Should You Use Excel for Your Supply Chain Planning Requirements?

Examining the pros and cons and how to make the choice


  • Long lists of customers and conditions: If your company needs to compile and analyze high volumes of data, you will find that spreadsheet software offers neither the capacity nor the intelligence. In addition, complex conditions such as rapidly-changing production schedules and multiple product configurations are not easily accommodated by spreadsheets.
  • Multiple users: Spreadsheet software is inherently single-user. As long as one user controls the master Excel spreadsheet – even when that master is “borrowed” by other users, version control is possible. However, when multiple users have equal access and/or equal responsibility, the chance of input errors increases dramatically. In addition, there is a far greater chance that basic functions will be corrupted by each user’s outlook on how the spreadsheet should be managed. The resulting chaos can make it difficult to establish a single version of the truth.
  • A need for accurate real-time data: In a smaller operation, a handful of people may be close enough to the production line to track current status and make any corrections. In a larger operation, however, software must be used to match inventory with demand, and to create accurate forecasts and schedules. Spreadsheets are not capable of tracking key data in real time.
  • Uncertainties: Spreadsheets are calculating tools, not analytical tools. If your organization requires ranges, forecasts, what-if scenarios, modeling, planning, or replanning, you will find that they are beyond the software’s functionality. This will result in a need for human judgment based on the limited evidence available. More sophisticated software can identify trends and interpret data with far greater precision.
  • Improved process control: Because they have virtually no business intelligence built in, spreadsheets cannot provide insights into how processes may be improved or enhanced.
  • Institutionalized knowledge: Critical process knowledge can walk out the door with a key individual – and a spreadsheet cannot replace it.
  • Data analytics: Spreadsheets offer virtually no analytical capabilities beyond simple calculations. For more sophisticated analysis, a transactional application is required.
  • Process extensions: If you want to extend a process into other departments or your external ecosystem, spreadsheet software offers no support aside from the ability to duplicate a document. Transactional software, by contrast, scales readily into other areas.
  • Process insights: Specialized supply chain software can provide valuable insights into the intricacies of your processes, enabling your team to continually improve efficiency. Spreadsheet software offers no process insights.

The next step

What is the next step from spreadsheet software? For most companies, the answer is a far more sophisticated planning application based on a relational database management system (RDBMS).

These applications gather real-time data from throughout the organization, and hold it onto a centralized server where it may be accessed by any number of users. More important, they offer true business functionality, including specialized support for a wide range of supply chain processes, including inventory management, manufacturing, and value chain collaboration.

RDBMS-based applications are, of course, not included with the purchase of a laptop. But they can provide business value that far exceeds their cost. Compared with Excel, for example, solutions based on relational database management systems offer significant advantages:

  • Safety: In Excel, any unsaved data may be lost if a system crashes. Databases write data to the hard drive immediately.
  • Volume and speed: High volumes of data will bog down Excel, while RDBMS applications routinely manage big data
  • Related data: Storing related data together in a single table or spreadsheet can be unwieldy and invite errors. Databases can easily link tables of related data together, such as customers and orders.

By leveraging the intelligence of an RDBMS-based application, a company’s decision makers can immediately detect data and mapping errors. In addition, they can see how data relates across attributes. And, they can detect patterns within the data itself, to make better-informed decisions about overall processes and individual projects.

Users Know Best

For applications that are limited in scope, such as basic information compilation and storage, spreadsheets may provide an adequate and inexpensive solution. However, spreadsheets have severe limitations that make them inappropriate for the complexities of today’s analytical requirements. These limitations can impact an organization’s efficiency and competitiveness – especially in a globally competitive marketplace that requires extensive interaction with customers and partners.

To establish whether your organization has outgrown its spreadsheet phase, one approach is to poll current users and ask whether they believe their processes are as efficient as they could be, or whether they feel it is time to graduate to a more capable transactional application.

Sujit Singh, CFPIM, CSCP, chief operation officer of Arkieva (www.arkieva.com), is responsible for managing the delivery of software and implementation services, customer relationships, and the day-to-day operations of the corporation. His industry experience includes managing software services and solutions for users in the food processing, consumer products, semiconductor, chemicals, and glass (industrial and commercial) industries.

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