Master Data Management — Supply Chain, Logistics, Procurement
Organizations have been questioning if Master Data Management (MDM) was the right approach, or if they had the condition to move forward to an MDM implementation, this is no longer the case.
Over the last few years, I’ve been writing extensively about Master Data Management, what it is, it’s role, what it addresses, it’s problems and benefits.
This article will focus on the specifics of Master Data Management in Supply Chain, Logistics and Procurement, and how it can help solve some of the challenges in these activities.
These are activities that run across almost every industry, from agriculture to the space industry, even if with different levels of criticality, so I’ll try to be as encompassing as possible, without getting into technical detail (for those, feel free to reach out and I’ll clarify any doubts).
There are multiple challenges for those working in supply chain, logistics and procurement, I believe that the most pressing must be of how to over all the supplier and item master records, across all the different systems in the organization?
What is happening?
How can you access updated, accurate and reliable supplier or item master data when the same data is being entered in different systems, that don’t fully integrate, it’s used across the organization with different degrees of timeliness and validity, most of the times the same supplier, or item is being qualified differently in different systems, etc.
What is the impact of this kind of situation when needing to make effective sourcing, procurement, or supply chain decisions?
Now, let’s consider an organization that usually works with a few thousand items, and corresponding dozens of suppliers, many of whom supply the same item, but using different names, increasing the complexity of procurement and supply chain processes.
How do you assure consistency, accuracy, streamline processes, and create common data across all stakeholders?
It’s it manageable? Probably, but at what cost?
Information on how to develop a Master Data Management solution is quite abundant, and it quite easy to find a few frameworks that can easily be adapted to the tool of choice.
What makes it so difficult? — even when you’re considering if your organization needs to adapt an MDM solution, or you’ve already decided it, but you don’t know where to start, if you already have some MDM capabilities implemented but need to step up, or worse you already have a failure in your hands.
How can it be achieved?
· Vision — The priority must be to establish the business vision. What’s the role of Master Data in the overall business strategy, and consequently in data strategy?
· Clear, ambitious (business) objectives — Data’s purpose is to create value, so any data strategy must be oriented towards the organization’s strategic priorities and key business objectives — Data strategy is business strategy. The same is true for master data, maybe even more considering the critical role this data plays in the most critical processes within an organization.
· Plan with the end in mind — Building a Master Data Management solution can be a long process; it needs careful planning. Creating a roadmap is an essential tool. Mapping all the initiatives needed to complete the Master Data Management objectives, identifying which data domains to address, which data to include in those domains, which systems and processes will be involved, identifying the existing gaps between the current situation and the future situation, and most important the existing gap between business and the existing IT ecosystem.
· Start small — The priorities identified in the roadmap allow to define the business cases to address first — business cases not use cases. In an early stage, for effectiveness purposes, there should not be more than five business cases running in parallel, all with clear, achievable objectives and stakeholders that are aware of the importance and impact of data. Select small, targeted initiatives, where the impact and value of master data can be clearly identified, with business stakeholders that can passionately and effectively articulate the impacts of master data in their business processes and that will be eager to defend the project.
· Focus on success and on gaining traction — Look for initiatives that can be framed within a reasonable funding model, that are targeted, with focused effort, within short timeframes, able to increase internal engagement, and that can deliver targeted returns on short timeframes.
Master data management provides various benefits to the efficiency and success the organization, either directly or as a support component for many of the digital transformation initiatives, it brings accuracy and consistency to master data, identifies the key entities and relationships in the organization and in the supply chain across trading partners.
Master data management enables the capability to:
· Base decisions on a consolidated and consistent enterprise level view of all the critical entities
· Deliver consistent, quality data across the organization, from supplier to point of sale.
· Reduce risk of data discrepancies between different data silos, channels (internal or external)
· Create a single, central repository for gathering and integrating data across the entire value chain
· Reduce time to market by effectively managing information as it flows across the organization and external channels.
· Establish a unified view of process and data
· Achieve a clearer knowledge of the full value chain
· Ensuring consistency and traceability for all core business data, across all channels
It’s important to keep in mind that this value can only be delivered once the master data is consumed by everyone in the organization, meaning that there are costs associated with the integration with other systems (Core, ERP, CRM, BPM, Portals, etc.), internal or external (Customers, Suppliers, Partners), must be considered to achieve these benefits.
Master Data Management acts as the glue that puts all the different pieces together. Allowing a 360-degree view of all domains of a business — customers, employees, products, suppliers, products — as distribution networks become increasingly complex.
Master Data Management integrates all data from online forms, ERPs, CRM, routing data from fleets, employee profiles, suppliers, product data, asset data, or location data and enables a seamless, uniform usage of this data within the organization and with its partners, suppliers, and other stakeholders.