The need for effective Material Master Data Management – Part 2
Our last post talked about two significant events that require high quality material master data: Merger / Acquisition and ERP / EAM Consolidations. Let’s talk about steady state processes which benefit materially (pun intended) from higher levels of data quality. We will cover operations issues in this post and touch on procurement issues in our next post.
Warehouse management systems, ERP systems, and third-party logistics service providers manage aspects of parts and finished goods inventories. This fragmented system landscape clouds inventory visibility and leads to overpurchasing, stock outs, inventory write-offs, and disruptions of manufacturing operations. Bad material data is the key culprit behind issues such as cash locked up in excess inventory, lack of inventory visibility within and across plants, low employee productivity, false stock outs and increased plant downtime. Increased inventory cost is the single largest bottom-line effect of unstructured and inaccurate material master data.
Decreased Plant and Equipment Availability
Poorly described material items, especially MRO items, often lead to incorrect and untimely part orders. Inefficient buying of critical supplies increases the cost of maintaining equipment and frequently results in decreased plant and equipment availability.
Decreased Employee Productivity
Duplicate and obsolete inventory leads to excess material records. This compounds the problem for most of the materials management software which are buoyed by a lack of effective search functionality. According to an Aberdeen Group survey of leading manufacturing firms, maintenance workers spend as much as 60% of their time identifying and searching for MRO parts, indicating that most organizations could benefit from improvements in their loss of wrench time. In addition, sometimes employees searching for the right part often lack the product expertise or time to manage the process effectively. The additional time, resources, and expertise needed to find the necessary parts to run an organization’s plant and equipment leads directly to decreased worker productivity.
Part Reuse in Design
An engineer’s design decisions can have lasting financial impacts on product margin as well as on the organization. Part reuse is dependent on the engineer’s ability to find the right part based on attributes. When existing parts are incompletely or wrongly classified, and attributes are missing, frustrated engineers find it easier to create a new part than to perform an extended manual search. This undermines sourcing strategies and merger-and-acquisition synergies, and further bloats inventories.
Stay tuned for our next post on procurement issues! For more information, contact us at firstname.lastname@example.org.
Latest posts by Arthur Raguette (see all)
- Benefits of Material Master Data Management-Part 5 - March 21, 2018
- Benefits of Material Master Data Management-Part 4 - March 1, 2018
- Benefits of Material Master Data Management-Part 3 - February 19, 2018