Material (Item) Master Data’s impact on Procurement Organizations
Senior Procurement professionals ask us about the real and measurable value of material master data management to their organizations. My answers are as varied as the companies we talk to, but there are a few common criteria that indicate both how much value there is, and how best to realize that value.
Certainly there is a difference between approaches to master data management of material and items based on industry.
Discrete and Process Manufacturing industries, including Energy, Utilities, Natural Resources and Mining are capital asset intensive and have significant Maintenance, Repair and Operations consumables and spare parts that should be normalized and rationalized to reduce excess inventory, and standardize demand.
Yet even non-manufacturing companies benefit from Catalogue based procurement for standardization of demand for key categories. We have seen CPOs investing in catalogue initiatives for key categories including telecom (including Mobile), Office Supplies, Printer / Copier Supplies, and Information Technologies.
Procurement organization maturity makes a big difference in the value derived from Material / Item Master management. For those more mature organizations, this is a step further than selecting a category specific vendor and linking catalogues through e-procurement punch-outs, it is about bringing in, from multiple manufacturers and suppliers, the preferred items (goods and services) into a common catalogue that is often linked with their ERP’s material master.
Given the different ways catalogue entries are described, and the varied ways suppliers and manufacturers share specifications, images and the like; there remains a strong need to normalize and attribute catalogue information to provide consistency and flexible search capabilities to maximize usability and user adoption.
Using Material MDM and MDG to increase Spend under management and leveraging it for sourcing benefits are two key areas we’ll explore in upcoming posts.