Every department and corresponding information system that supports the retail operation requires master data. Merchandising, category management, sales, warehouse operations, transportation and accounting have different but complementary roles to play. In many cases master data is created in each system to support the function of that particular department without serious consideration of how that information translates into other systems or other departments.
Creating a truly integrated supply chain with visibility at every touch point can occur when all of the master data components are centrally created and maintained in a single system and fed from there to other business areas that use the data. It will be understood the same way not only in Kansas and Florida but also in operations, merchandising, sales and accounting.
Creating Data with Integrity
A centralized master data model can deliver sustained benefits, including improving data integrity. When the same data is entered by different people into different systems, over time it is likely that the data becomes disjointed and unreliable. Once the data loses credibility in an organization it can be difficult to restore. What often happens is that each group or department has their own criteria for success, and measuring performance can lead to contentious debates and ambiguous results. However, when everyone is using the same data to describe the same thing it removes much of the subjective measures of success, makes it easier to manage expectations and to create accountability within an organization.
In addition, data integrity issues can lead to lost business opportunities. For example, let's say a buyer in Texas is moving a large volume of product from the vendor "Jeff and Joe's Country Cookin'" and is able to negotiate a favorable deal. The buyer from the same company in Arizona is doing less volume of the same product, but in Arizona the item number and the vendor number are different, and the vendor description is "J&J Country Cooking." Because the data is not uniform between the systems, the category manager may lose negotiating power and is likely leaving money on the table.
Creating a Flexible Supply Chain
A centralized master data model is also the staring point for creating a flexible and adaptable supply chain. During operational interruptions, for many companies, it can be the difference between survival and ruin.
Take, for example, a retailer with a distribution center in New Orleans that supplies Baton Rouge and the southern Gulf Coast. Suddenly, a hurricane strikes that shuts down operations for an extended period of time. The retailer has a couple of options: shift distribution for those stores to another facility, or leave the store shelves empty until the DC is operational again. Of course any retailer would choose option one, but all too many of them have a master data model that would severely limit their ability to respond. The store's order code, for many retailers, is the combination of item code and DC code, and changing the distribution channel requires changing the order guides, which for most organizations is a Herculean task.
Changing the master data model to facilitate abrupt changes in sourcing and distribution will require some changes in the way retailers think about their data. The key is to uncouple the raw data from anything else. An item is an item by itself, a supplier is a supplier by itself and a site is a site by itself. In order to be useful, of course, these things must be linked together, but by storing them as completely separate and unrelated pieces of data one can easily and quickly mix and match them to any configuration that is required for the operational situation.
Many merchandising systems make the mistake of forcing operational decisions to be made upfront and inextricably linking the master data to those decisions, which severely limits the retailer's options. The optimum model is to limit the information that is stored at the root level to data that is required to accurately describe the particular thing.
The item root, for example, should not have to account for sourcing, costing, pricing or distribution, because all of these things can change over time. The item itself consists of type (standard, fresh, recipe), dimension, configuration and a couple of other specific attributes and should stand alone as a completely independent piece of data. Once the items, suppliers, contracts and sites have been uncoupled then it is possible to begin linking the data to support the operations. It is also possible to reconfigure the links to support changing conditions. No longer will one think about DSD items and warehouse items, but rather one will think about an item the can be sourced from anywhere to anywhere at the touch of a button.