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A rant on Excel and Bad Ideas.

The great thing about the internet is that anyone can share their thoughts, the problem with the internet is that anyone can share there thoughts. A classic dichotomy if you will.

We see this all the time, people talking utter, utter rubbish about things they don’t understand. As “organisations” have started to blog more and more this issue has increased. The way I see it is like this… If you run “Mega Corps” would you want me bloging for you? I probably wouldn’t. You see I’m not a talented writer, my spelling and grammar are poor and I’m not adept at making my point – as I will now prove. So “Mega Crops” ask the people who can do these things well to blog for them. What actually makes for a good bloger is someone who can think well! See, a bad idea expressed well is still a bad idea. What makes a great bloger is someone who can think and write well – and these types are rare. But still, what would you rather have, an ill-conceived observation expressed elegantly or a quality observation just expressed?

Which leads me to these two blog post, the first one suggests that people who use Excel in the supply chain are doomed, and the second one adds more fuel to that fire.

Beware Supply Chain Excel Users—YOU are DOOMED!!!!

Excel doesn’t excel in all cases…

Now I need to be careful here, I don’t what to offend anyone.

Equally I’d like to address the lack of understanding and insight, or at least offer a counter view. I have some grounds to make these observations, being somewhat familiar with Excel and having worked in supply chain for the last decade or so.

Basically both articles point out the limitations of Excel, principally by comparing the differences between Excel and a Generic ERP system. For example:

“Excel has features that can calculate safety stock by using prebuilt basic formulas such as moving average, standard deviations forecasts etc. Keep in mind that by doing this, an organization will not have the ability to see the entire supply and demand relationship. On the other hand, when the same safety stock is calculated within an application, it will provide visibility to outstanding supplies that need to be replenished; orders can be planned for production; and it can calculate how quickly organizations can turn a forecast into a deliverable product.”

Khudsiya Quadri, Technology Evaluation Centers

And

“I completely agree with the author that there is a big risk to SCM Professionals who rely too heavily on Excel.  There are all the reasons listed in the article such as  lack of collaboration, visibility, control and no ability to perform “what-if” scenarios.  I would like to add some additional thoughts to this discussion.”

Monique Rupert,  21st Century Supply Chains

So, Excel has limitations creating what if scenarios, and pre built basic functions!! Clearly not Excel experts! Another common theme is that Excel is not very good for collaboration, information sharing and data security…

It is almost impossible to control the integrity of spreadsheet data and access to the spreadsheet.  With multiple people accessing the spreadsheet and no security, how can anyone have any confidence in the data?

Monique Rupert,  21st Century Supply Chains

Well true. Sharepoint (etc.) might help here, but that’s another issue. So basically don’t use Excel as a database. Fair enough but…

Comparing Excel to an ERP system is like comparing a Motor Bike to a Train Network. It’s just stupid. Telling people not to use Excel because it does not have the same capabilities as an ERP system is likewise really bad advice. Excel is different to an ERP system, we could easily re frame the argument the other way around and draw the conclusion that ERP system are the work of the Devil!

In fact, lets do just that.

Beware Supply Chain ERP Users—YOU are DOOMED!!!!

ERP systems are slow expensive complex beasts, with poorly documented calculation methods, inflexible font ends, and limited reporting capabilities. I recently talked to a number of supply chain professional and was shocked by how many of them are using their ERP systems in blind faith that the system are optimised for their needs. In the fast passed global supply chains of today, how can these default settings and calculation models possibly be right for your business?

Consider yourself doomed if you ever find yourself using an ERP system for any of these:

Reporting and Analysis: ERP system can out put reports in a number of formats, but typically they cant build well constructed dashboards, which are tailored to your companies specific needs, and/or ones that can be quickly adapted and changed over time as the needs of the business change. And forget it if you want to do some sort of analysis that the System Architect didn’t think you’d need to do in the 2 month he was specifying the system for your company 3 years ago. (Not that that would ever happen of course…).

Changing the model: ERP systems provide various forecasting tools, is getting the best results from them a skill or a science? Do you even know what equations are being used, it’s unlikely because this is the IP of the vendor, and what about data sources, is that data from the Spanish plant accurate, if it’s not can you do anything about it? Not all that flexible are we!

Your team just grew: Better get your wallet out…

You want someone form out side the organising to use the system: No.

You have a new data source that you’d like to add to the model: Humm, can you see where we’re going…

And so on…

In conclusion neither ERP systems or Excel can doom your supply chain and comparing one against the other as a way to high light a weakness is a logical flaw. Neither ERP systems or Excel are inherently good or bad, badly designed and/or used spreadsheets are a business risk, just like a poor quality ERP system or ones that are used poorly are a risk. Each “system” has strengths and areas where their use makes sense, and this are extremely well document. Likewise the “miss use” of Excel and the motivations for this are also well document, and note – not all of them are unreasonable.

I take exception to the two blog posts because as well as misrepresent the capabilities of Excel, they also give poor or misleading reasons as to why it’s use is dangerous, also they both take one or two valid, but already extremely well understood points, and extrapolate them to reach irrational end points.

So were doe this leave us?

