The end of spreadsheets

From the August 2019 print edition

Earlier this year, I wrote an article about the S2P process and its impact on distribution. The industry experts with whom I talked indicated that the continued utilization of spreadsheets in the S2P quoting process was a weak point regarding most digital distribution platforms.

In and of itself, it was an interesting article to write given the way that the Amazon model has radically changed our view of the modern supply chain. It was also a timely piece because I was about to moderate an international guest panel discussion on the topic, and I was looking to my research to provide the insights for many of the questions I would be asking the panelists.

But here is the thing; at the time I did my research, it was in the context of Supply Chain 2.0. However, I also discovered that McKinsey was talking about the emergence of Supply Chain 4.0? I could not help but wonder if I’d missed something, especially since the industry had apparently skipped over 3.0 from 2.0 to get to 4.0. I know, it is “point 0” overload. I had to learn more.

But never mind the X’s, what are the 0’s? For those who don’t have a program to identify the players and the various versions of their Point 0’s, below is a brief primer on what I discovered.

Supply Chain 2.0: In June 2016, Accenture wrote a paper called Supply Chain for a New Age. In it, they introduced the Supply Chain 2.0 concept, which focuses on rapid demand sensing, scalable supply networks, intelligent predictive capabilities and connected supply ecosystems.

The authors of the Accenture paper then go on to say that future 2.0 is enabled by “six core pillars.” Again, this original information was from 2016. When I did my research, there was also a January 4, 2019 CNBC advertorial piece presenting 2.0 as if it were still the standard, so keep that in mind as you read further.

Supply Chain 3.0: Now, this is where it starts to get a little confusing. A November 20, 2012 (that’s right, 2012) article in the European Business Review talks about how Supply Chain 3.0 will “automate and transform the rules of the global supply chain.”

While the European article made random references to manufacturing, ERP platforms and the boom, two years later a Supply Chain Brain article summed up 3.0 by saying that it is “the Internet of Things that will combine with Web 3.0 technology.”

Here is my question: how does 3.0 come before 2.0? Did we take a step forward with 3.0 and then take a step back by way of 2.0?

Supply Chain 4.0: In October 2016, McKinsey published an article—are you ready for it—about Supply Chain 4.0 and how it “will make your organization faster, more flexible, more granular, more accurate, and more efficient.”

So, to be clear, in June 2016 Accenture coins the term Supply Chain 2.0. In October 2016 McKinsey introduced Supply Chain 4.0. In a matter of five months, we go from 2.0 to 4.0, only to discover that the concept of Supply Chain 3.0 was introduced four years earlier, in 2012. It must be the new non-sequential math?!?

Don’t get lost in the 0’s
Regardless of what number precedes point-0, I found that the McKinsey article was from an S2P perspective most interesting in that it brought all elements of the digital supply chain into focus. This is especially true in areas such as internal and external demand and predictive analytics, the Uberization of transport capacity and agility and the utilization of advanced algorithms relating to demand probability and fulfillment.

Another interesting area of impact—and this relates more directly to my article and panel discussion, is how McKinsey reports that digital will enable prices to be “dynamically adapted to optimize the overall profit made,” while simultaneously “minimizing inventories.”

This last point from McKinsey aligns with my overall belief that an integrated, intuitive and streamlined digital S2P process will finally start to reduce, if not eliminate, the persistent dependence on spreadsheets in the procurement world.

In other words, and particularly as it relates to the distribution quoting process, spreadsheets have no place in a digital supply chain. Getting away from procurement’s long-standing reliance on them should be one of the top objectives with going digital.

Changing the spread (sheets)
Is it possible that the time of spreadsheets is coming to an end?

In a recent TweetChat I had with Bank of America University Distinguished Professor Robert Handfield, he reported that a recent survey found that 70 per cent of procurement people still rely on Excel as “their number-one tool.” In a digital world, this is an unacceptable number. In follow-up comments, it is clear that Handfield believes that this reliance on spreadsheets has to change.

He is not alone in his thinking. Although hedging his bet with the words “it’s possible to remove the reliance on spreadsheets,” industry expert Steve Wargalla agrees with Handfield’s position about spreadsheets. Wargalla, who is a leading authority on distribution in the digital age, believes that the industry is starting to see the value of having a digital database with extensive search capabilities and intuitive analytic functionality to simultaneously acquire quotes, assess best value pricing and fulfill customer requirements within a minimum keystroke framework.

Both Handfield’s and Wargalla’s digital confidence will likely be bolstered by a report that indicates that “90% of excel spreadsheets are sensitive to human errors.” Ignoring the added cycles associated with using spreadsheets for quoting, if there is such a large propensity for error, why are they still considered to be a viable tool?

Coming back to supply chain point 0
Whether you call it Supply Chain 2.0, 3.0, or 4.0 (and yes there is, according to industry experts, a 5.0 on the near horizon), it appears that digital transformation can move procurement into a brave new world of error-free efficiency and freedom without the continuing dependence on spreadsheets. Alright, maybe not across all areas of a supply chain practice, but at least in strategic areas such as distribution quoting.

Jon Hansen is editor and lead writer for the Procurement Insights Blog and was host of the PI Window on The World Show on Blog Talk Radio.

Referring once again to my article and guest panel discussion, the quoting part of the S2P distribution process would be a logical starting point to dispense with spreadsheets and go digital. After all, every long journey begins with a single small step. SP