Ensuring Data Quality for Purchased Parts & Products
Master data management is, by no means, a new concept. However, even in this world of increasing awareness about master data and its management, material or item master data remains somewhat neglected. Customer data is managed by the CRM team, vendor data is handled by accounts payable and procurement, yet who manages material data? Material data is touched by many teams (engineering for creating and looking-up items, and procurement for ordering materials) and often has no primary owner. Even suppliers use it to add their items to catalogues. This situation needs to change in any organization that is looking to reduce excess inventory, save costs in procurement, and improve efficiency in its processes and systems.
What generally goes wrong?
As mentioned above, the ownership of item master data is not always clear and this can lead to various challenges in its management. Here are some of the things that can go wrong:
- Coding standards are not uniform – This is probably the most common problem faced by companies. If your organization, and everyone involved in the process, does not use a uniform coding standard, things are bound to get messy. Engineering and procurement might use different coding standards for the same item while the supplier has a different system altogether. This scenario is not uncommon and can lead to a lot of confusion .
- Lack of ownership – As mentioned above, Material data is the orphan of the MDM world. As a number of departments use the data, errors and discrepancies are bound to creep in while the responsibility for data governance is likely to be passed around.
- Multiple legacy and other systems – Organizations grow by employing best of breed solutions for different departments or processes. All this works fine for a while, but trying to make the systems work together can be cumbersome (to put it lightly). This leads to redundant as well as duplicated data, an anathema to data cleansing and data governance.
Depending on the size of your organization, the answer to the above question varies from “You needed it yesterday” to “You will need it pretty soon”. An automated system that can cleanse your material master data, normalize it, supply the missing attributes and rationalize everything is something that should be on the radar of any organization with mature processes. The three most important instances when you would undoubtedly require a material data management solution are:
- Merger and Acquisition – The expansion of your organization is one point in time where having a system can prove to be invaluable. The new data that comes in with a new firm can be a headache and a system that can normalize everything automatically will lead to a significant reduction in the number of headaches you might anticipate.
- IT system upgrade – Whether you consolidating your ERP/MRP/EAM systems, or replacing an old one, material master data management can help you. It is essential to rationalize the existing data before consolidating your ERP systems in order to remove redundancies and legacy contamination from old, erroneous data.
- Strategic sourcing – In the last decade, major organizations have realized substantial savings by employing better sourcing strategies. This has led to an increase in strategic sourcing, and material master data management systems are tailor made for such an effort. By normalizing the existing data, cleansing it, rationalizing it, and providing missing attributes, an efficient system will make sure that anyone looking at inventory knows exactly what is available and what needs to be ordered. This along with bulk procurement or volume license agreements decrease unnecessary orders and lead to sizable savings.
Data is now more important than ever and managing such a critical asset properly is essential.Along with customer and vendor data, data quality for purchased parts is proving to be a game changer in most industries. In fact, very soon, material master data management might become the factor that determines your success in the market. Make sure you are not too late in jumping on the bandwagon.
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