Over the last few decades, the global supply chains have evolved in extraordinary ways, forcing rapid change in just about every sector. And yet, many companies today are still applying outdated methods to their supply chain planning. According to a 2020 survey conducted by Modern Materials Handling, a staggering 45% of supply chain professionals reported are using mostly or entirely manual processes. At a time when supply chains all over the world were being rocked by the pandemic, it’s hard not to dwell on how digital and automated processes would have helped companies to sense and respond better to swings in market demands, or issues of raw material and product scarcity, shipping delays, and labor shortages.
Having come out on the other side — with lessons freshly learned — 64% of companies say they plan to accelerate their digital transformation as a result. For those still dependent on manual processes, we want to stress the sense of urgency to evolve with the needs of today’s volatile marketplace and the threats hidden within traditional supply chain management systems.
5 Risks Introduced by Manual Supply Chain Planning
Discover some of the biggest threats to supply chain management, posed by manual methods like spreadsheet-based planning.
You’re opening yourself up to errors
Spreadsheets are managed by humans and humans make errors — a lot of them. In fact, according to the Corporate Finance Institute, errors in spreadsheets happen at an estimated rate of 88%. The errors resulting from manual management can create gaps, leave you vulnerable to risks, and limit your scalability.
You spend more time on the tactical aspects of planning than the strategic
When spreadsheets are used as the primary tools for planning, most of a planner’s time is spent on “keeping the numbers right” – i.e., making sure that the numbers add up and they are current leaving very little time for the planner to evaluate scenarios and alternatives. This results in only attending to fewer product categories than you would otherwise like to.
You are not able to collaborate cross-functionally to generate consensus plans
Circulating spreadsheets around to get inputs from functions like sales, marketing or a channel partner is both time consuming and error prone. Being able to design collaborative workflows and allow multiple parties to provide inputs easily is a “must have” in today’s dynamic supply chain environments.
You are not leveraging valuable data that is available to you
Spreadsheet based planning does not allow you to integrate data that is available from external; sources (channels and third-party data providers) as well as internal sources (ERP, CRM etc.) in a timely manner to support better demand and supply planning. For example, today highly valuable channel level sales and inventory data can be acquired from channels like Amazon, Walmart, and Kroger — use of this data in demand, inventory and supply planning can help enterprises of all sizes to offer higher service levels even while carrying lower inventory.
Your (slow) reaction time might be damaging customer experience
In today’s competitive environment, where any product category can have more than a handful of brands, being out of stock even for a few days could result in loss of market share. Ability to react quickly to demand and supply changes will require more frequent planning runs with the most current data.
The better option? Make the smart shift to AI-powered solutions
Despite their superpowers to predict the ebb and flow of a supply chain, professionals will always be dealing in a world where predictions can be upended at any moment. The best way to contend with the uncertainty is to fortify your supply chain with solutions that can protect you from vulnerability, help you achieve greater precision, and accelerate your growth.
According to a report from Ernst & Young, “the pandemic forced supply chains to develop new agility to carry forward — for example, many organizations are building advanced analytics to do dynamic SKU rationalization rather than doing one-off spreadsheet exercises.”
Setting the stage for process changes like these are AI and automation solutions that deliver enhanced visibility and optimized efficiencies end-to-end. Firstshift.ai is leading the way with an AI-powered, cloud-based demand planning software and supply chain planning platform. Firstshift.ai offers companies the power to more accurately forecast customer needs, sense and respond to market signals faster, and achieve a consensus demand plan with simplified cross-organization collaboration.
Ditch the spreadsheets and make the smart shift — schedule a demo to learn more.
Padman Ramankutty
Hari Menon
CP Agrawal