Commentary by Ralf Düster, member of the board of Setlog Holding AG, Bochum, Germany
(Bochum, 14.2.2019). The economy is sinking millions of Euros into its supply chains. Even worse: Most companies don’t know this. The top management sometimes believes that the brightest head is the one who keeps the most complicated Excel spreadsheets. Not to be misunderstood: This software makes sense for certain office activities and calculations. But not in the area of supply chain management, which is about processes and process optimization. Unfortunately, some managers still tolerate files with the ending xls. Anyone who thinks this way, should let the following calculation go through their head:
Every employee spends an average of two hours entering data from emails or telephone calls into increasingly complex Excel lists. If you calculate an average hourly wage of 30 Euros and about 500 hours per year, this adds up to 15,000 Euros for Excel actions per employee. A company with 200 employees pays a total of around three million Euros per year for Excel activities. What is the result?
Professionals from SCM and logistics know: All this money is not only wasted, but Excel also leads to problems. First, the master data should be entered into each Excel list. These tables reinforce the structure of silos and create media breaks and data inconsistencies. Because the lists cannot be used optimally across departments, let alone across companies, this leads to contradictory statements. Supporters of xls files ultimately create intransparency instead of transparency in SCM. Especially in SCM data should be equally accessible, describable and usable for everyone.
However, transparency and an optimal use of data can only be achieved, if it is entered or generated where it originated (from other systems, from other participants or companies in the supply chain, etc.). This data should also be usable by every partner in the chain. So, any additional information to the data leads to a “refinement” of the data.
Every manager should be suspicious, if employees wave with Excel lists and want to explain the status quo in logistics or supply chain management with data from their silos. Conclusion: logistics is systemically relevant in virtually all companies today. Therefore, companies should control this complex system with adequate SCM software and not with a spreadsheet program that creates intransparency and enormous problems in the area of SCM.
But the whole truth is that the selection and implementation of SCM software is no trivial undertaking. This starts with time planning. There are cases where a project can go live across companies in three to four months. This always works, if the supply chain is already seen strategically in the companies and the processes are defined. Complex projects with numerous customer-specific requirements and many interfaces usually take longer, especially when processes have to be redesigned. The effort, that companies must make before starting a project, should not be underestimated. However, solution providers can also moderate and support the process and get the right people from the relevant departments around the table.
A whole series of questions should be answered. Examples: How do the goods get from A to B – and which service provider takes over? How is the quality of products assured and tested? How are suppliers and producers included in the system? What should the workflow process look like? How are improvement potentials recognized and process optimizations implemented? And: What does an early warning system look like and who must react to reports?
But the implementation of a project is not a piece of cake. In order to reduce time and coordination effort, some companies do not involve some specialist departments at all or, if they do, they do so too late. In addition, many teams underestimate the internal capacities that have to be planned for interface problems. It makes perfect sense to think about SCM when introducing other systems, such as ERP. Which data or areas should be integrated into merchandise management? Which areas and processes have to be considered company-wide and should therefore not be programmed in a silo like ERP, but connected according to the best-of-breed principle? As Professor Michael ten Hompel, Managing Director of the Fraunhofer IML in Dortmund, always says in this context: “Nature has never come up with the idea of introducing a central computer!“
Ultimately, however, the effort for the implementation of SCM software is worthwhile. And this can also be measured excellently based on KPIs. For example, companies can simply check how much delivery times have been reduced. They can also calculate transport cost savings and measure the number of air freight shipments or storage capacity reduced. What impresses most stakeholders is the number of e-mails and Excel lists that have been omitted. Up to two thirds of all email messages are omitted on average. However, my personal KPI is the total number of Excel lists for SCM: This KPI is 0 after the successful implementation of a SCM software.
Nora Breuker, Digital Marketing Strategist
Setlog GmbH, Alleestrasse 80, 44793 Bochum, Germany T +49 234 720 285 78, firstname.lastname@example.org, setlog.com
Setlog Holding is a provider of tailor-made Supply Chain Management (SCM) software solutions. The central product is the cloud-based SCM software OSCA, which is used by over 150 brands in the apparel, electronics, food, consumer goods and hardware sectors. With the help of OSCA, companies network with their customers, suppliers and service providers to optimally coordinate their supply chain, accelerate processes and manage supply chains efficiently.
Setlog GmbH is a wholly owned subsidiary of Setlog Holding AG. Founded in 2001, the company is now a leading provider of SCM software with over 15,000 registered service providers and 35,000 users in 92 countries. The software company employs 60 people in Bochum (headquarters), Cologne and New York. www.setlog.com