEnvelope lost more than a quarter of their value in a single day after they warned of a fourth-quarter loss due to a budgeting error that resulted in an overestimate of gross margins. How long is it going to be before someone accidentally uses a plus sign instead of a minus sign in a profit formula and forgets to uncap an inventory calculation and instead of ordering 100,000 units of a profitable product, instead orders 1,000,000 units of a product that actually results in significant losses at the target sale price, for which the market demand is weak, ties up all of the organization's working capital, and essentially bankrupts the company? My guess, with the steadily increasing complexity of S&OP, JIT inventory management models, and supply chains, not much longer. But, maybe after a few companies are brought to their knees from spreadsheet errors, we'll see the day when Excel is sh!tcanned along with the dinosaurs who still think it has any more use than a HP or TI calculator.
It's time for anyone still on paper or Excel to wake up and realize we don't live in Walt Disneyland and that the story of the prince and the pauper is a fairytale. A pauper is not going to become the benefactor of princely riches just by looking like a bigger, richer, company. In today's uber-connected world, appearances don't account for much. It's not long before someone digs deep and uncovers the truth.
There's a reason why customers are demanding end-to-end visibility of their supply chains, including those of their supply chains logistics' partners. And a reason customers ow expect all of their suppliers and business partners on the supply chain (including logistics providers) to participate in a supply chain social network. It's because they know that the only way they can accurately manage their supply chain is to keep on top of it, that the only way they can build accurate models is with accurate data gathered from partners, and that the best reports they are going to get are going to come from supply chain visibility and planning software plugged into these "social networks" (where, in reality, these are "enterprise communities" that allow the necessary collaboration, not "consumer networks" where you can poke, prod, and shake your buddy for no apparent reason).
In other words, paper is dead, and Excel will be the new paper, and then, someday, it too will be dead. So if you don't want to be the pauper, move off of these technologies and onto solutions designed for your supply management needs. With a plethora of Best-of-Breed solutions on the market, designed for large and small providers, it's extremely likely that there's at least one solution that meets your needs almost exactly with minimal tweaking. If you look hard enough, the doctor would bet that there's at least three, or will be before you can look twice.
Categories: Supply Chain, Market Intelligence, Miscellaneous, Logistics
Tags: Social Networks Logistics Fail Excel rant Supply Chain Visibility
While I agree with your basic thesis (paper should be dead and excel will be replaced) and I think you mean for large tasks and projects based on your examples - I'd love to hear what you think about smaller tasks and projects that require significant customization.
In the end, a small business that is tracking inventory might be better off with a fully customizable spreadsheet (that is cheap and easy to use) than a program designed for a user that can pay a whole lot more than the business pays, incrementally, for Excel?
As for your example, trucking, I'd love to throw another that will astonish most people: healthcare. Much of the documentation that is recorded while you are being serviced by the healthcare industry is on paper. For many industries, it's not 2012 - heck, it's not even 2000!
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No, I am advocating software for any project that requires more data than you can fit on the screen.
Most projects don't require as much customization as one thinks they will, and, these days, most software has at least a moderate level of flexibility and configurability built in. Plus, there's so many options these days that it's not often that you can't find anything to fit your needs for basic inventory planning, warehouse management, and distribution.
Moreover, there's so many customizeable open source and shareware applications, that it's usually possible to cobble together an 80% solution quickly and cheaply and only need spreadsheets or other tools for occasional one-off projects while you source, implement, and customize the right solution. So there's really no excuse to be spreadsheet driven.
And as for healthcare, you're right. It's dire, but it's a harder problem. And not for the reasons that you might think. From a technical viewpoint, it would be easy to establish a common medical record and to develop simple chart-based recording apps that a doctor could fill out on an iPad as she did her rounds, but because there are so many frickin' regulations compounded on so many other frickin' regulations that you end up having so many regulatory bodies involved that they can never agree on anything, it's almost impossible for a hospital to even get a set of guidelines as to the rules an application has to adhere to. And then the rules end up being so cumbersome, and even contradictory at times, that it becomes difficult to implement the system and impossible to get someone to stand up and certify it as meeting the rules - and a hospital typically can't implement anything that isn't approved for privacy or funding reasons. Until the monumental mess that is the healthcare regulatory system is fixed, this problem will continue.
But in logistics and supply chain, the regulations are in the record keeping requirements, and don't limit what systems you can and can't use in-house, so there really is no excuse not to have a system.
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The fact that data is in a spreadsheet somewhere doesnt necessarily represent as bad a thing as you suggest. If Excel is being used as a scratch pad then I don't understand really what your point is? If your assumption is that I can rely on my planning and MRP system to remove the need for scratch pad work then your suggestion is naive. Not all operations processes are mature and not all planning is handled well by rules engines. Additionally, if my 'rules' are cumbersome and complex to maintain and update and work for 80% of my business scenarios what choices do I have for the other 20% especially if my suppliers or operations functions are not particularly sophisticated at the lowest common denominator level - namely the manufacturing or assembly line?
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No, it's not a problem to temporarily store data in spreadsheets that you are using as scratch pads just like it's not a problem to communicate with suppliers through e-mail and phone systems that are not integrated with your SRM, provided that you use Excel as a supporting tool and not as the primary engine of your supply chain.
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