Based on our observations, I would bet that most of our readers are using Excel spreadsheets for value analysis, utilization management, and analytics. It’s been our experience that despite the benefits and popularity of Excel, it is not always the best tool for the purpose that it is intended. I can make this statement because SVAH too employed Excel spreadsheets for many years until we assessed the risks of doing so. Here are the risks, as we see them, of using Excel spreadsheets exclusively for data management that can negatively affect your supply chain decisions:
1. Inaccurate Data: A simple cut and paste and/or calculation error on your spreadsheet can completely change the outcome, accuracy, and reliability of your data. For example, we were reviewing a GPO bid for a client and the pricing comparison data was reported out on over 5,000 line items. We found that some of the savings documented far exceeded the normal savings range for any price savings. Here it was just a simple cut and paste error by the GPO’s analyst which placed hundreds of line items with each price when the bid called for box or case. There was no way there was savings of 92% in a line item category, yet many line items had savings ranging from over 50% showing on the report. Mixed in with the other 5,000 line items, this could easily go unchecked. This dramatically changed the outcome of the bid and the overall savings went from $900K down to $426K for this bid document.
2. Decreased Productivity: Excel is a time vampire! Employees often need to manually copy/paste information from one sheet to another. That’s why studies show that 93% of Excel users consider combining spreadsheets as too time-consuming. On the other hand, off-the-shelf software solutions allow users to assign specific data to columns or fields, eliminating the wrong kind of information or misplacing it on the workbook. In fact, an FSN survey showed that more than 50% of spreadsheet users said they spend too much time checking number changes manually every time a change is made.
3. Inadequate Scalability: You need to have your data scaled as your supply chain organization grows. Spreadsheets reveal their shortcomings as soon as you start to handle large sets of data. Excel’s largest format holds a maximum of 1,048,576 rows and 16,384 columns, which means your datasets should stay within that capacity. At some point, you will find that your spreadsheets are too big and cumbersome to be useful, helpful, and manageable. Plus, even with filtering and VLOOKUP it becomes nearly impossible to navigate, work, or manage these big spreadsheets once they grow beyond a few hundred line items and about 30 columns.
4. Faulty Version Control: Without proper version control, your employees could end up with duplicate files with varying datasets. They could accidentally overwrite spreadsheets and experience delays. Excel’s inability to track real-time changes poses a risk to your data integrity, especially where multiple users manage a single workbook.
5. Erratic Disaster Recovery: Your spreadsheets can become corrupted despite faithfully backing up your workbooks. Recovery tools often fail when attempting to repair damaged workbooks, while recovered files don’t always include your latest updates. Off-the-shelf software can make it easier to back up and recover your files.
There is no argument that Excel spreadsheets have their place in your supply chain tool box, but if your staff members are employing Excel as a universal supply chain tool for all data management, it has its risks as outlined above. As a general rule, I would suggest that if your value analysis, utilization management, and analytics are mission critical, don’t use Excel spreadsheets but search for software that is specifically designed for the management of these important functions. Trust me when I say that you and your staff members will be happier with the ease of use, time saving features, and improved outcomes of these power tools.
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