Why the Oil and Gas Industry Needs Material MDM – Part III
While there are many things to be worried about for oil and gas industry professionals, this can be seen as the perfect time to strike at the root of systemic problems and make major changes in organizations. So, after spending two weeks documenting the travails and sentiments of the oil and gas industry, it is now time to talk about solutions.
Data, what is it good for? Absolutely Everything!
I have already discussed the issues facing the industry and what professionals think about it in my previous posts (if you have not read them, go back and do so; I’ll wait…). Done? Good, let’s start. It is clear that the issues faced by companies fall broadly into three categories –
- Cost reduction
- Risk mitigation
- More efficient resource utilization
These three can be countered with a single approach – an efficient material master data management initiative. Let us consider a scenario –
If the material data is unclassified, searching for a common part such as a casing hanger can return hundreds of results, causing employees to spend more time identifying the materials that they need (poor resource utilization). The overabundance of results means that the facility manager cannot find the materials or spare parts in the inventory system (even though it is present) and immediately raises a purchase request. There are two major reason for a part not being found –
- There were too many parts with similar names
- The correct part was mislabelled/miscategorized
This means that an order for a part which is already in stock goes through, resulting in excess inventory and increased cost (unnecessary spending that can be controlled).
The new purchase leads to the creation of a new master record and if there is no data governance / stewardship in place, there is a high possibility that the data quality of the new material data record will be poor to start and further degrade over time. Decreases in data quality often leads to compliance and regulatory failure (risks that can be mitigated), which can be detrimental in a strictly regulated industry such as oil and gas.
When the going is easy, even major problems become invisible, but with the industry in a turmoil, it is time for companies to take a long, hard look at what they can do to improve processes and gain operational efficiencies. A good material MDM solution, tied to a data governance initiative can ensure that your material master data is made clean and remains clean. A one-time solution that returns value for years to come; sounds like a good deal to me. What do you think? Share your thoughts in the comments section below.
Further Reading –
Latest posts by Vipul Aroh (see all)
- Key Takeaways from our Webinar – Strategically Manage Data Quality in an ERP rollout - November 4, 2015
- Boosting the ROI of an ERP project – Part I - August 31, 2015
- Master Data Quality Improvement – Adding to your EAM Implementation ROI - July 29, 2015