Master data management should be higher on the agenda
The ever-advancing digitisation of business processes is raising the demand for high-quality data and making it increasingly important, because the success of supply chain collaboration is inextricably linked with the exchange of usable data. As a result, the topic of master data management features high on the agenda within many companies like cosmetic brand rituals – and ideally not only for the It department, but also for the management board.
By Marco van der Hoeven
Master data management (MDM) is often mentioned in the same breath as ‘digital transformation’, whereby technology enables companies to develop fundamentally different business models. Airbnb, Uber and Alibaba are typical examples of ‘disruptive companies’: they wouldn’t exist without data and without the internet. A study by Stibo Systems, supplier of master data management, reveals that, in Europe, digital transformation is high on the agenda primarily in the retail & wholesale sector, manufacturing, the car industry and the (financial) services sector. Master data forms the basis for the digital transformation, such as the efficient design of the provision of information in the supply chain. But what exactly is master data? Since it is a relatively new topic there are many different definitions of master data, but the strictest one describes it as the master tables in the ERP system.
But this definition falls short in today’s reality. The ERP system includes only a limited number of characteristics – just enough to identify each product but not enough to be able to sell it. The details required by the IT department are not necessarily the same ones needed by Supply Chain, Marketing or Sales. So master data refers to all the product-related information that is relevant for employees, partners and/or customers.
As an extension of this, research firm Gartner defines master data management as a technology-enabled discipline in which the business and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise’s official shared master data assets. According to Gartner, supply chain performance depends on a consistent description of customers, products, objects and sites, among other things.
Master data has always been a hot item, ever since the emergence of ERP systems, says Lex Kop, Director of Logilex and Interim Supply Chain Manager at Farm Frites. “The supply chain revolves around all products, customers, processes, routines, formulations and specifications. It’s a melting pot of data, but how can you handle it all effectively?”
He sees companies falling into one of three main categories. “Firstly there are those who don’t handle it well and haven’t specified anything. It’s chaos. Secondly there are companies who only partially realise its importance. They’ve often made it the responsibility of a particular department, such as Finance, because the financial manager was the first to come up against the lack of master data – probably because the data didn’t add up. That department handles it in addition to its own responsibilities and in a lot of cases only informal agreements are in place. And then there are companies that take a serious approach, such as by setting up a dedicated department. It’s sometimes called product lifecycle management. They start to define the data as soon as it is input and they know who owns it.”
This article was first published in Supply Chain Movement 21 | Q2 – 2016