Master data management: 3 common misconceptions
High-quality, easily-accessible data is crucial when it comes to optimising service parts inventory. When turned into information, data can deliver insights that can make or break your business. Leaders implement multiple systems, such as ERPs, CRMs, financial and warehousing software, to take advantage of every opportunity to collect data. This sounds good in theory: but what if these systems are left disconnected? It can lead to “dirty” data: inaccurate, inconsistent data that can severely harm a business. So how can you extract the right data that will benefit your business: the “golden records”?
The importance of central management
Many companies invest in sophisticated enterprise applications, that usually operate in different areas of the business and are rarely centrally managed. So when vital information is updated in one system, changes don’t translate to other areas of the business. The lack of one single point of reference makes it difficult to make well-informed, strategic business decisions and can hurt a business in the following ways:
- Slower time to market
- Supply chain inefficiencies
- Higher cost of compliance
- Sales inefficiency
- Misguided marketing efforts
- Lost customer loyalty
A single data point of reference
Businesses need a single point of reference for all the dispersed data they may have, acting as the spider in the middle of a web, controlling the information that comes and goes from different environments and synchronising it to ensure conformity.
Master data management solutions understand the relationship between the data in each of the systems and acknowledge that some attributes (like factory costs and lead times, for example) are best maintained at the local level. Cross-referencing the attributes, they cleanse and validate the information to provide an accurate and complete picture of customers, suppliers and products. By creating these "golden records,” the management team, users and customers can easily access and interact with a single, definitive and authoritative source of truth for the company.
Advanced master data management solutions help maintain high-quality data that can provide a competitive edge. The better the data found in golden records, the easier it is to:
- Enhance transparency and manage risk
- Improve business performance
- Acquire, retain and upsell customers
- Forecast demand, trends and market fluctuations more predictably
Although master data management solutions are extremely powerful, many leaders routinely fail to uncover their full potential. They haven't taken time to learn the facts about the highly-specialised technology platforms available today. There are three common misconceptions:
Misconception #1: Our ERP system provides standard, consistent data across our entire network.
Enterprise resource planning tools are not the be-all and end-all for data management, especially when it comes to the complicated aftermarket service parts industry. They are no longer the central source of data, and the volume and complexity of aftermarket data is generally too much for an ERP to handle. A tremendous investment is needed to integrate multiple suppliers and dealers with an ERP. And, it can take years to implement a robust master data management program using solely an ERP system. Gartner has projected that nine out of ten ERP projects will end in failure by 2018 with failed integration being one of the main reasons.
Companies using ERP for master data management don’t enjoy a true view of their customers, products, and suppliers. Master data management is complex and a strong implementation requires specialisation that considers data domain, industry, use case, organisation, and implementation style.
Misconception #2: We already have an acceptable Master Data Management solution.
Many companies do have some level of master data management but they fail to leverage all the system's capabilities. Cumbersome implementation cycles of the past are often to blame. They took a long time and exhausted available investment before all functionality was fulfilled. A quick audit of a company's data may reveal the consequences, such as large numbers of unclassified items, invalid ZIP or postal codes or an exceptional amount of error-prone records from one or more systems.
New strategies and tools allow for better taxonomy of data, easier integration to third-party data sources, and effortless updating. Plus, advanced analytics capabilities now make it much easier to monitor the MDM hub and produce predefined and custom reports with just a few clicks.
Misconception #3: We can get through mergers and acquisitions easily enough without MDM.
Mergers and acquisitions within the industry create significant challenges for IT departments. Often, the systems being used by the newly acquired company are mission- critical or even superior to the parent company’s solution. Thus, IT must integrate data and communication while simultaneously planning and implementing consistent software across the organisation.
A strong master data management solution can expedite the integration of new businesses and help identify IT improvement focus areas. Because a comprehensive MDM platform communicates with disparate ERP, supplier and CRM systems, it can bridge the gap during a merger and help the parent company to:
- Gain visibility of all suppliers, customers and items
- Consolidate and cross-reference data, such as supplier prices, to identify saving opportunities
- Eliminate inefficient processes and coordinate the customer experience
- Apply advanced analytics to identify revenue and cost-saving opportunities
It is critical for leaders in the service parts industry to understand their own data and how its quality can affect efficiency, customer experience, and overall revenue. In today's competitive environment, master data management is the key to making a pervasive and comprehensive impact on business.
By Gill Devine, VP Western Europe, Syncron
Follow @SupplyChainD on Twitter.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”