Master Data - methods for managing master data? Dr. Kevin McCormack March, 2007
Master Data - methods for managing master data? • Master Data Management is a set of activities within an organization that create, modify, maintain and control Master Data (pricing structures, approved suppliers, controls, approved material, approved buying channels, usage data) for the Supply Chain processes according to standard naming conventions / required elements. • This includes: • Material Master, Material and Services Grouping • Vendor Master, Contract DB • Catalogs, Supplier Performance • Outline Agreements, Spend Data.
Master Data - methods for managing master data? Master Data and Transaction Data. There are two types of data, which can be differentiated by their functional purpose: • Master Data that seldom changes, such as customer or vendor details and material technical records or part numbers. • Transactional Data that the system uses during data processing, such as when receiving goods or when changing something in a master data record. BOM Payments Req. PO Transaction Data History on the life of a Req-PO Invoices Material Master Vendor Master Outline Agreements
Procurement Master Data Search Select Material Select Vendor Select Terms Process and Pay PO BOM Material Master Vendor Master Outline Agreements Transaction Data Fulfill and Invoice PO
Master Data - methods for managing master data? • Typical Situation: • Not enough master contracts with suppliers or outline agreements in the system. • Material number strategies vary throughout the organization from “everything gets a number “ to “only the stocked parts”. (UN SPSC) • Material number search capability is perceived as difficult to use unless a user description comes close to the description in the system catalog. • Over half of the purchases (90-100,000 annually) have a material number but less than 20% have outline agreements in the system. • Often the pricing is incorrect causing both suppliers and buyers to make adjustments before work is performed, material delivered or payment is made. • Difficult to find out which supplier offers which material or service. • This situation results in significant “friction” in the P2P process, a distraction of the sourcing efforts from larger opportunities with key suppliers and is a barrier to further automation of the P2P process.
Master Data - methods for managing master data? Recommendation: • Design, staff and roll out a central master data management process • This process and people would be responsible for: • Effectively and efficiently managing SC master data in support of the business unit plans, goals and objectives. • Maintaining the structure and quality of master data by cleansing, removing and correcting as needed. • Successfully managing changes / modifications to master data to keep it up to date. • Creation and structuring of the data (common terminology, classification schema, reporting structure, performance measures and definitions) • Controlling the data through access and distribution controls • This process would be implemented by appointing a MDM process owner and team, designing the process to be implemented, identifying roles and responsibilities for this process, and rolling out the process.
Master Data - methods for managing master data? • The objectives of the project are: • Implement an effective and efficient MDM process that results in accurate, reliable master data which enables the P2P process and end users in support of their mission. • Increase the number of outline agreements from 18% to 30%. • Increase the usability of the search process (through internal improvements of integration with outside supplier catalogs.