Let me continue the topic of master data from a previous St. Onge Company blog, Mastering Your Item Master Data. Item data, although an important one, is just one type of master data. Some other master data types are customer, supplier or vendor, and facility or site. Simply put, Master Data is data that remains unchanged over a period of time but that doesn’t mean it should remain unmanaged.
For example, let us relate a manufacturing company’s Item Master to a bakery that only bakes Challah bread (for example, since it is delicious and I like to make it). At this bakery, the Baker and the Office Manager are separate people and roles that rely on each other to accomplish their jobs. The Master Data are the Challah bread’s ingredients which are warm water, yeast, honey, oil, eggs, salt, and flour. One of the Office Manager’s tasks is ensuring the bakery has everything the Baker needs (“mise en place”) to make and bake the bread. The Baker arrives in the morning gathers their “mise en place” (ingredients, appliances, measuring cups/spoons, etc.). The Baker relies on the Office Manager to order and maintain everything in the bakery. This means the Office Manager needs to ensure they are ordering and stocking each, correct ingredient with specific attributes, for instance; the vendor or supplier name, item name, short description, received date, expiration date, color, price, etc. For the Challah bread, an “item master” needs to be maintained for all ingredients except the warm water since the Baker obtains this from the bakery itself! This a pretty simple example of master data but what if it is extrapolated on a larger scale with more people involved?
Master Data Management (MDM) is when the business, operations, and IT work together to ensure the uniformity, accuracy, and semantic consistency of the enterprise’s master data. That cross-functional group also ensures that each field originates from one source or host system. This involves the lifecycle processes of the master data; creation, maintenance, and decommissioning. As you can imagine there can be many parties holding diverse opinions on each master data type such as where the data should be obtained from, what each field means, how each field should be populated, etc. If not managed correctly, these varied opinions could lead to disagreements, distrust of the data, misuse of master data, and ultimately operational inefficiencies which then can trickle downstream to affect your customers.
Therefore, to accomplish MDM, many times a governing body or group is created to enforce each party’s accountability and a system of rules, policies, and procedures to ensure data quality and consistency. This Master Data Governance is comprised of four areas; process, organization, system, and data. It is an ongoing process that not only manages the governing organization’s administrative processes (representatives involved, meeting cadence, etc.) but also the MDM processes & workflows, roles and responsibilities, system structure & workflows, and data lifecycle.
Can you imagine what could happen without ongoing management and maintenance of the Challah ingredient attributes? This is where our Office Manager doesn’t maintain an “item master”, resulting in ordering the wrong types of products from the wrong and more expensive vendors; fresh yeast instead of active dry yeast, sourwood instead of clover honey, olive oil instead of vegetable oil, ostrich eggs instead of chicken eggs, Himalayan pink salt instead of table salt, wheat flour instead of unbleached all-purpose flour. Beside the fact that this would probably not taste very good, our customer would NOT receive what they ordered! It WOULD cost the bakery a lot more to make however the bakery may not pass the cost increase to the customer (They may not have even realized the cost discrepancy but that is another topic.). This leaves you with a disgruntled customer and little or no profit.
It may seem overwhelming to create a Master Data Governance program. You are right, it can be. However, once it is created, the management of master data becomes easier resulting in more accurate procurement, planning, forecasting, inventory management, and transportation.
Stay tuned for more blogs that continue to explore the supply chain industry and systems.
—Jess Kittrell, St. Onge Company