Thomas is an expert in Supply Chain and Manufacturing Optimization with more than 10 years of experience originating from Medical Device and High-Tech & Electronic Industries. He comes with a background as an Electronics engineer, complemented with a Master in Technology Management. Thomas has held positions in multinational corporations such as Nilfisk, heading the internal optimization program as well as the supply chain organization.
Master Data Management and the continued battle for replacing spreadsheets
For a number of years, Master Data Management solutions have been a hot topic within large manufacturing companies as an important element to solve problems such as cost, quality, tooling, and much more.
That is why every industry analyst for the last 5 years has been screaming: “Do you manage your master data with spreadsheets? Throw them out! Get a data management solution!”
Now, managing your master data with point solutions like spreadsheets has been guilty of causing errors like:
- Inaccurate data entry
- Incorrect data flow between applications
- Duplicate data between systems
Many businesses today, especially global enterprises have hundreds of separate applications and systems (ie ERP, CRM) where data that crosses organizational departments or divisions can easily become fragmented, duplicated, and most commonly out of date. When this occurs, answering even the most basic, but critical questions about any type of performance metric or KPI for a business accurately becomes a pain.
Why should I care?
Getting answers to basic questions such as “who are our most profitable customers?” and “what product(s) have the best margins? is tough to answer – or at least with any degree of accuracy.
Product data errors are one of the biggest problems for manufacturing companies. Emailing spreadsheets with BOM (Bill of Materials) will not make your product development and manufacturing process more efficient. Product development teams are all too familiar with how these errors occur, especially given the variety of systems that manage the data.
Basically, the need for accurate, timely information is acute and as sources of data increase, managing it consistently and keeping data definitions up to date so all parts of business use the same information is a never-ending challenge.
With master data management, there are gains to be made, especially when it comes to disciplines like BOM (Bill of Materials) management.
There are many benefits that can come from implementing enterprise Master Data Management for data solutions with long life cycles.
- For example, a U.S. based consumer electronics manufacturer reduced the time and cost of engineering changes by 30 %
- An industrial equipment manufacturer improved their enterprise BOM management by streamlining their PLM and ERP systems.
- A European equipment manufacturer increased their accuracy and efficiency with complex requirements along with their revenues.
Managing BOMs with high-level Master Data Management solutions has the most impact on life cycle performance. It affects almost everything from cost, quality and sourcing, to tooling, factory layout, customer options, and service efficiency.
What is master data management?
Master Data Management (MDM) is the technology, tools and processes that ensure master data is coordinated across the enterprise. MDM provides a unified master data service that provides accurate, consistent and complete master data across the enterprise and to business partners.
There are a couple things worth noting in this definition:
- 1. MDM is not just a technological problem. In many cases, fundamental changes to business process will be required to maintain clean master data and some of the most difficult MDM issues are more political than technical.
- 2. MDM includes both creating and maintaining master data. Investing a lot of time, money and effort in creating a clean, consistent set of master data is a wasted effort unless the solution includes tools and processes to keep the master data clean and consistent as it gets updated and expands over time.
Depending on the technology used, MDM may cover a single domain (customers, products, locations or other) or multiple domains. The benefits of multi-domain MDM include a consistent data stewardship experience, a minimized technology footprint, the ability to share reference data across domains, a lower total cost of ownership, and a higher return on investment.
Here is why you need Master Data Management
Because master data is used by multiple applications, an error in the data in one place can cause errors in all the applications that use it. An incorrect address in the customer master might mean orders, bills, and marketing literature are all sent to the wrong address. Similarly, an incorrect price on an item master can be a marketing disaster and an incorrect account number in an account master can lead to huge fines or even ail time for the CEO—a career-limiting move for the person who made the mistake.
Here are the top five reasons why manufacturers need Master Data Management (according to Gartner):
- Master data has too many masters and needs to be managed by one system
- Effective new product development and introduction (NPD&I) requires unstructured collaboration
- Complex manufacturing chains make product data harder to track
- Orchestrating different enterprise applications is proving too costly and complex
- You avoid high business risks and costs of product data errors
The scope of BOM Management
Manufacturers that don't have Master Data Management solutions but instead manage their MDM and BOMs with spreadsheets, should understand the scope of BOMs from the life cycle perspective, according to Gartner. This in turn involves successfully linking BOMs from different authoring systems, involving suppliers early, and establishing a governance group.
Clearly, this means that companies must, "insist on replacing spreadsheets" as Gartner puts it, particularly if a company has a life cycle approach to business.
Master Data is not a new thing
There is nothing new in this enterprise data life, but attempts should be made to manage data in a sustainable way. That ensures that your data ride won’t be bumpy. Instead, data arrives easy and your end-users will love it (and possibly also love you for it).
Companies won't be making changes away from their current solutions easily. The switching costs are so high that the promise of benefits will have to be even higher to entice companies to surrender their spreadsheets.
To sum it up
While it’s easy to think of master data management as a technological issue, a purely technological solution without corresponding changes to business processes and controls will likely fail to produce satisfactory results.
This article has covered the reasons for adopting master data management, the process of developing a solution, several options for the technological implementation of the solution, and who should be involved along the way to make sure the program runs smoothly.
As always, you can contact me at firstname.lastname@example.org if you want to know more about the benefits of new technology, digital transformation, and industry-specific solutions that are flexible enough to support anything the future may throw at you.