Well, here are some of my thoughts on what you should do to help you avoid risks if your using spread sheets (for anything really)

  • Design you spread sheets well from the ground up (here, and here for help)
  • Understand connected or discounted data sources
  • Learn how to connect to enterprise data bases.
  • Learn about versions, and version control and try to apply it
  • Think about risk, and except it explicitly if you have to

And there ended the rant ;-).

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12 Comments

  1. Re: the Rupert article: It’s one thing to be wrong about Excel, it’s a different kind of clueless to mindlessly repeat someone else’s misguided criticism.

  2. And Excel is not a one-trick pony.

    ERP vendors usually tie you in to their inflated support costs by having incomprehensible databases.

  3. Am I missing something or a couple of hyperlinks missing…

    “Design your spreadsheets well from the ground up (here, and here for help)”

    Should the ‘here’ point somewhere?

  4. Ross, I find your post interesting because it appears to be intended as a counterpoint to the post by Khudsiya Quadri but based on what you’ve written, I have the impression that you actually agree with her and have presented some complementary points.

    You said “Comparing Excel to an ERP system is like comparing a Motor Bike to a Train Network. It’s just stupid.”

    In fact, Khudsiya isn’t really comparing Excel to an ERP system rather she’s trying to make a point that while Excel has valid worthwhile uses, it also has limitations that other applications, like SCM systems, are designed to address.

    I believe this is roughly equivalent to what you said. A motor bike has its uses, a train network has its uses. Clearly the two are designed for different purposes and trying to use one to accomplish the other isn’t very reasonable.

    Sure, you can carry some items on your motor bike but you cannot transport a large quantity of cargo. Likewise using a train for no reason but to transport a few groceries would be hugely inefficient.

    I think if you read her post again from this perspective you might see that she’s identifying some of the areas where companies attempt to use a motor bike to lug a few tons of freight.

    Thanks for sharing your thoughts.

  5. Hi Josh,

    Thanks for the comment.

    I’m not trying to pull anyone apart here, so I hope this is all taken in the right way.

    Firstly:
    >>>I believe this is roughly equivalent to what you said. A motor bike has its uses, a train network has its uses

    In fact that’s not what I am saying. I am saying that a comparison between the 2 things is pointless, its so obvious that they are different it’s not worth making the point (..again, because it been made many times before), also I’m saying that there’s a basic lack of knowledge about what Excel can do, and also a few valid points are drawn out to make invalid conclusions. For example:

    >>>Supply chain professionals don’t realize that demand planning is a collaborative process among internal and external parties but also very dynamic in nature.

    Firstly I would argue that supply chain professional do realise that demand planning is collaborative and dynamic…, but OK…

    >>>Excel cannot provide the planner the actual demand for the customer, product, or part.

    Well, an ERP/SCM system, can’t “provide” it, it may be used to collect the data. The point is moot. It’s certainly not a reason why anyone using Excel to do a stock forecast is doomed!

    >>>Excel lacks the collaboration,

    Yep, it’s not a collaboration tool. I don’t think collaboration is what is actually meant here, because ERP systems are not collaborations tools either, I think what’s meant is multiple user type work, but either why the point is fair.

    >>>…visibility, and “what if” analysis needed to generate a robust demand for the organization.

    Not sure about visibility, I would say Excel can be very visible, much more visible then an ERP type system, Excel can most definitely do what if’s, that’s just wrong.

    >>>The demand cannot be static; it has dynamic variables such as geo-political, economical, weather etc. when accurate forecast is calculated.

    Firstly if you using geo political parameters in your demand planning then fair play to you… (not that I’m sure what they would be…), like wise with the weather and so on, but regardless, of what you choose to use in the plan, all these things can be done in Excel with easy. So again this point is wrong.

    Here then, we can see only one valid point has been made, we can see that Khudsiya is not pointing out that Excel has some strength and weakness, but is just making bad, factually incorrect augments about what Excel can and cant do…

    Like I concluded:

    I take exception to the two blog posts because as well as misrepresent the capabilities of Excel, they also give poor or misleading reasons as to why it’s use is dangerous, also they both take one or two valid, but already extremely well understood points, and extrapolate them to reach irrational end points.

    I feel this is fair comment,

    Thanks Josh.

    All the best Ross

  6. I agree with you Ross.

    Nobody will claim that Excel is the most appropriate tool for every possible job.

    But to write that Excel has “no” tools for what-if analysis is a particularly embarrassing way to admit (a) that the author has no real knowledge of Excel (and therefore no business commenting) and (b) the author has merely repeated someone else’s (incorrect) criticism.

    Some people might interpret that as a credibility issue.

  7. Excel is what you what ever you want it to be in the hands of a Master.
    The problem is there are just about 100 such masters world wide ….and about 10 million who think they are

  8. “The problem is there are just about 100 such masters world wide”

    And none of these 100 would be claimed by corporate IT as decision-makers. That is why discussions like this occur which misrepresent the possibilities that Excel presents.

  9. In MOST of the business situations that I’ve had the opportunity to consult with, 90% of the solutions that used Excel had no business using that. A database should have been created, a login system with access rights developed and a central data-store utilized. If they wanted to utilize Excel AFTER that fact, then OK. But I have seen far, far too many instances where Excel IS the company’s data-store. That is very sad.

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