Master Data Management as a Key Driver of Supply Chain Excellence

In today’s technological landscape, data drives virtually all facets of business operations in any given industry.  There is an abundance of software to choose from to streamline and manage critical business functions from finance and accounting to customer loyalty and every department in between.  When utilizing this available information to support ongoing process improvement, data availability can quickly shift from being the protagonist of operational success to the antagonist – creating confusion via data quantity, data significance, and data accuracy.

A solution to the segmentation of enterprise data is a platform concept known as Master Data Management (MDM).  Gartner defines MDM as “a technology-enabled discipline in which business and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise’s official shared master data assets.”  Creating a seamless database is critical in tying together the separate functions of a business to create a holistic view of the supply chain from raw material to consumer.  This data is extremely valuable in optimizing supply chain operations across the following common challenges that arise from lack of data uniformity.

1.       Optimizing Purchasing Leverage across Multiple Business Silos
Normalization of purchasing data is key in productively managing spend categories and continuously improving purchasing relationships.  In an ideal procurement landscape, supplier relationships are managed at the enterprise level to maximize volume leverage and reduce total cost.  If separate departments are purchasing from the same supplier, yet are operating under separate account management structures, there are unrealized efficiencies within the supply chain.  This can be difficult to monitor without a standardized data system which normalizes supplier data points such as name and vendor number across the entire business.

2.       Managing Parts Information
One of the biggest pain points in conducting a sourcing initiative, especially in the Maintenance, Repair, and Operations (MRO) and Direct Materials space, is locating the proper product specifications to adequately go to market.  For simplicity sake, consider a corrugated box that is used in a company’s warehouses to repack items before distribution.  While used for the same purpose at each location, perhaps the exact box specifications are determined by each warehouse’s supplier of choice.  With an MDM system in place, a centralized database stores the company part number, supplier part number, and specifications of these boxes, creating visibility into areas that have opportunity for standardization.  This single source of data can be used to rationalize specifications, and centrally locate the information needed to go to market to find best value pricing for all purchasing locations.

3.       Inventory Management and Forecasting
An MDM platform ties data from both ends of the inventory requirement spectrum.  Monitoring product availability from direct material suppliers down through customer demand gives a full view of factors that may affect inventory needs, such a seasonality of raw materials down to seasonality of customer demand.  This visibility is critical in striking a balance between the risk of inventory reaching obsolescence and the risk of a stock-out.  Furthermore, uniform data availability is key in implementing and maintaining Vendor Managed Inventory (VMI) programs with suppliers, which can reduce overall inventory burden.

The benefits of an MDM platform far surpass just the impact that can be made to purchasing and inventory management.  Compiling meaningful and readily available data is critical in customer retention, marketing success, and new product development.  Required architecture for such a system will vary dependent on a multitude of factors including industry, size, geography, and existing data systems in place.  The critical factor to note despite these differentiators is that unless the decided upon format must be able to support the strategic goals of the business.