OPSESSION
Volume 1|Issue 4
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Cover Story: Operational failures in hospitals
X-Ops conducts Nirnay ‘14
Opsession
The Spreadsheet Sabotage and its impact on supply chain
December Issue This is the fourth issue of Opsession, the X-Ops newsletter. The monthly newsletter was introduced this year by X-Ops with the intention of covering all the activities and events that took place during the span of a month
Xavier Institute of Management, Bhubaneswar Volume#1
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Volume 1|Issue 4
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Over time, supply chain spreadsheets often gain features such as conditional formatting to flag exception conditions, charts and graphs to visually display data, analysis components to identify trends, and more. Multiple spreadsheets may be linked together in order to feed results upstream and downstream, or to drive high-level business decisions. Each enhancement adds risk, especially if the spreadsheet’s original design requires major revamping to add the new features.
THE SPREADSHEET SABOTAGE AND ITS IMPACT ON SUPPLY CHAIN lthough many employees are not properly trained to use them, spreadsheets are used by huge number of businesses worldwide to manage data. This article explores the difficulties and issues with companies exclusively relying on spreadsheets to manage their data and supply chains, causing problems with key things like scale and real-time view.
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Supply chain management teams can find themselves severely hampered by chronic spreadsheet shortcomings when performing mission-critical activities such as demand planning, sales and operations planning, manufacturing, replenishment and supply planning, inventory optimization, and value chain collaboration. (See Figure 1)
Vulnerable to Single Points of Failure A spreadsheet often reflects the work of essentially one person. If that person leaves the company or changes roles, that spreadsheet becomes an unsupported single point of failure. If there are multiple spreadsheet authors around the supply chain organization, then there are multiple potential single points of failure.
Chronically Prone to ‘Pilot Error’ In supply chain management, the impact of a single error can derail a forecast, cause a supplier to ship too much or too little of a particular product, or cause service level nightmares that can lose a customer. Researchers Powell, Baker, and Lawson estimated that roughly 94% of spreadsheets deployed in the field contain errors. Compared to these findings, a University of Hawaii study that estimated 20% to 40% of all spreadsheets contain errors seems positively upbeat. Unavoidably Hard to Maintain When someone authors a spreadsheet layout, they are essentially creating a nonprocedural computer program. Nonprocedural programming offers as many chances for mistakes as procedural programming, yet spreadsheets are rarely checked or tested thoroughly, and are usually rolled out without a formal quality assurance process.
Major Spreadsheet Problems in Supply Chain Management Every time you turn to a spreadsheet in order to handle some
aspect of supply chain management, you open a can of risk. Real-world supply chains have management challenges that cannot be adequately addressed by a spreadsheet approach – challenges such as variable lead-times, unpredictable demand, suppliers who miss due dates, production lines or outsourced sites that don’t always cooperate, multiple streaming sources of data each with its own impact on dynamic global business objectives, et cetera. Spreadsheets simply cannot comprehend these factors. The Functional Isolation Problem Even organizations that place their spreadsheets on a central server can’t ensure that collaboration behavior takes root across functional silos. Most organizations using the spreadsheet approach find that each department, geographical location, or even individual worker may be relying on a separately managed and maintained spreadsheet. When crucial supply chain activities like demand management, inventory management, production scheduling, supply and replenishment operations, and transportation planning are all performed in isolation with the results expressed in parochial terms, nobody’s numbers ever seem to agree. To the extent that spreadsheet reliance increases isolation, it works against collaboration initiatives and demand-
OPSESSION | Volume 1 | Issue 4 driven processes like sales and operations planning (S&OP). One of the first steps in any S&OP project should be to evolve away from departmental spreadsheets toward a unifying supply chain management solution that provides one accurate model of the supply chain, and one set of facts based on up-to-the-minute data. The ERP Integration Problem Planning tools must exchange information such as inventory levels, orders, supply-side information, and more with the company’s existing ERP system. The reality is that data loading into spreadsheets is always a non-realtime, manual process, very slow and prone to data entry errors. Today’s advanced supply chain solutions provide template-assisted integration tools that streamline set-up time and minimise implementation costs. The benefits are worth the effort. A supply chain management solution can incorporate many streams of data (for example orders, shipments, inventories, bills of materials, manufacturing costs) from existing systems around the company, and provide a degree of supply chain optimisation far exceeding anything that can be accomplished with spreadsheets. Supply chain management (SCM) applications increase service levels, minimise inventory, improve planning efficiency, handle demand uncertainty and supply volatility, manage product life cycles for maximum profitability and availability, and drive fact-based S&OP decisions. The Fragility Problem To perform integrated supply chain planning, companies must connect multiple groups within an organisation (from planning and operations, down to supply chain and procurement). Global supply chain management requires extending supply chain visibility to the
3 outside world (i.e suppliers, customers) to increase the speed of activities from asset recovery to recycling. When functional groups attempt to feed information (such as demand forecasts) to the spreadsheets of other functions (like supply planning), the chain is only as strong as its weakest link. Linked spreadsheets become cumbersome to maintain. The information ‘conduits’ flowing from one sheet to another enable cascading error conditions that can prevent users from obtaining critical results on time. The probability that a link in the spreadsheet chain is bad exponentially increases the single-pointof-failure problem.
The Slow ‘Time-toDecision’ Problem To gather, assess, and evaluate information held in spreadsheets is a slow, manual process. Lacking real-time alerts triggered by exceptions in order to target value ranges for key performance indicators, SCM are forced to manually monitor hundreds, or many thousands, of items. They can literally spend all day perusing spreadsheets for signs of trouble, big and small.
