In today’s tech-led market, there is a software solution for almost every business activity, from lead acquisition to SME accounting. Supplier spend management is no exception, with a variety of business intelligence (BI) tools available for businesses looking to monitor and fine tune their supply chain. Nonetheless, even here in 2021, we find that many organisations are still using simple data tools such as Microsoft Excel to manage supplier spend.
The first in our series of Procurement Software blogs, this article will explore whether Microsoft Excel serves as a suitable substitute for specialised supplier management software, or whether businesses are missing a trick!
First, let’s assess the benefits of Microsoft excel as a supplier spend tool.
· It’s free: the most obvious advantage of using Microsoft Excel is that it’s free. For small or growing businesses, this can be important whilst trying to keep costs low – particularly in the spend analytics department where cost savings are the objective!
· Ease & accessibility: another reason Excel is used as a primary data tool for organisations is its ease and accessibility, readily available on most computer hardware from purchase. It’s versatility as a tool also means that most workers already have experience using it – reducing the need for employee training in more complex BI software.
Nonetheless, there are also several disadvantages to using Microsoft Excel as a procurement management tool:
· Data input is manual: unlike other BI tools which can be directly integrated with other organisational systems to automatically pull data, excel requires manual data input – often devouring hours of employee time to populate a single sheet.
Further to this, the manual process of entering data also leaves plenty of room for human error, with incorrectly copied data or the temptation for employees to round data up or down to influence the appearance of performance. This can subsequently affect the ability for businesses to make accurate data-informed decisions.
· Not built for collaboration: supplier spend analysis typically requires the compilation of data from multiple departments, however this can be difficult when working with Excel as data is not displayed in real time. As such, each time an update is made, the working spreadsheet must be sent to other relevant parties before they can add their own data / comments. Again, this compromises the time-efficiency of the process, as contributors must work on the data in a linear process.
· Lack on in-built security: excel spreadsheets contain a vast amount of company data. With the inability to invite collaborators to use the tool, it is necessary to send a document back and forth between contributors, often via email. This increases the risk of data being compromised and potentially falling into competitors’ hands.
Whilst manual data processing may be part and parcel of running a small business, such activities are not easily scaled for growing businesses. In fact, the time and manpower involved with upkeeping manual data input may hold your business back.
Further to this, a large aspect of organisational growth is the ability to actively track organisational performance and respond to issues and opportunities at a rapid pace. Even with a dedicated manager or team on board for managing data input into excel, the sheer amount of time taken to transfer data from different departments and between contributors makes it almost impossible to monitor supplier spend in real time. Again, this can inhibit organisational growth, with competitors potentially able to respond to macro factors at a much faster rate.
With the above in mind, even smaller organisations that opt to use Excel because it is free may be inadvertently losing money and competitiveness within the market.
Whilst there are some obvious upsides to excel (particularly for small businesses or start-ups), it’s important for businesses to be aware of its limits and to ensure that when the time comes, they are willing to replace its use with a more tailored BI software.
At Arrowhead, we’ve designed our procurement analytics software with you in mind – offering an easy user interface and handy features such as bespoke notifications to save your team valuable time.
Our interactive visibility caters for collaborative working – perfectly suited to the modern, remote work team – whilst our stringent security measures ensure that your data is protected, even when working from a tablet or mobile.
Supplier spend management in 2021 should not be a difficult or time-consuming process. We believe businesses should have the power to view data across the organisation in real time, allowing them to make data-informed decisions to grow the company.