Is Procurement Ready to Say Good-Bye to the Spreadsheet?

(Featured Image from Microsoft website.)

Yesterday, June 27th, I ran across an interesting tweet. Jon Hansen (@piblogger1) tweeted the following:

I wholeheartedly agree with Jon. In this age of blockchain and and small app startups disrupting almost every industry you would think that procurement, and supply chain in general, would be ready to part ways with spreadsheets.

But are we?

An article from Robert Half reports that 63% of U.S. companies still rely on excel spreadsheets. And a Small Business Trends reports shows that 84% of Small Businesses rely on excel!

This comes as no surprise for a number of reasons:

  1. Spreadsheets are cheap or free. A small business needing to keep costs down can get Microsoft Office for the low price of $10 or so a month, or just utilize Google Spreadsheets for free. OpenOffice is another free offering that has a program just like excel. The list of free alternatives goes on.
  2. Spreadsheets is easy. I don’t care who you are, spreadsheets is easy to learn. And once learned, spreadsheets can be utilized to do a plethora of things. Organize data, create charts and tables, analyze said data and charts/tables. Even an iota of training can lead an employee to create a generally acceptable presentation of data. Want to learn more about how to do things in spreadsheets? There are a number of excellent free online resources, or you can pay for a book, or even pay for an advanced class at your local community college. Big solutions providers? Not so much.
  3. Current ERP/WMS haven’t done a good job creating a viable replacement for spreadsheets. Despite SAP, Oracle, Coupa and others making great strides, the numbers I cited above speak for themselves. Enterprise Resource Planning (ERP)/Work Management Systems (WMS)/etc. do not provide enough of a solution to effectively unseat the spreadsheet.

I have personal experience in this area.

The company I used to work for had used an industry specific WMS for decades. Spreadsheets were the norm for day-to-day operations. As I left, the company I worked for was beginning the long road to a major upgrade of the WMS. But when asked about spreadsheets and additional functionalities, the WMS supplier replied that the company would still need to utilize spreadsheets.

Two small businesses I’ve worked with in the Greater Omaha Metropolitan area use spreadsheets for 80-100% of their operations. One of the businesses effectively has a WMS at their disposal, but that only covers a small fraction of what they need to track, and the WMS doesn’t connect with the business owner’s bank account. Enter spreadsheets. The other small business is just starting up, and there is zero dollars in the budget for even NetSuite by Oracle. Spreadsheets fill that void.

Conclusion

I think, as do many others within supply chain and procurement, that it’s time to say good-bye to spreadsheets. It’s 2019, after all.

But, then again, we were supposed to have flying cars and cities on Mars by this point…

Maybe someone will come along and create that perfect ERP that finally replaces the spreadsheet.

Will Amazon Be Your Sole Source Supplier?

(Image © Amazon Logistics)

The recent trend in procurement and supply chain is consolidating suppliers as much as possible. This gains the organization volume discounts for materials and services, increases the organization’s negotiating power due to the amount of spend, and it removes the administrative burden of managing and communicating. While not all companies can sole source with a single supplier, many work down to two or three in a range of categories.

But have you considered utilizing Amazon as your sole source supplier?

On October 23rd, Amazon announced new Business Prime Benefits for organizations in the U.S., Germany, and Japan. These new benefits include:

  • Spend Visibility
  • Guided Buying
  • Amazon Business American Express Card
  • Extended Terms for Pay by Invoice
  • Upgraded Shipping Options

Where many business may buy from a major distributor, Amazon is set to be that distributor and compete with companies like Genuine Parts Company (think NAPA Auto Parts) and Grainger. Customers don’t have to deal with a dozen or more different suppliers. They find what they need on and buy through Amazon, and can even set policies and limits for their organization’s buyers.

Amazon is looking to make it as easy and transparent as possible. From the Amazon Business blog:

“Amazon Business Spend Visibility allowed me to perform several functions that would otherwise have been manually performed and incredibly time consuming,” said Chris Vanderbilt, Procurement Director at Alterra Mountain Company, who owns and operates more than a dozen ski resorts across North America. For example, to identify purchases out of compliance, Chris would have to download a transaction list from their procurement card provider, request info from specific users, and spot check purchases. Now, using Amazon Business Spend Visibility, he can quickly run a category spend analysis and identify non-compliant purchases across multiple companies and users.

You can learn more about Amazon Business Prime here.

Many people know about all the different markets Amazon has entered, such as publishing, audiobooks, and cloud servers. But now Amazon isn’t just working to compete with bookstores or MRO distributors, they are also moving to compete with the likes of FedEx and UPS.

In 2016 it was reported that Amazon was quietly building its own shipping company. That escalated this year with Amazon’s announcement that it would help entrepreneurs start their own package shipping companies. For about $10,000 (and some vetting) you can start your own Amazon package delivery company with vehicles and uniforms to match, as well as Amazon technology to track your workforce and deliveries.

This move is two-fold: Amazon now has full control of its small parcel shipping, while putting it in direct competition with shipping giants FedEx and UPS.

What are the implications of all of this? Market shake-ups in MRO/tools/parts and parcel shipping. Suppliers on Amazon will be driven to be more price conscious in order for Amazon Business customers to choose their product and price over the competitor, driving down prices (unless a supplier markets more on quality).

And could it mean that one day your business or organization may use Amazon as a sole source supplier?