I’m just going to come out and say it—your ocean shipping and international logistics processes, even your overseas supplier collaborations, are still overwhelmingly run on spreadsheets and email. In our globally connected economy, with viral marketing events, volatile consumer demand, touchy geo-politics and increasingly tangled freight networks, maintaining your organization’s dependence on collecting, tracking and sharing supply chain data with Excel is perhaps the biggest threat to agility, resilience, visibility and profitability.
Sure, every supply chain and logistics professional is already a whiz with spreadsheets. The logistics field and even the procurement fields tend to attract people with strong planning and problem-solving skills, with industrial engineering backgrounds or project management strengths. In other words, people who are good with numbers.
For these rational-minded folks, the appeal of the spreadsheet, with its tabular layout, integral calculation capabilities, and data manipulation and visualization options, is clear. We rely on Excel to sort, rank and filter large volumes of information. We love that sense of order and control we get when a complex supply chain process or product flow is neatly captured in a list of steps and a matrix of stakeholders and a KPI chart of useful metrics. Spreadsheets help us identify the outliers and exceptions that threaten our carefully calibrated supply chain plans. They are a great way to share information across our business because their efficient file sizes make them easy to attach to email!
Except…spreadsheets were never intended to model or manage the real-time complexity and multi-dimensional inter-dependencies of today’s turbulent global supply chain operations.
Spreadsheets are lousy for complex, n-dimensional problem spaces with lots of moving parts and fast-changing decision-support scenarios. They’re especially poor at handling multi-party business collaboration; the undeniable hallmarks of our global supply chain operations today.
There are several supply chain management solutions offering the benefits of cloud access and connectivity today. These offer the ability to manage widely dispersed supplier networks, multi-enterprise trade collaboration. They include a canonical data model to harmonize and standardize data, and global implementation resources to onboard and educate your community of suppliers and logistics service providers so they can benefit from more efficient, digitalized workflows with you, the buyer.
In fact, the analyst community now recognizes a unique category of supply chain network technology that has quietly been growing for the past two decades. This technology has emerged in reaction to the many limitations of legacy, on-premise software from traditional categories of supply chain planning, international logistics, transportation management, direct procurement and global supplier management. This solution category of trade network platforms or commerce network platforms has emerged as the approach of choice for leading supply chain organizations. They use them every day to help move their multi-national partner ecosystems toward a Supply Chain 4.0 level of business alignment, transparency and frictionless collaboration.
So why haven’t more companies actively moved to replace those slow and brittle Excel-based workflows with multi-enterprise supply chain business networks?
Building the business case
The “digital transformation” that every chief supply chain officer claims as a top priority (and has for years) comes with a significant price tag. SaaS fees for the technology itself often pale in comparison with the heavy lift in change-management effort, both for internal stakeholders and external trading partners. And, if all parties are to begin realizing the full benefits of digitalization, change is unavoidable. The necessary investments and global project-management resources must compete for funding and approval with other business opportunities and needs. Building the complex business case to navigate that project and funding approval process can be daunting enough to drive many organizations back to their familiar-but-flawed spreadsheet processes.
A major hurdle to business case development for supply chain digital transformation involves the fragmented nature of most supply chain operations. Functional silos like transportation, warehousing, procurement, planning and inventory management often aim for different goals and work with limited alignment.
But consider who in the business owns a multinational supply chain. Suppliers/contract manufacturers fall under procurement. Inland consolidation or trans-ship facilities may fall under inventory control. Ports of origin and departure probably fall under transportation or even trade compliance. Upfit or final assembly is managed by manufacturing. Free Trade Zones or distribution center operations might be inventory control again.
How difficult is it to build a business case for a foundation of end-to-end digital visibility that crosses all these departments and functional responsibilities, while clearly reflecting the benefits and the required change and investment proportionately for key stakeholders?
Much like dining on a pachyderm, we can break the business case down into more bite-size mouthfuls. For almost any supply chain project investment, the major benefit areas fall in to five categories:
• Product velocity
• Assurance of supply
• Worker productivity
• Spend efficiency
• Cash Conversion
These are business-wide performance categories that impact the balance sheet and the bottom line. Identifying target improvement areas across your supply chain operations where spreadsheets currently reign, then tying them back to these high-level concepts can help you see beyond internal departmental boundaries and build a robust financial model for net value from a new technology investment. That research and analysis and the financial model will help evaluate and test your value hypothesis across many scenarios. Then you can feel prepared to gain the senior leadership support required for successful transformational projects.
If your company is currently risk-averse or cash-constrained, a supply chain technology upgrade may only be approved for discrete functions, or for one or two business units as pilots, rather than as an end-to-end solution. Still, the effort to consider the full scope of potential benefits from a more extensive digital transformation in your business case offers many benefits.
Your analysis can help you choose the right technology approaches even for limited-scope projects that won’t leave you stuck with a dead-end point solution. Set your functional improvements on a path where successive but incremental phases of new technology adoption can build on previously realized value, in order to lower total-cost-of-ownership and time-to-value for subsequent phases.
There is a truism in engineering circles: focus on local optimization and you’ll never find the globally optimal solution. In other words, limiting your supply chain improvement goals or steps to benefitting only one department or function at a time can completely miss the really big benefits that transformation across functional silos has to offer.
Global supply chain operations—the inbound or first-mile of the product journey—have chugged along behind the scenes during a decade of global economic and shipping stability. We were lulled into complacency about the first mile, and technology investment seemed a much higher priority in final mile and end-customer fulfillment.
Now we all understand that if we don’t get our goods and materials in from overseas in a reliable and cost-effective way, we will have nothing to make or to sell to our end customers.
The urgency to upgrade our supply chain technologies to connect with growing networks of suppliers, logistics service providers, international and domestic carriers has never been so high. We need to integrate those data and collaboration streams with more continual supply chain planning and nimble “sense and respond” processes that recognize demand trends faster, so that we can right-size inventory, optimize our working capital and seize market opportunities if they suddenly appear.
We know that our ERP systems, and now our spreadsheet applications, can’t deliver the agility and supply chain visibility needed to protect our company’s profitability. It’s time for supply chain network technology. The need is clear for multi-enterprise collaboration and coordination, for financial supply chain enablement and oversight, for converging strategic and tactical decision-support based on higher quality, real-time data.
Spreadsheets are holding your supply chain operations back. The best and fastest way forward lies with multi-enterprise supply chain business networks, the digital platforms that can help your business thrive in even the most turbulent future.
Monica Truelsch is Senior Director of Supply Chain Management Solutions at Infor.
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