Master Data Management

Nobody knowingly builds his house on sand. However, the master data of many companies is in a pitiable state. This means that all the systems, evaluations, sourcing strategies, and reported savings that are based on such unreliable master data are very much like houses built on sand.

Procurement, for its part, draws on data from a large number of sub-systems in order to compile comprehensive information on suppliers, demand and supply factors, payment terms, and prices. Hitch-free master data management is thus a major prerequisite for bringing transparency into procurement data. Master data management encompasses the standardized classification of material and supplier data, consistent linking between master data and the ordering system, and the avoidance of free-text ordering.

Many companies face considerable challenges in this process. This is because the role of data management is often restricted to that of mere administration, while the master data structure is often non-standardized insofar as the company was created through merger or acquisition.

These challenges can be tackled by master data management, which is especially important for groups of materials not shown in parts lists, including indirect materials such as lubricants, occupational health and safety items, or spare parts.

The first priority in optimizing a company's master data management is to review the quality of data. This involves ascertaining the extent of coverage the maintained master data provides, the data's level of detail, the volume of inactive data present in the system, and the extent to which harmonization of individual data systems is ensured. This is followed by an analysis of the categorization systems, the required level of detail, and the appropriate solution for categorization. The sorting and restructuring process, undertaken with the aid of innovative and intelligent tools, encompasses the following:

Classification system

Limitation of categories

Introduction of sustainable and understandable logic

Avoidance of gaps for particular sectors

Avoidance of the category “Miscellaneous”

Clear demarcation between categories

Material master data 

Classification of all materials and services

Link-up between electronic catalogs and the classification system

Link-up between suppliers and material groups

Orders

Avoidance of orders with free-text entry

Requirement for users to use valid keywords for categorization

Manual review of orders

This is followed by an analysis and definition of the process for specifying, deleting, amending, and administering master data, and an analysis and definition of functions and responsibilities. The results can be used as a basis for spend transparency, procurement management, and sustainability of savings.