Executives shouldn’t have to get their picture of what is going on through batch status reports in Microsoft Excel or PowerPoint, nor should you have to request frequent custom report runs to answer questions. With spreadsheets, the risk is 100% that critical out-ofbalance conditions will be missed or major deviations detected late. Crucial business decisions should be based on real-time access to up-to-date supply chain data, and management reaction times should be driven by automated alerts that let planners prioritise efficiently and manage by exception. Supply chain team members now spend their time as analysts, not data manipulators, getting accurate information faster and using their time more wisely. Relying on spreadsheets to perform supply chain management involves a host of pitfalls. While it may
not make sense to completely remove spreadsheets from our professional lives, there are times when they can be more of a hindrance than a help. Companies that continue to rely on spreadsheets in order to power their supply chain will be left behind, and find themselves throwing away the opportunities to drive substantial improvements in forecast accuracy, visibility and service levels while also reducing working capital.
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ORGANIZATIONAL FACTORS THAT CONTRIBUTE TO OPERATIONAL FAILURES IN HOSPITALS
EMPLOYEES BELIEVED THEIR DEPARTMENT’S PERFORMANCE WAS SATISFACTORY, BUT POORLY TRAINED EMPLOYEES IN OTHER DEPARTMENTS CAUSED THE FAILURES
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he operational failures of hospitals which can be defined as the occasions where there are discrepancies in the supplies, equipment, information, or people needed to complete work tasks— contribute to hospitals' poor performance. Despite a pressing need to do so, hospitals are struggling to improve efficiency, quality of care, and patient experience. Due to such issues being faced be the hospitals there is wastage of least 10 percent of caregivers' time, delay care, and contribute to safety lapses. Recently there are many studies being conducted to study the organizational factors associated with the occurrence and persistence of operational failures. As per the consolidated view of these studies it has been observed that low levels of internal integration among upstream supply departments contribute to the operational failures experienced by downstream frontline staff, thus negatively impacting performance outcomes, such as quality, timeliness, and efficiency. So one view with the key concepts says that: Firstly, to avoid workarounds or the need to keep large stocks of materials on the units, managers should create a method for customer-facing employees to request and receive patient-specific supplies in a timely fashion.
Secondly, employees are unlikely to discern the role that their department’s routines play in operational failures, which hinders solution efforts. Thirdly, failures and causes may be dispersed over a wide range of factors. Thus, removing failures will require deliberate cross-functional efforts to redesign workspaces and processes so they are better integrated with patients' needs. Fourthly, employees believed their department’s performance was satisfactory, but poorly trained employees in other departments caused the failures. However, studies have shown that only 14% of the operational failures arose from errors or training. They stemmed instead from multiple organizationally driven factors: insufficient workspace (29%), poor process design (23%), and a lack of integration in the internal supply chains (23%).This suggests that employees are unlikely to discern the role that their department’s routines play in operational failures, which hinders solution efforts. Lastly, furthermore, in contrast to the "Pareto Principle," which advocates addressing "large" problems that contribute a disproportionate share of the cumulative negative impact of problems, the failures and causes were dispersed over a wide range of factors. Thus, removing failures will require deliberate crossfunctional efforts to redesign workspaces and processes so they are better integrated with patients' needs.
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X-OPS CONDUCTS NIRNAY 2014
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irnay – 2014, the flagship event of X-Ops , was conducted during the annual cultural festival of XIMB, Xpressions – 2014. It is an online business simulation game designed and developed by the student members of X-Ops and is held each year. This year, the event kicked off with the preliminary round that was held on 2nd November, 2014. The teams had to compete in an online quiz round that tested their general awareness and knowledge in operations management. The event saw a huge participation of teams of two to three players from the top B-Schools across India like IIM Lucknow, IIM Indore, IIM Shillong, NITIE Mumbai, SPJIMR Mumbai to name a few. A total of fifteen teams qualified for the final round. The grand finale was held on 8th November, 2014, on the second day of Xpressions 2014. The online game was designed on a Microsoft Excel based platform and was based on the business model of an imaginary ecommerce venture “Apna Dhanda”, the brain child of an entrepreneur and fresh MBA graduate Ashwin. The game challenged the players to use their business acumen and help Ashwin make important business decisions to take his endeavor forward and reach new heights.
The game was divided into four levels that defined four business years. With only an initial capital of one crore rupees, the players had to propagate the business across different cities, using different permutations and combinations of marketing schemes, supply chain networks and distribution channels. The game required the players to use their holistic management knowledge of operations management to decide the locations and make sales forecasts; marketing management to rightly choose the product mix and integrated marketing communication strategy. It also tested their knowledge of financial and managerial accounting to decide their overall game play strategy that would be most profitable. One critical decision could either make or break the game. And rightly so, as “Nirnay” is all about making the right decisions.
All the finalists played for a grueling four hour duration in a cut throat competition. The teams were judged solely on the net profit earned at the end of the four years. At the end, three teams emerged as the winners
Winner- Team Sparks, IIM Lucknow 1st Runner Up- Team Victorious Secret, XIM, Bhubaneswar 2nd Runner UpTeam AbraKaDabra, SPJIMR, Mumbai
With an enthusiastic participation combined with the relentless effort put in by the team from X-Ops, Nirnay – 2014 was a huge success and promises to return next year filled with more challenges and interesting avenues. BRIEFLY ONCE AGAIN, AN ENTHUSIASTIC PARTICIPATION FROM SOME OF THE BEST B-SCHOOLS OF INDIA ENSURED A NAIL-BITING FIGHT TO THE TOP
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Editorial Board
CHIEF EDITOR:
RAKESH A
EDITORS:
ABHINABA DE ABHINEET SUDHENDRA ABINASH MALLICK NEHA GUPTA
COORDINATOR: ABHISHEK ARUN DASH
Opsession Monthly
XIM, Bhubaneswar