Establishing Your Lingua Franca for Supply Chain Management

Improve profitability through Master Data Management


Why put business people in charge of master data quality? Because they understand its meaning and use; they just need the right tools to manage it. MDM solutions provide a framework that supports stewardship of data by business people so that information quality can be managed as a business process.

Rather than enforce standardized references and definitions for singular use across the business, the MDM approach starts with a "master view" of the information. This view is generally created and maintained at the corporate level with business people in other functional areas of the company "mapping" their own definitions to it. This means that different units can maintain their own supply chain management software, business definitions and references at the local level, yet a consolidated view across multiple units can be rolled up to the central level. This "local to central" mapping approach eliminates the need for standardization across the enterprise and all the associated costs and delays.

MDM thus creates a true lingua franca for the SCM and procurement functions, providing a common medium for business communication while allowing business units to operate autonomously under their own local market, regulatory and cultural conditions.

Some of the advances that distinguish MDM from earlier solutions such as CDI and PIM include:

  • 1. Any master data can be managed, not just customer or product — One large oil company manages over 350 different types of master data with their MDM solution. This provides a higher return on investment than CDI or PIM solutions
  • 2. MDM is business-led — Business people collaboratively review, correct, authorize and publish master data. Accountability for information quality clearly lies with business people who have an expert understanding of the data and its meaning
  • 3. "Corporate memory" is preserved — Changes to master data are recorded over time so historic views can be recreated to support regulatory or contractual audits and trend analysis, etc.

Getting started with MDM

MDM is a collaborative process between the business and IT, and MDM programs are often co-sponsored by the offices of the chief information officer and the chief financial officer. The MDM strategy, organization and technology vision are established jointly, usually with the input from strategic advisors such as management and IT consultants or enterprise information management and MDM software providers.

MDM systems can be implemented and start providing value relatively quickly by following a "start small, iterate and evolve" approach – often by mastering one type of information such as vendor, then extending it to support product, customer and so on.

Many companies find the quickest way to benefit from their newly mastered data is to use it for management and business intelligence reporting. Within the first several weeks of their MDM implementation, a consumer beverage company discovered distribution reports were omitting data from several metropolitan regions. Correcting the problem quickly eliminated the costs of mis-paid rebates and commissions.

Conclusion

About the Author: Cliff Longman is the Chief Technology Office at Burlington, Mass-based enterprise software firm Kalido.

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