Resisting the Spreadsheet’s Siren Song for Supplier Management
The temptation to manage suppliers in spreadsheets is like a modern ‘siren song,’ luring professionals in with the promise of simplicity and convenience - all while preventing them from seeing how close those spreadsheets bring them to danger.
Despite how great spreadsheets seem, they introduce serious risks into supply chain processes and often lead to additional work. For today’s distributed teams, there is almost always a better way, one that helps them deliver better results and the company achieve greater efficiency and knowledge retention. These are just a few of the risks associated with using spreadsheets to manage suppliers:
Spreadsheets Separate Supplier Information from Transactions
While it may seem harmless to export and manipulate data offline, that is the same as breaking a branch off of a tree. The leaves may stay green for a few days or weeks, but the branch is still dead. Take supplier performance as an example. A buyer may export that data and start keeping their own records offline, preventing other buyers in the organization from knowing if that supplier is deserving of more spend or if they present a risk to the operation. Supplier performance data should live in one shared system where everyone who needs it can allow it to inform their decisions.
Spreadsheet Data Gets Cold – Fast
Data is one of the few resources in the world that improves with use, especially when everyone in an organization has the ability to provide updates. Anyone that is managing their current and potential new supplier lists in local spreadsheets may end up trying to use old data to reach a supplier point of contact. While this sounds like a minor inconvenience, it can bring an organization to a standstill if that supplier provides a critical part or service and can’t be reached because the information is out of date. Pulling supplier data from a centralized supplier information management platform EVERY TIME puts the right information into each decision maker’s hands.
Spreadsheets Make it Hard to Share Supplier Information
One of the most common – and dangerous – uses of spreadsheets in supplier management is analyzing supplier bid responses and pricing. The supply chain team may pull pricing and specifications into a spreadsheet to meet their short-term needs, but they are actually setting the organization up for failure in the longer term. With no evidence trail, the team will not have anything to start from the next time the category of spend is sourced, and no detailed basis for handling any re-negotiation that takes place during the term of the contract in response to changes in demand or cost drivers.
Spreadsheet Logic is Hard to Follow
When data is stored or manipulated in a custom-created spreadsheet, it follows the personal logic of the creator. That may be ideal for the person who created the spreadsheet, but it is less so for anyone else on the team. Most of us think very differently – even about supplier information. Data that is manipulated in a system with common, user tested logic will make sense to everyone, and ensure that work, as well as information, are transferrable between team members and projects
Using spreadsheets has long been a ‘crutch’ for procurement teams. As their functional maturity improves, however, spreadsheets can become a source of risk and unnecessary duplication of efforts. Whenever possible, supplier information should be stored in common systems where everyone has the latest version of the truth, the logic is easy to follow, and enterprise knowledge is preserved for future re-use.
If you are currently managing your suppliers in a spreadsheet and would like to discuss moving them to a supplier management platform, please contact us.
Charles Dauber, CEO of Warm Commerce, is a 4 time CEO with proven success in creating market-leading companies with top line and bottom line growth and significant investor returns. His experience ranges from NASDAQ listed companies to early-stage start ups.